Page 1022 - How to Make Money in Stocks Trilogy

The CAN SLIM Investment System 15
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The CAN SLIM Concept

CAN SLIM investing is based on two simple ideas:

• To find tomorrow’s big winners, look for stocks with the same traits past
winners had just before they launched their big runs.
• To know when it’s time to sell, look for the same warning signs these past
winners flashed when they eventually topped and began to decline.

What Does a Winning Stock Look Like
Before—and After—It Makes Its Big Move?
In the late 1950s, Bill O’Neil was a young broker who asked a simple ques-
tion: What common traits do the best stocks have before they make their big
price moves?
To find out, he began studying the biggest winners of all time. These were
stocks that went up 100%, 300% or much more very quickly, often in just
1 or 2 years.
These were the days before personal computers and the Internet, so Bill
covered his office walls and cabinets with charts and reams of data. He stud-
ied every available performance metric to see which ones truly mattered—
to see what characteristics and telltale signs these top-performing stocks
displayed just before they rocketed higher. He found:

The best stocks display seven common traits just before they make
their biggest gains.

Each letter in CAN SLIM stands for one of those traits, and they form the
basis of the rules you’ll find in the Buying Checklist.
Bill also studied what happens to leading stocks after they’ve had a big
run. Just as they share certain traits before they surge, they also flash simi-
lar warning signs as they top and begin to decline. Those signals form the
basis of the sell rules you’ll find in the Selling Checklist.

Over 130 Years of Market History
The study O’Neil launched in the 1960s continues to this day and now cov-
ers every market cycle and top-performing stock from 1880 to the present.
Whether it’s Bethlehem Steel in 1914, Xerox in 1963, Google and Apple
in 2004, Priceline.com in 2010, SolarWinds in 2011, or 3D Systems in 2012,