Most Helpful Customer Reviews
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238 of 267 people found the following review helpful:
5.0 out of 5 stars
It WORKS!!!, December 23, 2002
How did a world-famous dancer with no knowledge of the stock market, or of finance in general, make 2 million dollars in the stock market in 18 months starting with only $10,000? Well, first, he used margin.Second, he was a genius! Lucky thing is, YOU don't have to be one to read this highly entertaining, readable book and use the techniques which Darvas intuited, pioneered and refined. This is the book that stopped me from being terrified of the stock market. The method it uses is so sound and so brilliant that it reduces the risk of loss to an almost negligible level. And despite what some say, it works even in a bear market; in fact, Darvas made most of his money in a period that was historically considered to be a "baby bear" market. The difference is that, during a bull market, Darvas-worthy stocks show up ten times a week. During a bear market, one of these stocks may take six or eight months to show up. Why do I say it works? I've tried it. The almost shameful secret here is that it's like being an Inside Trader without an inside trader's information. You can still cash in, though. Darvas's system catches stocks that are - in most cases inexplicably and with no accompanying news - suddenly experiencing heavy buying, driving them up powerfully to challenge and break through previous highs. And why are these stocks doing this? Nobody knows. Why does a pharmaceutical company in business 13 years which has never been able to bring a drug to market, never made a profit, and is predicting worse earnings to come suddenly have people buying it more and more each day, its price running up steadily and strong, with absolutely no news out of the company? Who CARES? In fact, one of Darvass rules was to read absolutely NONE OF THE NEWS about the stock! The Darvas system just spots the stock as it climbs. If it breaks through that previous high, you will buy it along with all these other people you don't know. And when the stock continues to climb...in three weeks, and THEN the company announces it has just released an FDA-approved drug which is the strongest anti-influenza drug to ever hit the market and already has a distribution deal with Johnson & Johnson, you might understand. You might understand that a LOT of people knew something. They just weren't telling. Luckily, you didn't have to be one of them, nor did you have to be to enjoy the further $10-in-one-day jump it experienced the day the news broke. And if you followed Darvas' trailing stop-loss requirement, you automatically sold when it fell back down. This happened to me, and I've done it DOZENS of more times, though the climbs werent always that dramatic. Usually, you never find out what caused the surge. You just profit from it. Darvas himself likened it to being a silent partner with all those people in the know. One warning: you either understand what the system is by the way it's explained here, or you don't. To me it was as simple as pie, and with the Internet screening techniques available today (which Darvas didn't have in his early days - further proof of his true genius was his ability to make "mental charts" without looking at physical ones - abstract thinking characteristic of a very high IQ) these stocks can be found if they exist. But more people DON'T grasp the system than do. This is especially clear in the remarkably funny Q&A section at the end of the book where you find that people are entirely missing his concepts and he is almost at a total loss to explain what seems so obvious to him. This is not day trading. But neither is it long-term buy and hold. I think it hypocritical of Darvas to claim he was a long term investor - he was long term only as LONG as the stock stayed in its "box" or moved up into a new one. If it moved down, he was OUT OF THERE. That's NOT long term investing. It's smart investing. And Nicolas Darvas is my investing hero. He made all the mistakes that all of us make, and youll chuckle a lot as you watch him plod through all the mistakes youve already made or may be about to make. Then he hits on his system, makes a lot of money, gets very humanly egotistical and even arrogant about it, and almost loses it all as he gives in to overconfidence and the other very human emotions which are an investors worst enemy. Finally he learns to separate emotion out and leave discipline in. It is the only way to make this system work. Also, dont forget that this is a combination of technical AND fundamental investing stocks are located by technical signals, but are further analyzed fundamentally (if only to a minimal degree) before being considered as buy candidates. This book reads like a highly entertaining novel its hysterical when news of his success leaks out and TIME magazine sends three different sets of editors down to interview him and study his system before they finally decide he is for real and end up printing his story and putting him on the front cover. Which is what eventually lead to the demand for this must-have, must-read classic. Darvas is legendary, and with good reason. Find out why. P.S. Buying this book with How To Make Money In Stocks by William J. O'Neil is a perfect combination, as O'Neil, the founder of Investor's Business Daily, helps clarify, and builds on, Darvas's techniques, although - shame, shame - he doesn't give him credit.
