October 9, 2008
Interviews with Nicolas Darvas
Via zentrader.ca I found that solitarytrader posted links to a couple of fascinating interviews, one from 1959 and another from 1974, with Nicolas Darvas … here are my selected excerpts:
Pas de Dough (1959 Interview):
“Since he has to do trading from wherever he is dancing he ignores tips, financial stories and brokers’ letters, and has never been in a broker’s office. Basically, his approach is that of a chartist: he watches price and volume … When a stock makes a good advance on strong volume, he begins watching it, buys when he feels that informed buyers are getting in. For example, when he was playing in Calcutta, he noticed E. L. Bruce moving up in the stock tables. Suddenly, on 35,000 shares it moved from 16 to 50. He bought in at 51, though he knew nothing about the company, and ‘I didn’t care what they made.’ (They make hardwood flooring.) He sold out at 171 six weeks later.
Darvas places his buy orders for levels that he considers breakout points on the upside. At the same time, he places a stop-loss sell order just below his buy order, so that if the stock does not move straight up after he buys, he will be sold out and his loss cut. ‘I have no ego in the stock market,’ he says. ‘If I make a mistake I admit it immediately and get out fast.’ Darvas thinks his system is the height of conservatism … If he has a big profit in a stock, he puts the stop-loss order just below the level at which a sliding stock should meet support. He bought Universal Controls at 18, sold it at 83 on the way down after it had hit 102.
Darvas trained for the market just as methodically as he had studied his dancing, read some 200 books on the market and the great speculators, spent eight hours a day until saturated. Two of the books he rereads almost every week: Humphrey Neill’s Tape Reading and Market Tactics and G. M. Loeb’s The Battle for Investment Survival. He still spends about two hours a day on his stock tables.”
That line, “[He] buys when he feels that informed buyers are getting in,” made me chuckle. It should read “He buys when he suspects that uninformed fools are piling in.”
An Interview With Nicolas Darvas in 1974:
“Don’t forget I too went through a period of learning from 1953 to 1958 where I lost a substantial amount of capital before I worked out what worked and then was lucky enough to time it in the 1958-1960 bull market.”
I don’t remember him mentioning this “period of learning” in his $2,000,000 book, but it’s been a long time since I read it. Darvas, like Gann, was one of the few guys from the old days who stressed the importance of stop-losses.
October 9th, 2008 at 11:29 am
I really liked the book, too, but Darvas might have made more money selling it than he ever did from trading:
http://www.uglychart.com/2007/04/11/nicolas-darvas-how-he-made-2000000-writing-a-book/
Here is a short article about it from 1960:
http://www.time.com/time/magazine/article/0%2C9171%2C873372%2C00.html
October 9th, 2008 at 11:39 am
I read it about 10 years ago. I only remember Darvas used some sort of box method on his charts. A hedge fund manager I knew gave me a negative opinion of the book, so I never gave it much thought.
October 9th, 2008 at 3:28 pm
@Anthony: Think for yourself; you’re smarter than most of the dipshits running hedge funds. It’s an entertaining book if nothing else.
@Ugly: Thanks for the links… I’ll check them out. I have no problem with people who make $2MM trading and then write a book about it; I do have a problem with people who never traded writing books that make $2MM.
October 9th, 2008 at 7:45 pm
please don’t tell me there is not santa claus
October 10th, 2008 at 1:00 am
Please teach me how to make $2 milion in the stock market, please.
October 10th, 2008 at 4:17 am
start a stock market blog
October 10th, 2008 at 5:31 am
I read the book about a year ago and I remember that a significant portion of the beginning was about him losing money. In the book he actually says that he started out trading off of tips from others and he continually lost until he was forced to develop his own method…at least that’s what I remember.
October 10th, 2008 at 6:46 am
I should read the book but the part about “no ego in the market” I feel is very important to understand.
October 10th, 2008 at 10:01 am
@George: Thanks … I read it long ago and my memory is not as good as it used to be.
October 10th, 2008 at 3:07 pm
Ok Pete, but I will tell you there is no Mrs. Claus.
Darvas was an interesting character if nothing else, definitely a different lifestyle.
October 10th, 2008 at 11:55 pm
Any stock tips on how to make $2 mil? Mao please tell me what to buy and sell, I will give you commission if I win.
October 11th, 2008 at 3:02 am
help, you should look at MS. It’s a real winner. Here’s a nice chart. http://www.thelawyertrader.net/2008/10/morgan-stanley-on-death-watch.html