William J. O'Neil, founder of the financial newspaper Investor's Business Daily (IBD), developed an investment method called IBD based on decades of research data on the strongest growth stocks across multiple market cycles. This theoretical foundation was first presented in his 1988 book, *How To Make Money In Stocks*, a guide for many investors worldwide.

IBD revolves around four main pillars: fundamental analysis, technical analysis, market trend evaluation, and risk management. This system has been applied in Investor's Business Daily's analytical products since 1984.

William O'Neil - one of the legends of the investment world. Photo: William O'Neil & Co

Fundamental analysis: evaluating a company's solid foundation

Fundamental analysis helps investors assess a company's financial strength and growth potential through indicators such as profit, revenue, cash flow, profit margins, and return on investment.

O'Neil cautions investors to avoid "penny" stocks (low-priced stocks, often issued by small-cap companies with low liquidity). According to O'Neil, these companies often lack transparency, fail to focus on their core business, and pose many risks.

Determining trading timing using technical analysis

In addition to fundamentals, technical analysis helps determine appropriate buy and sell times through price charts and trading volume. According to O'Neil, strong growth stocks often form accumulation patterns such as "cup and handle" or "flat base" before rising in price.

Understanding charts also helps investors recognize institutional cash flow, market sentiment, and the laws of supply and demand.

Understanding the general market context

O'Neil believes that choosing the right stock is not enough; one must also assess whether the general market is favorable for investment. He developed the concept of "follow-through day" to identify when the market reverses from a downtrend to an uptrend and "distribution day" to detect signs of weakness.

DNSE provides business index analysis through Senses. Photo: DNSE

Risk management and the principle of stop-loss

Risk management is a core factor that helps investors maintain their position in the long term. O'Neil's prominent rule is to cut losses when a stock falls 7-8% from the purchase price to prevent small losses from becoming large ones.

In addition, realizing profits at the right time and building a balanced portfolio, including the weighting of each stock, volatility, and concentration, helps minimize overall risk. He also advises investors to regularly practice business analysis and study price patterns when participating in the stock market.

The IBD method is the result of decades of observation, experimentation, and experience by William J. O'Neil. This system is highly regarded by many investors because it combines both qualitative and quantitative aspects and is disciplined.

In Vietnam, to support investors with a comprehensive and quick view, securities companies are integrating analytical tools, market insights, and stock codes into their trading platforms. For instance, DNSE has developed Senses, a real-time business index analysis platform that helps investors easily track fundamental factors such as profits, cash flow, profit margins, and return on investment. These are the core indicators emphasized by William J. O'Neil's method in the stock screening process.

In addition, the company also integrates technical analysis, market trend alerts, and portfolio management through the virtual stock assistant Ensa in the form of a chatbot. Besides, DNSE's Investment Ideas feature is also an effective tool for investors, providing buy and sell recommendations vetted through a 4-layer filter and based on the principles and strategies of reputable investment advisors.

According to DNSE, these tools help bridge the gap between retail investors and methods proven in developed markets, step by step, simplifying the investment journey and attracting more investors to the market.

Anh Vu