Investment experience 15.02.2022
William O’Neil – Founder of CANSLIM
He spent most of his life with the stock market and became an extremely successful researcher and consultant. And most of his research has great applicability, such as the CANSLIM Momentum Investment Method – In which he studied the past data of hundreds of rising strong stocks. CANSLIM helped the account managed by William O'Neil increase more than 20 times in the 26 months when he was at Hayden, Stone & Company.
CANSLIM involves the implementation of both technical analysis and fundamental analysis. The seven parts of the acronym are as follows:
C = Current Earning: O'Neil emphasizes the importance of selecting stocks whose earnings per share (EPS) in the most recent quarter have increased compared to the previous quarter's EPS, including attractive and steadily increasing EPS levels such as FPT, HPG stocks...
A = Annual Earning Increases: The letter A in the strategy says that a company should have a good annual earnings growth rate (annual EPS) over the last five years. For example HPG
N = News: which refers to the idea that a company should have continuing development and innovation. This is what allows the stock to emerge from a proper chart pattern and achieve a new price.
S = Supply and Demand: Stock prices change every day because of market forces. By this, we mean that share prices change because of supply and demand. The best way to estimate a stock's supply and demand is by following its daily trading volume. If a stock’s price falls down but the volume does not increase, indicating any significant selling pressure, conversely, when a stock’s price goes up and the volume gradually increases indicating the stock is being bought.
L = Leader or Laggard According to CANSLIM, an investor should compare the stock’s performance to its peers and competitors in the industry and check if it is leading the pack or lagging. In every industry, there are always leaders –stocks that provide shareholder value, while there are stocks that lag behind and have little value. Some leading stocks such as VNM, VCB, and HPG can be mentioned.
I = Institutional sponsorship which refers to the ownership of the stock by mutual funds, banks, and other large institutions. Investors will feel more secure to invest when the stocks that they buy also be bought by large organizations or reputable financial institutions. However, Investors should be aware of a large amount of stock is owned by many institutions, which can lead to conflict, or any bad news can lead to a sell-off situation. On the other hand, investors should also learn about the holding institutions, the heads of the organizations as well as the investment history of the institutions.
M = Market Direction which is an important factor determining the success or failure of an investment plan. Investors should know which market they are in, whether it is a Bull market or a Bear market. Please determine the market’s trend and the movement of stock lines to have an effective trading plan. |
According to William O’Neil, everyone can become a millionaire if we learn to save and invest properly. The advice that William J. O'Neil gives to his readers is "Be brave, be positive and never give up. Great opportunities appear every year. Let’s prepare, study, research, and seek them out. What you will find are seeds that can become great trees in the future with your perseverance and efforts, nothing is unattainable. You can do it and your determination to succeed is the most important factor in determining it.”
In the book "How To Make Money In Stocks", William O'Neil has conveyed a lot of investment experience, knowledge, and skills to readers. And one of them was his message about the main reasons why people miss out on the great stocks.
Following William J. O'Neil’s opinion, there are 4 reasons why investors miss out on great stocks:
First are distrust, fear, and ignorance. Most successful stocks are new companies (IPOs in the last 7 or 8 years). These are the engines that drive development, creating revolutionary new products and services as well as new technologies. The simplest way is to follow the price trends, trading volume, revenue, and earnings of all these “young” companies. |
|
P/E | The second is prejudice about P/E ratio numbers. In contrast to the traditional prejudices, the best stock is rarely sold at a lower P/E ratio. Just like the best players always have the highest salaries. Good companies always sell at high P/E. Using the P/E ratio numbers to make decisions will prevent you from buying the best stocks. |
Third, investors don't understand that the price movements of the leading stocks actually start from prices near peaks or at new highs, rather than near new lows or positions away from the tops. Investors often prefer to buy stocks that look cheap because they cost less than they did a few months ago and of course, they buy stocks on the way down. They think they've bought a bargain. But actually, what they should do is buy stocks that are on the way up, having just climbed to a new price peak after breaking out of a platform or a price-stabilizing area. | |
SELL | Fourth is selling out too soon because they want "washed out" or get early profits and then, they have to buy back because of regret. They often sell out too late, turning a small loss into a huge loss because they don't cut off when it hits 8% |
(According to nhipcaudautu)