These are just some of the things O’Neil says an average investor can learn to make money like the pros. O’Neil believes because that’s just how he started.

O’Neil’s first venture into investing was a $300 outlay in Procter & Gamble stock, although he admits he did not make a lot of money on the deal. Still, his fascination with the stock market launched his career as a stockbroker in Los Angeles, where he studied the historical trends of the greatest stock market winners.

His analysis revealed seven performance characteristics that each leading stock had in common before any big price swings. Ultimately, his efforts paid off: O’Neil was the top-performing broker at the firm and boosted his investment portfolio by 2,000 percent in just 26 months.

NewsMax Media’s Barry Farber of Off-the-Record spoke with Bill O’Neil, who revealed his stance on brokers, what he really thinks of market media coverage, and when he believes the bear market will end.

Editor’s Note: NewsMax has a great offer: Get Bill O’Neil’s book "How to Make Money in Stocks" with the full Bill O’Neil interview tape “Off the Record with William O’Neil” FREE – just click here

NEWSMAX: You started investing in your 20s with that $300 in Procter & Gamble. What happened?

O’NEIL: I didn’t make much on that. I read a lot of investment books. Gerald Loeb’s "Battle for Investment Survival" helped guide me to cut all losses at 10 percent. You aren’t going to be right all the time, and you’ve got to have some kind of a sell plan if you make a mistake. The secret to doing well in the market is not to be right all the time, but to lose the least amount possible when you might be wrong.

NEWSMAX: You talk about how investors can empower themselves to start doing for themselves. But aren’t there experienced friends of investors, you know, we call them stockbrokers?

O’NEIL: The brokerage industry is a little bit of a sales process. It’s not that they’re unethical. They’re hardworking people, but over the years it has gravitated toward the firm’s research recommendations. The only way I figured out the market as a broker was to make some dumb mistakes.

NEWSMAX: What did you learn?

O’NEIL: For the last 30 to 40 years, if I’m down 7 or 8 percent from what I paid for something, I go out automatically. I don’t want to run the risk of losing 30, 40, 50 or 80 percent. You mentioned the brokerage industry. I think that people have to learn that they can’t just listen to anybody. They’ve got to learn to study on their own and know a little bit more about what they’re doing. It’s their money.

NEWSMAX: Have you ever received complaints or criticism that you took the audience backstage when you started Investor’s Business Daily?

O’NEIL: Not really. We’ve received an awful lot of letters from people saying that we saved their lives. About 30 percent of our customers made a huge amount of money in the late '90s, sold stocks and raised cash, and another 30 percent made some net positive progress. The rest of them didn’t pay close attention to what we repeatedly were telling them in 2000, and they probably got hurt like everybody else.

NEWSMAX: The database you started years ago can be labeled as bulletproof and pig-tight, but who says that anything that happens now is really based on the past?

O’NEIL: Historical stock market sages such as Jesse Livermore and Bernard Baruch both said that history repeats itself and there’s nothing new in the market. The market is human nature on parade, and human emotions, ego, opinions, hope, fear and pride keep being repeated.

The stock market is really crowd psychology. People don’t want to buy stock on the way up in price; they want to buy it on the way down because it looks cheaper.

The market tends to move contrary to how a normal, intelligent, educated, successful person thinks. They don’t want to take losses yet they never think about when is the wisest time to sell and take a profit or cut short a loss.

NEWSMAX: The media, which once ignored the market, can’t get enough of it today. How do you feel about the media’s market coverage?

O’NEIL: This is a tricky question because I don’t pay any attention to any of the shows on TV. When something is widely available, free to the masses, you’re probably going to make a lot of mistakes. Since the market tends to go in the opposite direction of what the majority of people think, I would say 95 percent of all these people you hear on TV shows are giving you their personal opinion. And personal opinions are almost always worthless … facts and markets are far more reliable.

NEWSMAX: Do you think the media taints the public’s perception of the market, which then affects the economy?

O’NEIL: The market is mainly determined by the big institutions, the big mutual funds, and what they are thinking and doing. The media doesn’t understand the market very well, plus there’s a lot of bias.

Numerous studies show that about 6 percent of reporters and editors voted Republican. There’s an enormous balance over on the other side, and the bias comes in when they just report on some issues and intentionally ignore others.

There’s a great deal of important news that never sees the light of day. Balanced reporting is what people need to see, if they’re to understand in full context the important issues.

NEWSMAX: What is Investor’s Business Daily’s editorial take on the President’s economic stimulus plan?

O’NEIL: What I like about it and what the paper likes about it is that it’s very broad. It affects every single taxpayer in every bracket.

The marriage penalty situation is being resolved. A huge amount is put into the consumer’s pocket to try to encourage consumer demand and consumer spending. There was also a little compassion and compromise shown where they were extending out the unemployment benefits.

It’s interesting, though, because six months ago a lot of people in Congress didn’t want this type of plan and thought we should rescind the tax cut plan President Bush get enacted in 2001. Now they’re on the opposite tract.

What’s interesting about it is that there are three, four or even five people running for president, and they all came up with their own proposals. So, now everybody is talking about whose plan do we use rather than “let’s rescind the earlier tax cuts passed.”

We need a bigger stimulus than normal, which the Bush plan has, because of all the problems we had in the bubble market in early 2000 that’s creating an economy that is going to take more time to recover than normal.

NEWSMAX: Anything the president should add to stimulate the economy even more?

