Nicolas Darvas (1920-1977) was born in Hungary and educated as an economist at the University of Budapest.
He was desperate to escape Hungary and in 1943 fled the country with forged paperwork and made it to Turkey. He teamed up with his sister and together they formed a dancing team performing in Europe and the USA.
In 1953 they appeared with Judy Garland and Bob Hope.
In his leisure time, Darvas liked to read - oftentimes 8 hours a day. His main (or maybe his only) interest at that time was the Stock Market. He reckoned to have read about 200 books on the subject.
Wow! He almost caught us up :)
Nicolas Darvas read and read about the markets. He couldn't get enough. He was obsessed with the whole concept.
One book that he read over and over - he must have read the print off the pages - was "The Battle For Investment Survival" by Gerald M. Loeb.
He must have seen something in that book that peeked his interest.
In between his dancing gigs he received informatiom from Barron's weekly. But because he was always on the road, the information was always a week old by the time he received it.
But that didn't worry him. In fact, he was only too happy to be away from the hustle and bustle of the markets. Maybe it helped him think clearer.
Nicolas Darvas had a "system" that he called his "Box Theory".
He eventually dipped his toes into the market and bought a couple of stocks which, in the Bull Market of the 50s went up. Then the stocks rose some more and he decided to take profits.
In just 18 months 1957-59, seven years since his first trade, he claimed to have made over $2,000,000.
During that period the S and P 500 Index rose 53%.
His stock selections were made from Barron's Weekly but due to his dancing commitments the publications were one week old before he acted on the information.
He claimed that his method showed signs of "insider trading" before a company issued the news publicly. He would select a stock that rose on strong volume and on good news.
Later, he devised a card system called the "DAR-CARD" that pictorily showed when he should be trading. See "You Can Still Make It In The Market" below.
Lesson 1: Darvas soon realised that he had to narrow down the number of stocks he could comfortably follow. He soon did this by focusing on a company's Fundamental points and its stock price fluctuations.
He knew that companies that had impressive earnings and growth their share price increased accordingly.
Lesson 2: He developed a system called his "Box System." It was nothing special, but he was the one that highlighted it. He noticed that stocks when being 'marked up" (see Stock Market Cycle) paused for breath on the way - into some kind of consolidation.
He called these 'boxes'. His knew the cycles of the Stock Market and that shares would experience this 'Mark Up' Phase before tooping out. But along the way they paused. Consolidating into these 'boxes'.
Lesson 3: When Darvas first started investing he was still contracted to his dancing, so is investing took secod stage. Which he believed was a good thing because he was well away from all the oise of the markets and "the crowd".
He was content to follow his methods of following price and volume. A mthod which many investors today still follow.
Lesson 4: Darvas liked to be flexible. He studied the markets using both Fundamental and Technical Analysis.
Warren Buffett uses purely Fundamental Analysis. We here at Common Sense Retirement Investing agree with Darvas - we use both kind of analysis.
To our mind, there's no right way or wrong way. The best way is the way that works for you.
Nicolas Darvas authored five books:
See below for details on the two we select:
How I Made $2,000,000 In The Stock Market by Nicolas Darvas
At the age of 39 and after Time Magazine ran an aricle against him he documented his experiences in this book.
Within the book he aptly describes his "Box System."
You obtain Darvis' book by clicking on the link below:
You Can Still Make It In The Market by Nicolas Darvas
In this book, Darvas introduces what he calls the "DAR-CARD".
It is a simple home-made card that diagramatically shows a share in an up-trend with Darvis' super-imposed Boxes. This is another one of Darvas' methods he used to reveal when to buy, when to sell, and when to hold.
Just click on the link below to order 'You Can Still Make It In The Market'
We admire people like Nicolas Darvas. He was unfortunate to be born in an Eastern European country at a bad time.
But he had the courage to avoid the Nazis and the Soviets and cleverly dodged the system.
He would probably have been good at anything he turned his hand to. HAs it was, he was also successful in the Fashion Industry, Theatrical Producing, Real Estate, and others.
Was there no end to this guys talents?
However, in 1960 there was one sour blemish on his character. Time Magazine ran an article that accused Darvas of fraud. They reckoned his claims of profits made could not be verified. So what!
His book: "How I Made $2,000,000 in The Stock Market" was a best seller and still sells well in today's market.
We give Nicolas Darvas our approval for his strength of character alone.