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

2.1. GAINING A FOOTHOLD IN THE BUSINESS

—Lao-tzu, Chinese philosopher (604 b.c.–531 b.c.), The Way of Lao-tzu

—A journey of a thousand miles begins with a single step.

I had always wanted to work for William O'Neil after learning that he and his protégé David Ryan had produced exceptional long-term investment track records that outperformed the markets over multiple market cycles. When I read William O'Neil's book, How to Make Money in Stocks back in 1989, it revolutionized my way of thinking about the market. O'Neil's hybrid method of applying both fundamental and technical analysis, as well as the "M" in CAN SLIM—a technique that enables one to stay on the right side of the market—resonated deeply within me.

So began my journey. From 1989 onward, I devoted many hours to the pursuit of making sense of the markets. In these early years, I created all sorts of econometric timing models based on a myriad of economic indicators that seemed to have predictive value. However, I later found that most of these indicators only worked over a period of less than 15 years; thus should markets change, these indicators would lose their ability to predict. I realized that studying 15 years worth of data was insufficient. Not surprisingly, in the years ahead, my market direction model kept returning to the purity of price/volume action of the major indices. As I developed my skills at reading charts, price/volume action in timing the markets eventually became the most important variable. I also ...