Trade Like an O'Neil Disciple: How We Made 18,000% in the Stock Market

3.1. A ROCKY START TURNS GOLDEN

Despite the new market uptrend, I got off to a wretched start. By April 1995 I was down over 30 percent in my account, and the market had been in a "confirmed rally" that had been in force for nearly five months! I could see the river running before me, but every time I got into it with my boat it promptly tipped over, and I was starting to get frustrated. Fortunately for me, I tend to focus most when I am ticked off, and so I began working harder, going through my weekly printed Daily Graphs® books with an even more discerning eye. To this day I can still smell the fresh ink on those books when I used to go directly down to the O'Neil offices in Marina del Rey (where I would later be employed in 1997) to pick up my books every Saturday morning when they came off the press. To me, it was pure aromatherapy.

My intensified efforts were soon rewarded when I came across a company that was developing mpeg encoder, decoder, and codec products that enabled video to be compressed so that it could be viewed on computers and transmitted over the newly emerging Internet. At the time, this was a key enabling technology, and the company producing it was C-Cube Microsystems (CUBE) in 1995. At the time CUBE was showing three big quarters of earnings growth at 700 percent, 1,100 percent, and 375 percent, respectively. Sales were up 101 percent in the most recent quarter, and after-tax quarterly margins were at a peak of 18.6 percent. CUBE's return on equity was ...