Actually, I think that interview might be phony. There are some strange inconsistencies in it. I think it was actually made up as a "what if" interview by the author.
Darvas methods?
- Thread starter grainmerchant
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It was definitely phony.
If you were trading at the time, you could recognize the many mistakes made by its author.
Any details?
I was surprised he said in the interview that he read Barron's every dag. It is a weekly. And Darvas knew that...
It would be fun to rehearse those days and how interesting it was to get a copy of his book. Sort of like parallel universes except I related more to the New Yorker, banking and the social interconnections with the head of the SEC and marketing at the leading US accounting firm and working for IBM which had 80% of the world market.
If you can get the version of the book by the American Research Council that was distributed to the trade (See verso of title page), there you see the notes and appendices the ARC developed to explain Darvas's actual trades. They are NOT Darvas's charts nor practices.
Darvas used a fundamental approach, primarily.
Thus he had tip offs of stocks that had high brokerage issued ratings (AAA throughDD).
he learned to trade stocks that replicated a V, P pattern that the public knows as "box trading".
The author of the "interview" suggested that weekly charts were involved for Darvas. This wasn't true. Darvas followed the financial news (daily information on volume and price) and knew the relationship of volume to price. The Appendix was produced and added by ARC as a handy dandy addition that followed taking 25K to 2 million.
All credit to Time magazine or doing its dilligence to produce the news of Darvas in 1959. More credit to ARC to get him to write it up.
As I remember the period, a person interested in making money could do no wrong. If you traded technically it was even more exciting.
At IBM the executive board met every last week of JAN and if the stock was nearing 80 they split it down to 20 in the beginning of FEB.
When I had occasion to call from IBM to TI, Ida Green would answer the phone then. We shipped our automated transistor assembly and test production line by DC 3 to TI so they could make all the transistors IBM needed.
In those days traders went through the WSJ to compare YDT H/L's. I went Z to A. Reading the index of the book which lists stocks is just the way it was then.
What happened then was very "unusual". trading and investing was a very narrow part of society. It was not hands on at all. No one "did it". But margin was 80% then. LOL.
I commented on Dunnigan a couple of day ago. He did "trap" and continuation" trades. Darvas did too but he based his ""box" on watching trap volume to take notice (the BO to point 2, for me) and then he traded the third move of a trend (point 3 to FTT) based on the next volume BO at the end of what is known today as a retrace ending.
So he sorted by fundamentals (did picking) and timed by volume after "proof" given to him by the first trough to peak volume (Dunnigan's trap). He didn't chart but he did use V and P relationship as espoused by Dodd/Granville.
It was all very very cool. Absolutely no one could believe it at the time. He also protected himself by using tools (the stop) which the general public did not even know existed.
Today, anyone can duplicate his work and do it at a faster pace.
I suppose that today it is still impossible to believe that picking on fundamentals and trading on volume is "impossible", "unbelievable" and "astonishing". Today's equivalent is doing 100 trades a year @ 10% a turn.
At that time I could have been called a "conspicuous consumer" or something. In Greenwich, it was sort of conventional to experct people of different age groups to do their thing at that age. By skipping ahead and more or less travelling in a different set, it led to constant comments on not playing by the rules. Making money was offensive in some ways. So it was true that Darvas took a lot of heat from a lot of people in parallel ways.
The "interview" is riddled with things not done and it totally omits what was really done and really exciting.
Jack,
Thank you.
I could like to know who made this interview with Darvas - og where it was published in 1974...
Thank you.
I could like to know who made this interview with Darvas - og where it was published in 1974...
Thank you, just21. But Darvas must still have been a rich man in 1976 since he could stay at Dorchester Hotel, one of the most expensive hotels in London.
We need a good writer who could research the life of Nicolas Darvas and write a book about him.
Yes, you're right. When he died in 1977, he had homes in Paris, London, and the South of France. He also spent his time in the U.S. living in some of the nicest hotels in New York, such as the Plaza. Not exactly the behavior of someone who had bottomed out.
That referenced excerpt which tries to paint Darvas in a negative light, to be fair, comes from a book where the author's motive is to essentially claim that nobody can really make money in the markets. I think that needs to be acknowledged. And frankly I find the claims troubling in light of the author's agenda and his vague reference to Darvas via claims of random individuals who said they had interactions with him, and not actual facts or records.
I'm actually fairly involved in chronicling the life and strategies of Nicolas Darvas. In particular, I recently made contact with one of his personal acquaintances who is still alive and well.
He told me that Darvas was actually a pretty frugal man. Yes, he had several homes and chose to live in grand hotels, but that was due to his preference to travel frequently, and not to be "showy" about his money.
Darvas, besides trading, also got heavily involved in real estate speculation and business ventures involving the theatre and fashion industries during the 60s and 70s. I understand that some of these deals and ventures were not particularly successful, but again, Darvas had by no means fallen on hard times as far as I've been able to find in my research.