How to Make Money in Stocks Review: Bill O'Neil's CAN SLIM Approach

The Method That Built Investor's Business Daily

William J. O'Neil's How to Make Money in Stocks (4th edition 2009) introduces the CAN SLIM method — a quantitative framework for identifying leading growth stocks. O'Neil founded Investor's Business Daily as a vehicle for delivering CAN SLIM analysis to retail investors. The book remains essential for active growth investors.

Short answer: Useful for active growth investors who want a systematic framework. CAN SLIM combines fundamental + technical analysis. Not for passive index investors. 7 letters, 7 criteria: specific and testable.

CAN SLIM Explained

C — Current Quarterly Earnings: At least 18-20% growth year-over-year

A — Annual Earnings Growth: 25%+ over last 3-5 years

N — New Products/Services/Management: Positive catalyst for new highs

S — Supply and Demand: Shares outstanding + institutional interest

L — Leader vs Laggard: Industry leaders only; relative strength 80+

I — Institutional Sponsorship: Well-respected institutions buying

M — Market Direction: Buy only in confirmed uptrends

A stock qualifies only if ALL 7 criteria are met. This narrows thousands of stocks to 10-30 candidates at any given time.

Why This Framework Works

Confirmation bias reduced: Systematic criteria force you to evaluate actual data, not narratives.

Growth focus: Captures leading stocks in bull markets (where most retail profits come from).

Risk management built-in: "Buy only in confirmed uptrends" (M) prevents buying during bear markets.

Testable: Back-testing is possible since criteria are specific.

What the Book Covers

• CAN SLIM detailed breakdown (each letter gets a chapter)
• Chart pattern recognition for entry timing
• Cup-with-handle pattern specifically
• Stop-loss discipline (8% rule)
• When to sell (complete profit targets + technical breakdown)
• How to build a watchlist

Who Should Read

Strong fit:

• Active growth stock pickers
• Investor's Business Daily subscribers
• Traders in 3-12 month holds
• Mid-cap and large-cap focused investors
• Post-college investors accumulating wealth

Less ideal:

• Passive index investors
• Day traders
• Deep value investors (opposing philosophy)
• Those uncomfortable with technical analysis

CAN SLIM in 2026

Some criteria have weakened:

• "New products" harder to identify in information-rich age
• "Institutional sponsorship" data less proprietary than 1988
• Market "leaders" harder to identify in sector-dispersed modern market

Core principles remain valid, but execution in 2026 requires more nuanced application.

Compared to Other Active Investing Books

CAN SLIM sits in growth stock territory alongside Fisher and Lynch.

Pros and Cons

Pros: CAN SLIM is specific and testable, combines fundamental + technical, founded IBD, 40+ year track record, clear buy/sell discipline, active trader focus

Cons: 2009 edition examples are dated, subscription to IBD helpful but adds cost, 8% stop-loss rule may feel too tight, market timing component requires judgment, doesn't apply to passive approaches

FAQ

Do I need an IBD subscription? Helpful but not required. Public resources exist.

Is CAN SLIM outdated? Core principles valid; specific execution requires adaptation.

Better than Intelligent Investor? Different approach. Graham = value. O'Neil = growth. Use both.

Works for small caps? Yes, but CAN SLIM tends to select mid/large caps.

O'Neil's fund track record? IBD portfolio strategies have outperformed S&P 500 over many years.

Best for what time horizon? 3-12 month holds typically. Not day trading.

Bottom Line

How to Make Money in Stocks is the CAN SLIM reference. For active growth investors, the method provides systematic criteria for identifying leading stocks. Not for passive investors.

Our rating: 4.4/5 — Docked for 2009 edition dating and heavy reliance on IBD ecosystem. Within growth stock picking category, leader.