The history of entrepreneurship and business is incomplete without William O’Neil- the founder of Investor’s Business Daily. This legendary investor is known for his exceptional work ethic and entrepreneurial spirit that enabled him to introduce innovative stock-picking methods.
It was due to his dedication and insight into investment success that he managed to open his own companies to assist potential investors in gaining more knowledge about stocks and improving their performance.
O’Neil’s groundbreaking strategies, unparalleled success, and unwavering determination brought a huge revolution in the New York stock exchange. In other words, his efforts altered the investment landscape and inspired generators of investors and traders.
Born in an American family in 1933, William O’Neil was always attracted to the criteria of how stocks work and the ways to make money from them.
It was his curiosity and dedication to do something that brought him to the position where he finally launched a publication called Investor’s Business Daily or IBD.
Investor’s Daily was aimed to facilitate potential investors to learn the technical aspects of stocks and business.
He didn’t stop here- William O’Neil wrote many bestselling books and gave lectures in numerous workshops, seminars, and conferences to create a legacy around educating investors.
An Enthusiastic Market Wizard
Apart from providing investor education philosophy, William O’Neil was also known for introducing ‘cup with handle’ patterns that had proven results to predict the future of stocks.
Disciplined Approach
The best thing about O’Neil’s services is his disciplined approach and thorough research that always kept him updated about the stock market and the prevailing business trends. His pioneering strategies enabled him to efficiently deal with turbulent market situations by seizing opportunities and identifying profitable stocks. It was due to his extensive knowledge that he managed to turn uncertainty in his favor and invested in some of the high-growth companies like Amazon, Google, and Apple. That was the time when these companies weren’t that big and not many people knew about them.
The CAN SLIM System by William O’Neil
With his immense interest in stocks, their mechanism, and how they give profit to their holders, William O’Neil dedicated most of his time to inventing new and better strategies. Not only did he apply them for his benefit but also taught potential investors through his own company.
He used to combine fundamental factors with technical elements to get a realistic insight into a stock. Experts also praised him for studying the two factors. O’Neil always started by analyzing the fundamentals to pick an appropriate company for investment carefully. Afterward, he used to pick technical elements to find out the right time to make an entry into the market and invest in those stocks.
William O Neil identified seven incredible yet common characteristics that added value to the stocks’ value. Today, those features provide the basis for the CAN SLIM Investing System to let investors choose the best stocks for buy and sell.
Moreover, the CAN SLIM principles and data science enabled O’Neil to introduce Daily Graphs- the predecessor of the MarketSmith charting platform. These few steps empowered him to come out of his place and educate other individual investors about the tips and tricks to grow in the stock market.
Contrarian View on Volume
O’Neil was one of those pioneering researchers who gave a new meaning to trading volume. He declared high trading volume as a significant tool to identify stocks’ potential. Since he believed that ‘price moves are directly proportional to volume,’ he used to find stocks that have big price surges. These surges are clear evidence of potential price movements and high profitability.
Such pointed stocks were AAPL by Apple Inc. which clearly explains O’Neil’s theory of volume-based analysis.
The 7% – 8% Rule and Risk Management
Since O’Neil was familiar with the importance of risk management in forex trading, he introduced a rule explaining that if a stock falls 7% to 8% below its original/purchase price, it must be sold right away. Following this rule, many institutional investors managed to stay in the game even after facing severe ups and downs.
Introduction to Stock Ratings
As per the RS Rating, 1 refers to the worst while 99 shows the best stock. In other words, a stock is considered more profitable than 98% of the companies present in the IBD database.
In his bestseller, ‘How to Make Money in Stocks,’ O’Neil combined his basketball and baseball passion by saying that the winning stock (one with a good RS Rating) must be included in the same league as that of a pitcher’s fastball.
O’Neil tested 197 industry groups at different time frames, demonstrating a unique method to analyze the performance of stocks. The method was later imitated by banks, portfolio managers, and equity research firms.
On April 9, 1984, the combination of a quantitative database and a successful printing firm became the basis for the first publication by Investor’s Business Daily. This publication was later converted into a national business newspaper, whose major focus was on digital properties, particularly MarketSmith and Investors.com.
Market King’s Lasting Legacy
In 1988, O’Neil presented his market learnings in the form of his first book named ‘How to Make Money in Stocks.’ His bestseller sold over 4 million copies in multiple editions- giving tips on how to be a successful investor and tricks on how to be a pro at stock speculation and trading.
Since the day he entered into this industry, O’Neil wanted to share his findings and inventions with others to bring satisfaction in their future decisions. His mission was not only to be successful but he wanted to make things better for others as well.
His group of companies in 3 continents is evidence of his passion and dedication to the stock market. Each of them exhibits O’Neil’s stock-picking prowess and sense of discipline that helped him survive all the ups and downs during the decades.
