Nicolas Darvas
Encyclopedia
Nicolas Darvas was a world famous dancer, self-taught investor
and well-known author
.
by birth, Nicolas Darvas trained as an economist
at the University of Budapest. Reluctant to remain in Hungary
until either the Nazis or the Soviets
took over, he fled in June 1943 at the age of 23 with a forged exit visa and fifty pounds sterling to stave off hunger in Istanbul
, 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
.
In April 1953 Darvas and Julia appeared with Judy Garland and Bob Hope. By 1956, Darvas and Julia were touring the world. Picture of Julia Picture of Nicolas Darvas
His top 2 books which he had read almost every week were:
.
Darvas decides 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 long years since his first trade.
. 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 select a stock when it made a good advance on strong volume, with favourable fundamental
company research.
This method also showed Darvas 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
.
His famous stock selection method was called "BOX theory." He considered a stock price wave as a series of boxes. When the stock price was confined in a box, he waited. He bought when the price rose out of the box. He simultaneously set a stop-loss just under this trade price.
, 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 used to buy and sell stocks.
In a follow up, dated 13 January 1961 Time reported that the probe was blocked by the court, which ruled that the investigation by Attorney General Louis J Lefkowitz was an 'unwarranted invasion of the free press'.
Time also reported that state investigators admitted that they had not been able to track down all of the dancer's brokerage accounts.
Darvas called the charges false, a "cynically irresponsible action, book burning by publicity."
http://www.time.com/time/magazine/article/0,9171,873372,00.html
Darvas never sold short. As he states, "I have never done it myself because psychologically 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.". He realized that his system could easily be adapted to short selling.
In his last book, You Can Still Make It In the Market,. Darvas gives the rules for a method called Dar-Card.
** Out of print.
Investor
An investor is a party that makes an investment into one or more categories of assets --- equity, debt securities, real estate, currency, commodity, derivatives such as put and call options, etc...
and well-known author
Author
An author is broadly defined as "the person who originates or gives existence to anything" and that authorship determines responsibility for what is created. Narrowly defined, an author is the originator of any written work.-Legal significance:...
.
Escape from Hungary
HungarianKingdom of Hungary
The Kingdom of Hungary comprised present-day Hungary, Slovakia and Croatia , Transylvania , Carpatho Ruthenia , Vojvodina , Burgenland , and other smaller territories surrounding present-day Hungary's borders...
by birth, Nicolas Darvas trained as an economist
Economist
An economist is a professional in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy...
at the University of Budapest. Reluctant to remain in Hungary
Hungary
Hungary , officially the Republic of Hungary , is a landlocked country in Central Europe. It is situated in the Carpathian Basin and is bordered by Slovakia to the north, Ukraine and Romania to the east, Serbia and Croatia to the south, Slovenia to the southwest and Austria to the west. The...
until either the Nazis or the Soviets
Soviet Union
The Soviet Union , officially the Union of Soviet Socialist Republics , was a constitutionally socialist state that existed in Eurasia between 1922 and 1991....
took over, he fled in June 1943 at the age of 23 with a forged exit visa and fifty pounds sterling to stave off hunger in Istanbul
Istanbul
Istanbul , historically known as Byzantium and Constantinople , is the largest city of Turkey. Istanbul metropolitan province had 13.26 million people living in it as of December, 2010, which is 18% of Turkey's population and the 3rd largest metropolitan area in Europe after London and...
, Turkey
Turkey
Turkey , known officially as the Republic of Turkey , is a Eurasian country located in Western Asia and in East Thrace in Southeastern Europe...
. 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
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
and the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
.
In April 1953 Darvas and Julia appeared with Judy Garland and Bob Hope. By 1956, Darvas and Julia were touring the world. Picture of Julia Picture of Nicolas Darvas
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. He began his studies by reading the following:- 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:
- The Battle for Investment Survival, by Gerald M. LoebGerald M. LoebGerald Loeb was a founding partner of E.F. Hutton & Co., a renowned Wall Street trader, and the author of the books The Battle For Investment Survival and The Battle For Stock Market Profits. Loeb promoted a view of the market as too risky to hold stocks for the long term in contrast to well...
. Published in 1935. - Tape Reading and Market Tactics, by Humphrey Bancroft Neill. Published in 1931.
Darvas Profits
Darvas ploughed his money into a couple of stocks 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 profitProfit (economics)
In economics, the term profit has two related but distinct meanings. Normal profit represents the total opportunity costs of a venture to an entrepreneur or investor, whilst economic profit In economics, the term profit has two related but distinct meanings. Normal profit represents the total...
.
Darvas decides 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
Market trends
A market trend is a putative tendency of a financial market to move in a particular direction over time. These trends are classified as secular for long time frames, primary for medium time frames, and secondary for short time frames...
. In total, just 7 long years since his first trade.
