How to Make Money in Stocks

By William J. O'Neil

• You should learn stock chart patterns, and one pattern especially
  • One of the most important to remember looks like a cup with a handle. In fact, that's its name:Cup with Handle. So, after rising for a period of time, a stock will often fall. As it falls, it sometimes makes a rounded, downward curve, which then becomes a steady, flat line. This is the base of the "cup."
  • This base is very important. Because, without a strong base of investors who believe in the stock, it could just collapse. But with this solid foundation, the stock will rise properly when its fortunes change. As it climbs upward, it will form the other side of the cup. Just then, it dips back again, and it will form the "handle." It's precisely atthatpoint that you should buy in. More times than not, the stock will shoot upward.
  • Whether the stock is Apple in the 2000s or Sea Containers in the 1970s, this trusty stock-market pattern has resulted in great rewards for investors over the decades.
• An increase in earnings is the most important quality in a good stock
• Innovative companies can make for a good return, but you need to know when to invest in them
• Supply and demand is an important factor in stock picking
• You should buy industry leaders
• You should look for stocks with institutional sponsorship
• You should keep a close eye on the general market direction