How to Make Money in Stocks (Book Review)

how to make money in stocks book review

Read this book review of “How To Make Money in Stocks” to see if it’s for you…

How to Make Money in Stocks, by William O’Neil provides you “A Winning System in Good Times and Bad.”

If you’re feeling a little skeptical about this investing book then you should know, “How to Make Money in Stocks” has sold over 2,000,000 copies. And the author William O’Neil is the found of Investors Business Daily. His CAN-SLIM investing methodology was also featured in Market Wizards. So…

With all that credibility, you can be assured “How To Make Money in Stocks” is a reliable investing manual. The book provides a relatively easy to follow methodology that can help you find big growth stocks. Let me tell you a little more about why I liked How to Make Money in Stocks…

What How To Make Money in Stocks is All About:

How to Make Money in Stocks by William O’Neil is a classic investment book that outlines a relatively straightforward methodology you can follow to find stock ideas on your own. The interesting thing about O’Neil’s approach is that he combines some technical and fundamental factors in his analysis. For example…

How to Make Money in Stocks really focuses on stock charts. The first 100 pages of the book are simply annotated long-term stock charts. How to Make Money in Stocks does a great job explaining why the featured stock patterns telegraphed huge stock price gains in the companies they represent. While the analysis would have been more convincing in real time, How to Make Money in Stocks does isolate a number of important chart patterns that you should be aware of even if you’re a long term investor.

But then… “How to Make Money in Stocks” goes a step further…

That’s because the investing methodology described in How to Make Money in Stocks also has a strong fundamental component. But O’Neil is not a value investor either. Since I always look for a margin of safety in my investments I had a bit of dissonance with O’Neil’s method at first. For example…

How to Make Money in Stocks does not encourage looking at metrics like Price to Earnings or Price to Book ratio. The book argues these companies are cheap for a reason, and instead, you should follow the CAN-SLIM methodology of investing. Find companies with current and annual earnings growth that are offering innovative new products. Make sure the companies don’t have too big a stock float, that they’re leaders in their industry with institutional support and management that is shareholder friendly. That’s a lot to ask for right?

How to Make Money in Stocks keeps things simple and encourages you to look for companies that are offering new products that improve consumer standard of living. Instead of worrying too much about the value you are paying for, use the long term chart patterns to guide your buying and selling.

While this approach wasn’t totally compatible with my value investor methodology, there are definitely aspects I could appreciate and integrate into my investing style. But that’s not even the best part of How to Make Money in Stocks.

My Favorite Part of How To Make Money in Stocks:

How to Make Money in Stocks is a great growth investing book. In a lot of ways, the book reminded me of Philip Fisher’s Common Stocks and Uncommon Profits. That’s saying a lot, since Fisher’s book has stood the test of time and is even credited with influencing Warren Buffett’s investment philosophy.

So it should be no surprise: the thing I liked most about How To Make Money in Stocks was that it took Fisher’s philosophy a bit further. This book made the growth investing strategies Fisher talked about much easier to apply. O’Neil really breaks down the growth investing into specific CAN-SLIM criteria that you can look for.

This more-quantifiable backdrop that How To Make Money in Stocks provided really helped me understand the nuances of growth and momentum investing. I liked knowing the specific things O’Neil has used to have such a successful career over the last 30 years. So I appreciated how actionable this book was.

But there was one thing that kind of annoyed me about How To Make Money in Stocks…

What I Didn’t Love About How To Make Money In Stocks:

Don’t get me wrong, How to Make Money in Stocks is a great book for growth investors. And every individual investor can learn something from it (even if you are primarily value-focused like me). But there’s one part of How to Make Money in Stocks that kind of rubbed me the wrong way…

While the beginning of the book is packed with useful information, I felt that towards the end of the book, How to Make Money in Stocks increasingly became “How to Make Money with Investors Business Daily.” And while I don’t doubt IBD is of great value, the end of the book just felt like a little too much of a sales-pitch for O’Neil’s services.

Of course, I still learned a ton from How to Make Money in Stocks. I just thought you should know that at times it is a little bit promotional. Now let’s wrap this book review up…

How To Make Money in Stocks – The Final World:

How to Make Money in Stocks is a great book that does an excellent job quantifying some of the growth investing methodologies outlined by Phil Fisher. For that reason alone I would recommend you buy How to Make Money in Stocks on Amazon.

This book will go a long way in helping you integrate fundamental and technical analysis, whether you’re a long term investor or a shorter-term swing trader. And if you’re looking for more information on How To Make Money in Stocks, feel free to check out the video boo review below…

How To Make Money in Stocks Video Book Review:

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