- Paperback: 186 pages
- Publisher: Martino Publishing; 8.9.2011 edition (September 8, 2011)
- Language: English
- ISBN-10: 1614271690
- ISBN-13: 978-1614271697
- Product Dimensions: 6 x 0.5 x 9 inches
- Shipping Weight: 10.4 ounces (View shipping rates and policies)
- Average Customer Review: 442 customer reviews
- Amazon Best Sellers Rank: #25,677 in Books (See Top 100 in Books)
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How I Made $2,000,000 in the Stock Market Paperback – September 8, 2011
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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? Darvas is legendary, and with good reason. Find out why.
This product is manufactured on demand using CD-R recordable media. Amazon.com's standard return policy will apply. --This text refers to an out of print or unavailable edition of this title.
About the Author
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 Soviets took over, he fled at the age of 23 with a forged exit visa and fifty pounds sterling to stave off hunger in Istanbul, Turkey. During his off hours as a dancer, he read some 200 books on the market and the great speculators, spending as much as eight hours a day studying. Darvas invested 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 large profit. His main source of stock selection was Barron's Magazine. At the age of 39, after accumulating his fortune, Darvas documented his techniques 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. Darvas' book remains a classic stock market text to this day. --This text refers to an out of print or unavailable edition of this title.
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Top customer reviews
He first talks about just fundamentals and his go at that, but he says that even a stock that looks great from that standpoint can fall immediately and irreparably, as many of us have no doubt found to be the case. He then talks about technical analysis, combining price momentum and irregular volume, similar to those such as Mark Minervini and William O'Neil. Also similar to them is the fact that he clings to stop-losses to force him to sell; unlike them, he often keeps these stop-losses tighter than 8%, but then at other times can give over 10%, depending on the stock. Like them, he also tries to identify buy-points, but it sounds less like he believes it's an iron-clad "this is the exact buy-point" system. Instead he talks about boxes, which sound like small troughs or even bases within a tight range of between 5 and 15%. Also, similar to at least Minervini, every successful stock owned by Darvas had already increased at least 100% within the prior year (although he does not point this out--I noticed it--and it was never claimed to be part of his system, whereas Minervini himself points it out).
Lastly, as one reviewer pointed out, Darvas benefited from an option program that either does not occur anymore or certainly does not occur commonly, especially for someone not looking for it, and further, he embraced the margin. As I recall, margin has been embraced by O'Neil and Minervini, but many novice or cautious investors will not want to do that, even with capital-saving stop-losses. That is where the similarities end, though. O'Neil and Minervini go into much greater detail on earnings, earnings surprises, market direction, and numerous other things. Darvas seems to admit his focus on just a few small factors--namely, price momentum and rising volume. Beyond that, his tip is to not pay too much attention to your stocks or you'll freak out and do too much.
One thing that I do have to credit this book for, which Minervini did well but O'Neil has not in any book of his that I have read, is to give the confidence to use stop-losses right. The point here is that Darvas admitted that even when you do everything right, you may be stopped out of a stock even the same day as buying it, and then you may still want to buy it after that. With some, the mentality seems to be, "well, you're getting stopped out and you aren't very good, but you're at least limiting how bad you are, so that's something." Here, the mentality is more, "these things don't always work and your charge is to follow your system. If it rises, raise your stop in time. If it falls, then you're just following the rules. Good."
What I found most interesting were the seven years leading up to the point where Mr. Darvas struggled to find a system that worked for him. He stopped asking others for tips and advice. He stopped listening to the hype coming from Wall Street, and the media. He went against conventional investing wisdom. He quit studying the fundamentals. As none of these things provided Darvas with much success.
I was also surprised at how disciplined Darvas was at using stops, and cutting a losing position quickly. From the beginning Darvas did this. Taking a loss is something very hard for most traders / investors to do. Darvas, according to his book, never struggled much with this. I wish I could say the same from a personal standpoint.
What ultimately brought Mr. Darvas success was his method of honing in solely on price action, and holding these stocks that continued to make new highs. Using stops, and then trailing stops. He learned to be patient, and close his ears to the noise that surrounds the markets.
It also didn't hurt that in retrospect, while Mr. Darvas found great success, America was in one of the biggest bull markets in recorded history. Nonetheless, the man made bank and I say, good for him.
I recommend this book to any individual investor / trader who has a desire to succeed in the zero-sum game the markets provide those of us who wish to play.
It also points out the pitfalls that we all have when investing. "Why re-invent the wheel" when its already invented. Read the book and avoid the stupid mistakes that cost you money.