Nicolas Darvas
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Nicolas Darvas is greatly known as an author, world famous dancer, and self-taught investor.
[edit] Escape from Hungary
Hungarian by birth, Nicolas Darvas trained as an economist at the University of Budapest. Reluctant to remain in Hungary until either the Nazis or the Russians took over, he fled at the age of 23 with a forged exit visa and fifty pounds sterling to stave off hunger in Constantinople, Turkey. Sometime later, he met up with Julia (his half-sister) who became his partner in a dancing team that was to become one of the most successful acts in Europe and the United States[1].
He never attended the University of Budapest. There is and was no such university. There is (and was) a University of Economics which no graduate called them " University of Budapest". Nicolas Darvas did not escape from Hungary from the Soviet occupitation, but he was warking as night club performer in Turkey and didn't return to Hungary. Julia his dance partner was not his half sister, but his wife.
[edit] First Stock Purchase
In the 1950's, after making a profit in some stock of a Canadian mining firm (which he bought from the proprietors of a Canadian dance venue), Darvas was hooked on chasing a quick buck in the Stock Market.
Like many before him, Darvas was convinced that having made an initial profit, he was some kind of natural born stock market speculator. However (again like many before him) Darvas took loss after loss on the Canadian stock market after buying in and out of the market on tips, rumors, and the advice of brokers and newsletters.
Telling himself that the Canadian Stock Market was for small fry, he changed course for the New York Stock Exchange. Here (again) he took loss after loss, buying in and out of the market on the advice of brokers and newsletters. Always seemingly buying at the high - then witnessing a sharp retracement - and selling at the low.
After 5-6 years of losses and sick of buying on the high and selling on the low, and in a fit of desperation, he did not give up.
[edit] Books Read Off Hours
During his off hours as a dancer, he had read some 200 books on the market and the great speculators, spent eight hours a day until saturated[2]. He began his studies by reading the following[3]:
- ABC of Investing, by R. C. Effinger.
- The Stock Market, by Dice & Eiteman.
- The Securities Market: And How It Works, by B. E. Schultz.
- Your Investments, by Leo Barnes.
- Profit In The Stock Market, by H. M. Gartley.
- Consistent Profits In The Stock Market, by Curtis Dahl.
- You Can Make Money In The Stock Market, by E. J. Mann.
His top 2 books which he had read almost every week were[4]:
- The Battle for Investment Survival, by Gerald M. Loeb. Published in 1935.
- Tape Reading and Market Tactics, by Humphrey Bancroft Neill. Published in 1931.
[edit] Darvas Profits
Darvas ploughed his money into a couple of stocks that that had been hitting their 52-week high. He was utterly surprised that the stocks continued to rise and subsequently sold them to make a rare profit.
Darvas decide to regroup to assess this remarkable occurrence. And it was here that Darvas came up with this approach and plan for trading stocks that was to see him achieve $2,450,000.00 fortune in just 18 months, during the 1957-58 bull market. In total, just 7 short years since his first trade.
[edit] Stock Selection
His main source of stock selection was from the Barron's Magazine[5]. The magazine was usually a week old edition since he was traveling throughout the world performing his dance troupe. He would use cables and telegrams to send his buy and sell stop orders to his broker in New York. From now on Darvas would execute his famous trading plan: selecting stocks with new 52-week highs and suitable spikes in volume coupled with favourable fundamental company research.
This method also showed Darvas remarkable insights into a stock's price behaviour, often revealing the signs of ‘inside buying’ before a company's release of favourable news to the public.
[edit] Time Magazine
At the age of 39, after accumulating his fortune and also being exposed in Time magazine[6] , Darvas was to document his actions in the book, How I Made 2,000,000 in the Stock Market. The book describes his unique "Box System", which he uses to buy and sell stocks.
[edit] View of Wall Street
In the mid 1960's after his second book Wall Street: The Other Las Vegas was published, it put him at the top of the most hated list of every stock broker in the country[7]. As he explains, "Wall Street is nothing more than a huge gambling casino, bristling with dealers, croupiers and touts on one side and winners and suckers on the other. I had been a winner and was determined to stay one". [8].
He learned to ignore tips, financial stories, and brokers' letters. And has never been in a broker's office.[9]
[edit] Bear Markets and Selling Short
There are times when he is out of the market. As he states, "I keep out in a bear market and leave such exceptional stocks to those who don't mind risking their money against the market trend."[10].
Darvas never sold short. As he states, "I have never done it myself because psyologically I am not cut out for short selling. But I think markets have now changed their character so much that all experienced investors should seriously consider it. It is not for the proverbial widows and orphans, though."[11]. He realized that his system could easily be adapted to short selling.
[edit] Maintains Apartments
Also during the 1960's, it was known that he left dancing, and devoted himself to the world of finance. To keep himself physically active, Mr Darvis maintained apartments at The Dorchester in London and the Hotel George V in Paris[12].
[edit] Success Formula
In his third book, he states "Later, I went on to explore and become successful in other fields, the fashion industry, theatrical producing, real estate are just a few". Here he claims "the formula for success remains essentially the same." In the book he illustrates, "the rules to be followed." [13]. "But one must know the correct route" [14].
As an international traveller, his heart belongs to Wall Street[15].
He never had an appartment in the London Hotel Dorchester. Time to time he stayed there. Same is with the Paris Hotel George V. When he was in Paris (seldom) they accomodated him in Hotel Apartment section. In New-York he made his residence at the Plaza Hotel. He was not succesful in other business. His "luck" in the real estate business was one single transaction. In the early 50-s he obtained an off the strip Las Vegas property, which he bought for in the low five figurs and sold that land in 1962 for high six figures. He was an alcoholic.
[edit] Death
Nicolas Darvas died in 1977[16].
[edit] Complete books written by Darvas
- How I Made 2,000,000 in the Stock Market. Published in 1960 (hardcover).
- Wall Street: The Other Las Vegas. Published in 1964 (hardcover).
- The Anatomy of Success. Published in 1965 (hardcover).**
- The Darvas System for Over-The-Counter Profits. Published in 1971 (hardcover).**
- You Can Still Make It in the Market. Published in 1977 (hardcover).**
** Out of print. He died as an alcoholic.
[edit] Personalities of Wall Street
See List of personalities associated with Wall Street.
[edit] References
- ^ (1971) The Darvas System for Over-The-Counter Profits, back cover.
- ^ (May 25, 1959) Time magazine, p. 85.
- ^ (1960) How I Made 2,000,000 in the Stock Market, chapter 1.
- ^ (May 25, 1959) Time magazine, p. 84-85.
- ^ (May 25, 1959) Time magazine, p. 85.
- ^ (May 25, 1959) Time magazine, p. 84-85.
- ^ (1971) The Darvas System for Over-The-Counter Profits, back cover.
- ^ (1971) Wall Street: The Other Las Vegas, p.12.
- ^ (May 25, 1959) Time magazine, p. 85.
- ^ (1977) You Can Still Make It in the Market, p. 126.
- ^ (1977) You Can Still Make It in the Market, p. 89.
- ^ (1971) The Darvas System for Over-The-Counter Profits, back cover.
- ^ (1965) The Anatomy of Success, p. xiv-xv.
- ^ (1965) The Anatomy of Success, p. xxvii.
- ^ (1971) The Darvas System for Over-The-Counter Profits, back cover.
- ^ (1978) You Can Still Make it in The Market(softcover), About the author.
[edit] Books Written About Darvas
Lessons from the Greatest Stock Traders of All Time, by John Boik (May 21, 2004)
How Legendary Traders Made Millions, by John Boik (March 23, 2006)