Stock Selection
His main source of stock selection was from Barron's MagazineBarron's Magazine
Barron's is an American weekly newspaper covering U.S. financial information, market developments, and relevant statistics. Each issue provides a wrap-up of the previous week's market activity, news reports, and an informative outlook on the week to come....
. 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
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
. From now on Darvas would select a stock when it made a good advance on strong volume, with favourable fundamental
Fundamental analysis
Fundamental analysis of a business involves analyzing its financial statements and health, its management and competitive advantages, and its competitors and markets. When applied to futures and forex, it focuses on the overall state of the economy, interest rates, production, earnings, and...
company research.
This method also showed Darvas insights into a stock's price behaviour, often revealing the signs of ‘inside buying
Insider trading
Insider trading is the trading of a corporation's stock or other securities by individuals with potential access to non-public information about the company...
’ before a company's release of favourable news
News
News is the communication of selected information on current events which is presented by print, broadcast, Internet, or word of mouth to a third party or mass audience.- Etymology :...
to the public
Public
In public relations and communication science, publics are groups of individuals, and the public is the totality of such groupings. This is a different concept to the sociological concept of the Öffentlichkeit or public sphere. The concept of a public has also been defined in political science,...
.
His famous stock selection method was called "BOX theory." He considered a stock price wave as a series of boxes. When the stock price was confined in a box, he waited. He bought when the price rose out of the box. He simultaneously set a stop-loss just under this trade price.
Time Magazine
At the age of 39, after accumulating his fortune and also being exposed in Time magazine, 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 used to buy and sell stocks.
Attorney general
Time magazine subsequently reported that the New York Attorney General had 'thrown the book' at Darvas charging that his story was 'unqualifiedly false' and that it could find 'ascertainable' profits of only $216,000. The action was the first to be taken under a broadened state law that banned fraud or misrepresentation in giving investment advice.In a follow up, dated 13 January 1961 Time reported that the probe was blocked by the court, which ruled that the investigation by Attorney General Louis J Lefkowitz was an 'unwarranted invasion of the free press'.
Time also reported that state investigators admitted that they had not been able to track down all of the dancer's brokerage accounts.
Darvas called the charges false, a "cynically irresponsible action, book burning by publicity."
http://www.time.com/time/magazine/article/0,9171,873372,00.html
Bear Markets and Selling Short
He stated, "I keep out in a bear market and leave such exceptional stocks to those who don't mind risking their money against the market trend.".Darvas never sold short. As he states, "I have never done it myself because psychologically I am not cut out for short selling. But I think markets have now changed their character so much that all experienced investors should seriously consider it. It is not for the proverbial widows and orphans, though.". He realized that his system could easily be adapted to short selling.
Success Formula
In his third book, he states "Later, I went on to explore and become successful in other fields, the fashion industry, theatrical producing, real estate are just a few". Here he claims "the formula for success remains essentially the same." In the book he illustrates, "the rules to be followed." . "But one must know the correct route" .In his last book, You Can Still Make It In the Market,. Darvas gives the rules for a method called Dar-Card.
Complete books written by Darvas
- How I Made 2,000,000 in the Stock Market. Published in 1960 (hardcover). Available in French : "Comment j'ai gagné 2.000.000$ en Bourse" (softcover).
- 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) **. Republished on August 20, 2008; ISBN-10: 0982055676, ISBN-13: 978-0982055670
** Out of print.
Books Referencing Darvas
- How I Made Money Using the Nicolas Darvas System, by Steve Burns (August 17, 2010)
- 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)
- Mastering the Trade by John F. Carter (Dec 7, 2005)
- New York City Vaudeville (NY) (Images of America), by Anthony Slide (Jul 26, 2006)
- How to Make the Stock Market Make Money for You, by Ted Warren (Dec 1994)
- The Best: TradingMarkets.com Conversations With Top Traders, by Kevin N Marder (Sep 15, 2000)
- The Transformation of Wall Street: A History of the Securities and Exchange Commission and Modern Corporate Finance, by Joel Seligman (Jun 26, 2003)
- Protecting Your Wealth in Good Times and Bad, by Richard A. Ferri (April 18, 2003)
- Sixties Going on Seventies (Perspectives on the Sixties), by Nora Sayre (May 1996)
- Trend Trading: A Seven-step Approach to Success (Guppy Trading), by Daryl GuppyDaryl GuppyDaryl Guppy is an Australian financial columnist and author of books on stock market trading techniques. He has been a speaker at conferences and made appearances on finance programs on television. He invented Guppy Multiple Moving Averages which is included in the MetaStock and some other...
(May 28, 2004) - The Astute Investor (Second Edition), by Eric L. Prentis (Mar 27, 2006)
- The Perfect Speculator, by Brad Koteshwar (Jun 30, 2005)
- Swing Trading for Dummies, by Omar Bassal (2008)