William J. O’Neil

William J. O’Neil, born on March 25, 1933, is an American entrepreneur, stockbroker, and author, best known for founding the stock brokerage and financial research firm, William O’Neil & Co. Incorporated, and for developing the CAN SLIM investment strategy. Over several decades, O’Neil has significantly influenced retail and institutional investing, particularly through his publications and educational efforts.

Early Life and Education

O’Neil was born in Oklahoma City, Oklahoma. He pursued his higher education at Southern Methodist University, where he earned a Bachelor of Business Administration (B.B.A.) degree in 1955. With an early interest in finance and investing, his educational background laid a firm foundation for his future career.

The Genesis of William O’Neil & Co.

After a stint in the United States Air Force, O’Neil started his career as a stockbroker with Hayden, Stone & Co. Noticing inefficiencies in how stock market data was collected and analyzed, he was inspired to start his own company. In 1963, he founded William O’Neil & Co. Incorporated, an investment research firm that provided institutional investors with extensive stock market data and analysis.

Creation of CAN SLIM

One of O’Neil’s most significant contributions to investing is the development of the CAN SLIM investment strategy. This growth stock investing strategy is based on the study of the best-performing stocks over the past 50 years. The acronym CAN SLIM stands for:

C: Current Quarterly Earnings

The “C” in CAN SLIM stands for Current Quarterly Earnings. O’Neil emphasized that investors should focus on companies that have shown a significant increase in their quarterly earnings per share (EPS) compared to the same quarter in the prior year. Typically, an acceptable benchmark is an EPS growth of at least 25%, although higher percentages are preferred.

A: Annual Earnings Growth

The “A” stands for Annual Earnings Growth. In O’Neil’s analysis, companies that have demonstrated considerable annual earnings growth over the past three to five years are more likely to continue growing. A growth rate of at least 25% per year is generally considered a good benchmark.

N: New Products, Services, Management, or Highs

The “N” stands for New things. Whether it’s a new product or service, a new and innovative management team, or even a stock hitting new highs, companies that are breaking new ground often continue to outperform.

S: Supply and Demand

The “S” in CAN SLIM stands for Supply and Demand. O’Neil observed that the laws of supply and demand could also be applied to stocks. When fewer shares are available (low supply) and many people want to buy them (high demand), the stock price tends to go up.

L: Leader or Laggard

The “L” stands for Leader or Laggard. This criterion involves choosing the leading stocks within leading industries. Leaders often have stronger earnings growth, superior products or services, and more substantial market positions.

I: Institutional Sponsorship

The “I” stands for Institutional Sponsorship. Institutional investors like mutual funds, pension funds, and insurance companies often influence stock prices due to their large trading volumes. Stocks with strong institutional support tend to perform well.

M: Market Direction

Lastly, the “M” stands for Market Direction. Even the best stocks can falter in a bear market. Therefore, understanding the overall market trend is crucial for timing investments.

Influence Through Publications

O’Neil is also a prolific author. His most famous book, “How to Make Money in Stocks“, first published in 1988, has sold millions of copies worldwide and is considered an investing classic. The book elaborates on the CAN SLIM strategy and provides insights into O’Neil’s market philosophy, which combines both technical and fundamental analysis.

He is the founder of the financial newspaper, Investor’s Business Daily (IBD), first published in 1984. This publication aimed to compete with the Wall Street Journal and other financial dailies by providing actionable stock analysis, data, and market insights tailored to individual investors.

Legacy

William J. O’Neil’s impact on the investment community is immeasurable. His methodologies have been integrated into various financial technologies and are still in use by investors and traders around the world. His focus on data-driven analysis and the democratization of stock market information has left a lasting legacy.

Online Resources

For more detailed information, his company can be found at William O’Neil & Co. Incorporated.

In summary, William J. O’Neil’s methodical approach to understanding and investing in the stock market through his CAN SLIM strategy has profoundly shaped modern investment practices. His works, publications, and firms continue to educate and benefit investors globally.