"Investing to Win" IBD with David Ryan, Side A (1990)

An interview with David Ryan in 1990, William O'Neil protege, and US Stock Championship winner. Investor's Business Daily / CANSLIM 00:00 CHAMPION’S CRED • David Ryan – triple-crown U.S. Investing Championship winner with a 1,379 % three-year return. • Sets expectation that his tactics are teachable, not magic. 00:53 FIRST-STOCK REALITY CHECK • At 13, Ryan’s $1 “candy company” pick crashes in the 1974 bear market, teaching risk the hard way. Before any purchase, write down what edge the company truly has—if you can’t state it plainly, skip the trade. 03:56 START SMALL, COMPOUND BIG • You can begin with $500–$1,000 and add steadily—compounding is the engine. • Resist raiding the account for lifestyle splurges; let capital snowball. Set a fixed monthly auto-deposit into your brokerage or IRA and never interrupt the streak. “It’s amazing how that small amount of money can build itself into a very substantial amount.” 05:23 THINK LIKE A PARTNER • View shares as ownership in a five-to-ten-year growth story, not a six-month lottery ticket. • Ryan targets 25 % annual returns rather than “make a killing.” Write a one-paragraph business thesis for every holding and revisit it each quarter. “Too many people are looking at a short term and not really believing they’re buying a piece of this company.” 06:04 DISCOVERING THE CAN SLIM EDGE • Method born from William O’Neil’s study of the greatest winners of the past 30 years. • Focus on growth companies with measurable, repeatable traits. Keep a checklist—if a stock fails any CAN SLIM letter, it’s out. “We looked at these companies right before they made major moves and isolated all the characteristics.” 07:31 PROFITS THAT POWER (C & A) • Annual earnings growth ≥ 25 % for five straight years shows durability across cycles. • Last two quarterly earnings should also be ≥ 25 %, the higher the better. Screen for EPS growth streaks first; don’t rationalize one weak quarter. “If I can find a company with earnings up fifty, seventy-five, a hundred percent—that’s even stronger.” 08:59 SOMETHING NEW (N) • Seek new product, new service, or new price highs—anything that rewrites the story. • Circuit City example: early bet on surging VCR sales became a 10-bagger. Actionable Advice: Track industry adoption curves; buy the supplier or retailer riding the curve early. “That’s what you really want—something new that’s starting to get hot.” 10:37 BUY HIGH, SELL HIGHER • Flip the buy-low mindset: new-high breakouts face no overhead resistance. • Aim to capture the middle 50 % of the move, not every tick. Add an alert 1 % above a stock’s 52-week high; act on volume-backed breaks. “I buy high, but I sell even higher.” 13:04 SHARES THAT CAN SOAR (S) • Best winners often start with ≤ 30 million shares outstanding—lighter supply, faster moves. • Confirm demand via volume spikes ≥ 50 % above average. Actionable Advice: Sort watch-list by market cap and shares; give preference to the leanest float. “Look for companies that are small or medium-sized growth companies.” 14:58 LEADERSHIP & RELATIVE STRENGTH (L) • Buy stocks with Relative Strength ≥ 80, ideally 97-99. • Ensure the industry group itself sits in the market’s top quartile. Actionable Advice: Keep a weekly “RS ≥ 90, Top-50 Group” screen and focus fresh money there. “Most of the companies I’m buying are outperforming just about every stock in the market.” 17:15 COURTING THE BIG MONEY (I) • Mutual funds power 80 % of daily volume; you want them as partners, but not in excess. • Sweet spot: 1 %–25 % institutional ownership; above 30 % risks heavy supply later. Actionable Advice: Check fund ownership trends—rising quarter-over-quarter is a green flag. “Institutional sponsorship is good, but it’s the amount you have to keep an eye on.” 18:33 RIDE THE MARKET TREND (M) • Even perfect stocks sink in bear markets; monitor your own holdings for early tells. • Use simple tools: Dow vs. 200-day MA, momentum gauges, advance/decline breadth. Actionable Advice: When two of your leaders breach support, raise cash first—diagnose later. “What are my stocks doing? If they’re rolling over, that gives me the best clue.” 21:23 TIMING WITH CHARTS & EMOTION • Charts record collective fear and greed—patterns like cup-with-handle flag buy points. • Timing is at least 50 % of the game; CAN SLIM plus chart pattern = high-probability entry. Actionable Advice: Combine a one-year daily and five-year weekly chart; buy only when pattern + volume confirm. “Graphs reflect the actual decisions of investors—there are no opinions contained in charts.”