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92 of 101 people found the following review helpful:
4.0 out of 5 stars
How Darvas Made $2,000,000 in 2 Years While Traveling the Globe., November 12, 2005
Nicolas Darvas wrote "How I Made $2,000,000 in the Stock Market" in 1960, shortly after he had made over $2,000,000 trading stocks in a little over 18 months. But the story starts in 1952, when Darvas, a ballroom dancer by profession, acquired his first stock in a Canadian mining company almost inadvertently. He sold it at a profit, and he was hooked. But Darvas knew nothing about the stock market. He learned everything the hard way, and that's what makes this book interesting. Darvas is a colorful, overbearing, but frank character, and he takes us through his quest to figure out how to make money in the stock market step by painful step.
Darvas divides his learning experience into 4 parts. At first he was "The Gambler", acting on tips and impulses. That failed. Then he got serious and became "The Fundamentalist", reading annual reports, listening to analysts, and investing accordingly. That failed. So he became "The Technician", developing his own method of anticipating a rise in stock price, which he called "box theory". He wasn't losing much money, but he wasn't making much either. Finally Darvas devised a method of predicting stock price movement that incorporated all of his hard-learned lessons. He became "The Techno-Fundamentalist". He selected stocks based on earning prospects for their sector, but bought the leaders in their sector only when price movement looked promising according to his box theory.
Nicolas Darvas comes to the same conclusions in "How I Made $2,000,000 in the Stock Market" that many other books on trading or short term investment have for nearly a century. He's a short term investor, not a trader, who advises you to: follow the trend in price movement, buy in pyramid fashion, cut losses quickly, never buy on tips or advice, and never try to sell at the top. He may as well be Gerald Loeb or Bernard Baruch in the 1930s. But a few things make this book interesting: Darvas failed a lot while he went through various investment philosophies that many aspiring investors can identify with. He created his "box theory" from scratch, which yields much the same information as tracking support and resistance on a candlestick chart. Best of all, his story is unusually entertaining. Darvas made most of his money while on a 2-year world tour with his dance act. He received stock information daily by telegram, in code, and communicated his orders to his brokers while on the move. His mysterious cables often aroused suspicions of espionage in foreign telegraph offices. I found the whole thing hilarious.
"How I Made $2,000,000 in the Stock Market" is only 129 pages long. Some additional material is included at the end of the book: Darvas tells the story of his 1959 interview with a "New York Times" reporter. There is a section containing examples, with comments, of the cables Darvas sent from far flung locations around the world. There are candlestick charts for the stocks from which Darvas profited the most. And there is a Q&A section in which Darvas answers the questions most commonly asked by his readers. The paper the book is printed on is super-cheap, and the text isn't centered properly on the pages. Not a quality publication, but it's readable.
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42 of 44 people found the following review helpful:
5.0 out of 5 stars
Books to read again and again. Not complete agreement w/IBD, February 5, 2002
By A Customer
I think this is an investing classic, for a few reasons:1. It's very readable.
The author describes his investing style as a narrative. It takes you through his investing evolution step-by-step, detailing his actual experiences. This made it very easy to follow, and also more real. 2. It emphasizes both technical and fundamental criteria.
This is critical to good investing. Both areas tell a story. This is the best book I've seen that details an investors journey through to discover that both matter, and integrate the two pictures. 3. It makes for a better system, in some ways, than Investor's Business Daily.
I noticed other reviews that noted the similarity between IBD and Darvas. While they are similar styles, there are some key differences. First, Darvas looks for companies that have a good high-growth STORY, but does not necessarily require the company to have high-growth earnings. He doesn't look at ROI, earnings growth rate, etc. (at least not in this book) The potential advantage of this approach over IBD is that sometimes stock prices reflect earnings potential BEFORE actual earnings show up. Alternatively, sometimes stock prices reflect perceived earnings declines BEFORE the actual decline in earnings. 4. His system makes sense from a technical standpoint, but is actually harder to do than you might think.
I like his system because it's technically sound. For example, it emphasizes taking small losses and being patient for large gains (among many other things). Don't be fooled, however . . . it's trickier to follow that you think. Not because his system doesn't work, but because it requires a lot more discipline that you might imagine. In his main year of gains, he records investing in only a few stocks. Also, he waits for a bull market. How many of us are really patient enough to do these two things. In reality, not many. It's just very difficult in practice. Also, he keeps an investing journal, something which I still struggle to do, but which is essential for growth. Most people can't do this on a daily basis. In all, it's a great book for the average investor to read and reread. I highly recommend it.
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