Did your original job at William O'Neil & Co. involve any market analysis? No, but once I was in, I just started studying and studying.
On your own time, I take it Yes. I would take stuff home every night and on weekends.
What kind of things were you studying? I would go over our charts. I studied the company's past recommendations. I studied historical models of
great winning stocks to ingrain in my mind what a stock looked like before it made a major move. I tried to get to the
point where I was looking at the exact same things O'Neil did. He was my role model.
Were you trading at this time? Yes, I opened a $20,000 account shortly after I started working for the company [1982].
How did you do? Initially, I ran the account up to about $52,000 by June 1983. Then I gave it all back, including some of my
starting capital. By mid-1984, my account was down to $16,000.
Do you know what you did wrong? Yes. I sat down and studied every mistake that I had made from June 1983 through the middle of 1984.
Probably my biggest mistake was that even though we were in a moderate bear market—the Dow came down from
1,296 to 1,078—I continued to play as aggressively as I had during the bull market from August 1982 through June
1983.1 also made the mistake of buying stocks that were overextended. By that I mean I was buying stocks that had
already moved 15 to 20 percent above their price bases. You should only buy stocks that are within a few percent of
their base; otherwise, the risk is too great.
I turned it around by learning from all the mistakes that I had made. In late 1984,1 sold a piece of real estate
I owned and put all the money in a stock account.
Were you confident, despite your poor performance during mid-1983 to mid-1984, because you felt that you had figured out what you were doing wrong? Yes, because I had studied very hard and was determined to be disciplined, I thought I was going to do very
well. So in 19851 entered the U.S. Investing Championship. I won the stock division that year with a 161 percent
return, I reentered the contest in subsequent years and substantially exceeded 100 percent returns in 1986 and 1987
as well. I was doing the exact same thing over and over again. I was buying stocks when they had all the
characteristics I liked.