O’NEIL: Focus on incentives to create more new small business owners. Small business creates 75 percent of our net new jobs. Let anyone who wants to start a new business that hires employees pay only half the normal capital gains on company stock they sell over the first 10 years. The average new company will create five jobs and individual taxpayers.

Over five years, you would get 1.5 million new jobs, and government would net 20 to 30 billion dollars in new business and individual taxes they would otherwise not receive. So, it makes money, rather than increasing deficit.

Also, 1,000 or more of the extra new firms created will go public over the next five years – creating badly needed new stock market investments to help the stock market recover.

NEWSMAX: What about investors – what should they do today?

O’NEIL: Learn to read stock charts to time your investments. Develop a set of selling rules. Look for stocks with excellent earnings. And have a logical plan.

The Investor’s Corner of Investor’s Business Daily explains how to do this. The methods provided in that column beat approximately 50 other systems, including those of Warren Buffet and Peter Lynch, according to a real-time study over the last five years conducted by the independent American Association of Individual Investors.

The public should realize that they have to sit down and do some studying. The investors who made 500 percent are the ones who picked up some of our investment books and read the books at least three or four times to develop the skills, write out prudent, realistic buy and sell rules and follow them.

NEWSMAX: What should a new investor get into? Mutual funds? Dow Jones top 30?

O’NEIL: It’s a matter of time and motivation. If you’re typical, you can learn to do it on your own, but if you don’t have the time, you don’t want to, you want to go into funds, it might be worthwhile just to look at an index fund and put so much money in each month.

Even with index funds off 30 percent or more, I would add a little bit more each month because the funds are diversified across a broad section of the market and will sooner or later recover.

NEWSMAX: Are there any particular sectors you like?

O’NEIL: The Internet is still a young baby, and even after the blow-up, there will be some companies with a sound business and an excellent, proven earnings record.

It’s a little early to tell about groups now because there’s been so much damage done in the market. It’s just gradually trying to recover. The stimulus package needs to get passed. Right now you have both parties with a vested interest in the economy doing better.

NEWSMAX: Do you have any interest in investment opportunities outside the United States?

O’NEIL: It is a world economy, but we are so far ahead of Europe and Japan and other countries. In Europe, they don’t even have a Nasdaq market that encourages young, new companies to be created. Japan is a great country, but they haven’t quite faced up to all those bad bank loans.

I don’t see any reason for somebody to invest in foreign stocks when you’ve got over 5,000 potential investments here. You can look for ones with a high return on equity, ones that have consistent earnings growth and a good profit margin that are leaders in their industry, that are acting a little bit better than the rest of the market.

I’ve never bought foreign stocks, and I’ve never bought bonds. Bonds can’t even keep up with inflation and taxes. Eventually, you’ll be able to invest part of your Social Security dollars in index funds, which will have a very positive effect on the future of Social Security and the American market.

NEWSMAX: Why are bonds so popular, then? They seem kind of dull.

O’NEIL: They are dull because it’s a place to hide if you’re concerned about the market. We tend to invest in the very best companies we can find, hold them as long as they’re behaving properly, and when we don’t like the market, we retreat and go into money market funds.

NEWSMAX: Did you ever keep score on how often your rules don’t work?

O’NEIL: Those rules are based on exactly how the market has worked each year for many years. The only problem with the rules is you might misinterpret them or forget to pay attention. People get into trouble when they ignore the rules.

For example, we have some rules on how you spot the top of a general market average, like the Dow or S&P 500. We look at how many days of distribution we see with heavy volume, higher than the day before, with the market giving ground. This has gotten us out of almost every top in a market reasonably early.

After you see five to six days over a period of two or 3 weeks, where there’s too much distribution, that market is going to come down. We tested this over 50 years, even applied it to the stock market of 1929, and it hit it right smack on the button four days off the peak in 1929.

NEWSMAX: When is the bear going to yawn, limp off stage and wave goodbye?

O’NEIL: You have to look at history. Look at the ’73-’74 bear market. The average stock were off by 75 percent. It was horrendous and lasted a long time. It took two to three years to really come out of it, even with the few small sharp stock rallies.

After World War II, in the late '40s, the market was sloppy, and it took about three years to snap out of it. After the Great Depression that started in the fall of 1929, it took two and three-quarters years to begin to recover, and it was a painfully slow process.

NEWSMAX: What if there was another catastrophic terrorist act in the U.S.? And what about the war’s effect on the economy and the anticipation of the war’s effect?

O’NEIL: Everybody has historically, always underestimated this country. They underestimate the strength and the resilience and the willpower of our people. We have freedom and opportunity, and I would not want to be the enemy on the other side, facing a bunch of our highly trained, better equipped Marines coming down into Baghdad.

There is a lingering fear from the aftermath of 9/11, and that’s a problem. But this country is sound and strong. An enemy who wants to come after us has got to be nuts.

NEWSMAX: If the American mood were an over-the-counter stock, how would you judge its performance since 9/11?

O’NEIL: If you go back to the Reagan era, and also look at George Bush today, they both have a deep belief in freedom and opportunity for all Americans, and their capacity. I think everybody underestimates it.

Look at Japan in 1941 after attacking us at Pearl Harbor. Six months later we sunk all their aircraft carriers, defeated their Navy, and doing it with our left hand as most of our military force and power was in Europe. The Japanese radically underestimated our capability … that, if you come after us, all of a sudden we will wake up and get organized.

I would not want to be an enemy facing that sort of strength and determination.

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