Page 929 - How to Make Money in Stocks Trilogy

178 HOW TO MAKE MONEY IN STOCKS SUCCESS STORIES

Charles Harris
Charles was a commercial real estate appraiser working toward his MAI
designation (Member of Appraisal Institute), but he was very unhappy with
the work and wanted to find a new career. He had always been interested in
the stock market, so when he saw a posting on the UCLA jobs board for
William O’Neil + Company, he decided to apply. Charles got a rejection let-
ter that thanked him for his application but said he wasn’t quite right for the
job. A few years later, William O’Neil + Company was looking for an MBA
to work as an analyst in the research department. Although Charles did not
have an MBA, he applied for the position anyway, and this time he pre-
vailed. At the time he was hired, Charles was primarily a value investor and
was “dabbling in the market and investing in low P/E stocks without much
success. I didn’t even know who Bill O’Neil was back then.”
Charles’ initial plan was to get his foot in the door, spend a year or two
getting some valuable work experience in the financial industry, and then
move on to a job as a securities analyst. Toward that end, he began pursuing
his CFA designation.
His responsibilities in the Research Department gave him access to stock
data and detailed reports of individual stocks prepared by securities analysts
from all of the major investment firms. Charles figured that with access to
these reports, he would be able to pick the very best stocks and make a
killing in the market: “When I read these reports that were so well
researched and so persuasive, I called my wife and told her, ‘We’re going to
be rich!’ Instead, I lost half of my money in about three months. I was very
naïve, but it taught me a very important lesson: Don’t rely on the opinions
of others. Do your own research, and come to your own conclusions.”
From September 1995 through the end of 1996, Charles didn’t have
much overall success with investing, despite trying to learn all that he could
about the CAN SLIM Investing System. Although he was able to pick some
winning stocks, he had a tendency to hold onto his losers far too long, and as
a result he lost money on a net basis.

Assess Your Trading Strengths and Weaknesses
So in December 1996, he sat down and had a serious discussion with him-
self. He contemplated, “Who am I as a trader? What are my strengths and
weaknesses? What are the basic rules that I must follow if I am to be suc-
cessful?” Charles wrote down a whole set of trading rules based on a post
analysis of his actual trades over the prior year, as well as the teachings of