Sunday, April 27, 2014

Success story : William O'Neil

(from IBD 4/25/14) William O'Neil built IBD's "10 Secrets To Success" as an action plan for anyone who wants to create a better life for oneself or for others.

Secret No. 1? "How You Think Is Everything." In other words, stay focused on success.

Secret No. 10: "Be Honest And Dependable; Take Responsibility."

Perhaps an 11th secret helps the chairman of Investor's Business Daily and continue to influence readers today:

No matter how big you've hit it, be modest. Stay humble.

Walk into his office at IBD's Los Angeles headquarters and you'll find it similar to the way it was 10 years ago, when IBD celebrated its 20th birthday.

The room is the same size as before, with barely enough space to house a conference table and shelves. Same metal desk. Same gray carpet. No mahogany paneling. No Impressionist or postmodernist paintings on the wall.

Instead, it features a portrait of a dog, front pages of IBD and a photo of O'Neil meeting President Reagan in the Oval Office in the 1980s.

In Touch

When a reporter recently asked O'Neil, "Outside starting IBD, what is the achievement you are most proud of?" the 81-year-old native of Oklahoma arched his eyebrows, breathed deeply and shrugged.

"I don't think of that, don't look at that very much," he replied. "I think starting a business is important because you've got the total freedom to start and create what you want. We've obviously created products that have helped a lot of people."

He added: "If you want to start a business, you've got to have some experience in the field. If you're going to be selling peanut butter or something, you better have some experience with peanut butter."

O'Neil never joins a conversation with an intention to boast. He publicly cares less about what success he's had and more about the organization's mission today: Make readers smarter investors.

"I think the stock market is complicated itself, and not very many people really understand how the stock market works," he said. "If you're going to invest in the stock market, you're going to make mistakes. The typical person doesn't want to buy and then turn around and sell it for a loss. To some extent, to be very successful in the market, you've got to do what you have to do, which means taking some profits and taking some losses."

O'Neil has done very well in a large number of stocks over the decades. In 1962, as a broker at Hayden Stone in Los Angeles, he made profits of more than $200,000 ($1.5 million in today's money) in a short play on discount department store chain Korvette, a long investment in Chrysler and a buy in Syntex, one of the first companies to cash in on the birth control pill.

That haul helped the graduate of Southern Methodist University start his own institutional stock research firm — William O'Neil + Co. — on Nov. 7, 1963. One of the company's early achievements: managing money for the Vatican.

Last year, O'Neil's research firm celebrated 50 years in the business. It remains a force in the world of institutional stock research.

He was one of the first people to use computers to collect vital information, and one of the first to place key information on fundamentals and buying trends by mutual funds and top money management firms right on the stock chart.

This simple innovation made his products stand out immediately.

"How did William O'Neil + Company survive and grow over 50 years? We concentrated on stocks, the one thing we know best," O'Neil wrote in the introduction to the book "50 Years of Independent Market Vision." "People asked me why I didn't buy bonds or commodities. The answer was simple: I didn't want to be distracted."

He added: "Just the concept of concentrating, seeing all the details, is important to innovation and being the best."
Twenty-one years after founding the securities company, O'Neil in 1984 launched Investor's Daily (later changed to its current name) with a mind toward building a new business and helping people use the same tools as top money managers to find stock market winners.

Today, IBD is more than a paper and a website. It hosts dozens of beginning-to-advanced-level workshops as well as its Leaderboard Summits to help investors of all levels, including money managers.
Awareness of IBD continues to grow. draws 30 million page views a month.

Long-Distance Applause

Brian Edwards, a former high school English teacher who moved to Southeast Asia to start an online toy manufacturing business, first met O'Neil during a two-day Level 4 Masters program workshop in Los Angeles in 2004.

An active growth investor, Edwards asked O'Neil about the paper's online direction and whether he felt overwhelmed by the changes sweeping the media industry.

"I was looking for insights. Bill's response was knowledgable and reassuring, down-to-earth, the meat-and-potatoes variety. I like meat and potatoes," Edwards told IBD. "Bill's investment approach is similar. He urges one to follow historically valid rules and not to get overwhelmed by emotion. He has found stability in an environment others find chaotic."

Does O'Neil ever take losses in stocks? Of course. One reason for his success in the market is the ability to consistently keep losses small, usually in the 3%-4% range.

He quickly learned the benefit of acting fast when you realize you have made a mistake.

In addition, early in his stock-investment career, O'Neil made a point to meet Gerald Loeb in New York. Loeb was making serious money as a stockbroker and wrote the investment classic "The Battle for Investment Survival."

In that book, he advised people to limit losses to 10% in any stock.

Loeb, a California native, went to Los Angeles and visited O'Neil, who recalls: "As he was leaving, I asked Loeb, 'Do you always sell every stock in trouble at 10%?' He said, 'I would hope to be out of them much quicker than that.'"

Onward In Oklahoma

Born in Oklahoma City, O'Neil moved with his family to Muskogee, roughly 40 miles southeast of Tulsa, when he was young.

His father had left the family by then, but O'Neil says his aunt motivated him to strive for success. She encouraged him to sell magazines to women in the neighborhood when he was in grade school.
O'Neil listened. Soon he landed a better-paying job on a newspaper route. He loved sports, particularly baseball, and worked hard to earn the extra $20 needed to buy a new glove or bat. After school, he hustled to finish his newspaper route so he could join baseball games.

"I was a pitcher. You're competing with nine batters all game long. You can do all right, then in the sixth inning, one of them beats you," said O'Neil, who also played the cornet. "I think I learned something from sports and a couple other activities."

O'Neil stresses that it's crucial to listen and learn from the very best in their respective fields.
The same philosophy applies to books. O'Neil once bought a library of investment books and found that most were junk. Only five or six really helped him learn how to make money in the stock market.

O'Neil himself has produced four editions of "How to Make Money in Stocks," a best-seller.

"Everyone and his brother have written a book on investing," he said. "Find out who is successful in a field, and if they've written a book, then the writing is from somebody who's been there, done that and been successful in that field. That, I think, is the whole key."

O'Neil is upbeat about the stock market's prospects over the next 30 years. "The country will grow and continue to grow as it's done in the past. You cannot hold human nature down," he said. "And you've got this freedom in the country, so there's a lot of opportunity. There will be new inventions, new developments, new companies. That I wouldn't worry about.

"You have this constant renewal of new products coming along, new services coming along, and a company does pretty well for a while. Then the company either gets too large to grow or is replaced by someone else. That's been going on for cycle after cycle after cycle."

O'Neil's Keys
  1. Bought a seat on the NYSE at age 29. Pioneered stock research with studies of fundamental, technical and institutional shareholding factors among greatest winners during bull markets over the past 130 years. Started IBD in 1984.
  2. Overcame: Skepticism by Wall Street and the mass-media industry, intense competition, multiple bear markets.
  3. Lessons: Choose carefully what you read and to whom you listen. Do not be afraid to learn. Correct mistakes quickly.
  4. "Yes, you have to listen to people, but half of the things that come to you are not perfect."

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