About William O’Neil
William O’Neil is an extremely successful American investor and one of the first investors to rely on computers for stock research and analysis. O’Neil is now best known for founding the Investor’s Business Daily news and research site, which draws in several million visitors each month. At age 87, he is worth an estimated $100 million.
O’Neil began his career as in investor in 1958 when he joined the New York firm Hayden, Stone & Company as a stockbroker. He attended Harvard Business School in 1960, where he developed the CAN SLIM trading strategy. Soon after, he bought a seat on the New York Stock Exchange – at age 30, he was the youngest person ever to buy a seat at the exchange – and founded William O’Neil + Co. in 1963.
At William O’Neil + Co., O’Neil created the first-ever computerized database for daily stock movements and sold his database to other Wall Street firms. In 1972, O’Neil created Daily Graphs, a booklet of annotated stock charts delivered to investors every week. The Daily Graphs service ultimately became MarketSmith, a paid subscription component of Investor’s Business Daily.
O’Neil founded Investor’s Business Daily (then just Investor’s Daily) as a daily newspaper in 1984. The newspaper was designed to compete with the Wall Street Journal, publishing market news as well as research from O’Neil’s computerized stock database. Today, the newspaper is printed only weekly, but the Investor’s Business Daily website draws nearly three million visitors each month.
William O’Neil’s Investing Style
William O’Neil’s investing style focused on identifying high-growth stocks and holding them for the long term. O’Neil was the founder of the CAN SLIM strategy, which epitomizes the factors that the investor looked for when evaluating stocks:
- Current quarterly earnings: Stocks should have a 25% increase in quarterly earnings compared to the same quarter the prior year.
- Annual earnings growth: Stocks should be up 25% or more over a three-year period.
- New product or service: A company should be introducing a new product or service, and positive price action should develop around the release.
- Supply and demand: Trading volume should drop when a stock’s price is dropping and increase when the stock is rallying.
- Leader or laggard: Buy ‘the leading stock in a leading industry,’ based on company and industry price performance over the past 12 months.
- Institutional sponsorship: Look for stocks that are owned by institutional investors such as funds and major investment firms.
- Market direction: Buy stocks when the broader market (i.e., the S&P 500) is trending upward since stocks tend to follow the overall market direction.
O’Neil executed on his CAN SLIM strategy by creating a computerized stock database, which at the time was virtually unheard of. O’Neil’s use of computers to collate and analyze stock data played a major role in his success throughout the 1960s and 1970s.
William O’Neil’s Key Investing Tips And Insight
Through several books and interviews, O’Neill has offered a few key pieces of advice for today’s investors. On the whole, he recommends that investors put in the time and work required to identify promising stocks. The CAN SLIM strategy, for example, took a significant amount of research into stocks (especially in the early days of computerized databases). According to O’Neil, ‘90% of the people in the stock market, professionals and amateurs alike, simply haven’t done enough homework.’
Another important piece of advice O’Neil has is to cut losses quickly. ‘I make it a rule to never lose more than 7 percent on any stock I buy,’ O’Neil says. ‘If a stock drops 7 percent below my purchase price, I will automatically sell it at the market – no second-guessing, no hesitation.’ This advice is particularly appropriate for O’Neil’s strategy targeting high-growth stocks. It is better, in that case, to minimize losses and allow winning trades to ride for years to come.
Finally, O’Neil sees trading volume as an underappreciated signal for successful stock trading. As outlined in the CAN SLIM strategy, he prefers to see volume surge when a stock’s price is rallying. This suggests that institutional investors are buying into a stock, which is another important component of O’Neil’s strategy.
William O’Neil’s Services
Investor’s Business Daily
William O’Neil founded Investor’s Business Daily in 1983 as an alternative to the Wall Street Journal. The 20-page daily newspaper has evolved into a largely digital business in recent years, but continues to publish a weekly newspaper.
Investor’s Business Daily’s flagship product, developed under O’Neil, is the Leaderboard. This is essentially a stock picking service built around O’Neil’s CAN SLIM trading strategy. Every stock in the Leaderboard database comes with annotated charts and a full trading plan, complete with risk management guidelines to limit losses.
Investor’s Business Daily also has several other stock database products, including MarketSmith annotated charts and the Swing Trader service for trading growth stocks on shorter timeframes.
Books
William O’Neil has written a number of books over the years. His two most famous books are ‘How to Make Money in Stocks: A Winning System in Good Times or Bad,’ published in 1988, and ‘24 Essential Lessons for Investment Success,’ published in 2000.
Conclusion: William O’Neil
William O’Neil was one of the first investors to use computerized databases to build and execute on a stock trading strategy. His CAN SLIM strategy, which emphasized high-growth stocks trading with strong upward momentum, relied heavily on his ability to find and analyze stocks that met multiple trading criteria. Today, any investor can take advantage of O’Neil’s database-driven approach through Investor’s Business Daily.