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Main » 2014 » January » 06 » An Interview With Nicolas Darvas 1974
12:10 PM An Interview With Nicolas Darvas 1974 |
An Interview With Nicolas Darvas 1974 OK. After your amazing success in the late
1950s and after publishing How I Made $2 Million In The Stock Market how did
life change for you?NIC: It was an amazing period in my life. I went from
$25,000 which was everything I had at the time to a multi-millionaire in quite
short length of time. But I was amazed at the publicity I stirred up in Time
Magazine in 1959. I never knew there would be such a big interest in a solo
stock trader. Then the success of my book was another major accomplishment in my
life. It sold over 400,000 copies in the first year you know. Sure I was much
richer than I dreamed I ever would be by 1960 but my life never changed. I
carried on dancing and investing. I was able to buy more properties throughout
the world with my financial success. For that I was grateful. As a person it
never changed me one bit.Glad to hear it Nic. I got that impression. You seem a
very sincere down to earth guy. Do you think this attitude helped you succeed in
the stock market?NIC: Maybe its not for me to say. I never got too down about
losses. It never bothered me if I was out of the market for months at a time.
And because my system dictated when I got out of a winning stock I never got
anxious or excited about hose winners. Looking back, I suppose it was quite
remarkable how I could go from $25,000 to over $2 Million with such calmness.
Thats me. After the massive success in the late 1950s I took a portion of my
profits out of the stock market and invested in property. I felt there would be
no point of great success if I didnt see something tangible for it. After that I
felt like I was merely participating in a game. If I followed the rules I won
money. When I broke them I lost Parajumpers. My challenge was following the
rules.So you admit to still making mistakes in the stock market?NIC: Of course I
do. Its very hard not to try and cut corners even when its your own ultra money
making method. Occasionally I get swayed. Break the rules. Lose money. But it
isnt very often theses days. Whats the biggest question you always get asked
when traders find out you are Nicolas Darvas?Thats easy. Can I have your
autograph and can you borrow me some money.Ha,ha. Really?Nic: No. Just kidding
you. Hm.. the two most asked question I get? Lets think. They would probably
be..( To read the rest of this interview with Nicolas Darvas please email me at:
stressfreetrader@tiscali.co.ukBy Mark Crisp ©1)Have the markets changed?2)Will
you teach me how to trade?OK Nic can you answer those two questions for us?NIC:
Sure. First off Have the markets changed In short No. You see the markets are
simply human emotion reflected in $$s. People really need to get this into their
heads. Its not about logic. Company results. Mathematics but emotion. When
emotion and logic collide. Emotion will always come out ahead. The way I traded
in the 1950s and made such fantastic money was simply the same method Livermore
and Barauech traded before me. I traded the same way right the way through the
1960s and 1970s. And I am certain it will be the same going into the year 2000.
Its all about riding huge waves of emotion to the maximum. The big money is made
from these moves. Its crazy. But we are only human. But having said that whilst
the method does stay successful the mechanics of trading that method have and do
change. As more and more traders adopt one method of entering and exiting these
stocks the floor traders then see easy pickings as they fleece the crowd. My
entry in the 1950s bull market is slightly different to the one I now use in the
1970s. You simply see what stops working and then use what does work. To recap.
The main theory always stays true and always will be. The mechanics of trading
that theory will change from time to time.The second question: Will you teach me
how to trade?First off. No. I am not a teacher and it was never my intention to
teach people how to trade successfully in the stock market. But you have
everything you need in my three books to use my method. Thats basically all one
needs to use my method. Sure it takes time and effort to really understand how
to trade my way. But its all there.I know what you mean Nic. There are some
holes in your books I am dying to ask you about. May I?By Mark Crisp ©NIC: OK go
ahead.You say you never trade in a bear market. You only trade when the market
has the best chance of giving you a winning trade and that is a bull market. How
do you tell if the current market is a bull or a bear market?Nic: Oh thats
really tricky and complicated. Not really. I simply look at a weekly chart of
the averages over the past 6 months. If its generally going down its a bear
market. If its going sideways or up I look for my stocks. Its as simple as
that.Thats it? Ha,ha amazing. All those analysts spending hour after hour
studying all kinds of economic reports, trends, forecasts, etc and you simply
look at the weekly chart. Shouldnt they simply do the same?NIC: Probably. I too
gave to laugh at the way the markets work. Hey..they have to justify their jobs
somehow. And if means studying reports and writing forecasts good fro them.
Youll always find the simplest of methods work the best. This is why I have
never really studied fancy technical analysis. It simply doesnt make sense to
me.What do you mean by fancy technical analysis Nic?NIC; Well you see, to me my
method had to make sense. I had to be able to explain it to my partner (who
knows absolutely noting about stocks) and she had to grasp the reason why it
worked. In short it had to have a lot of common sense about it. My method was
simply looking for the most in demand stocks, in the best sectors in a market
Not GOING down. I would ride them as far as the ride would let me and exit when
it was over. Makes sense right? But if you ask many traders to explain their
method and straight away they mention Elliot Waves, Fib. Retracements, Cycles
etc my question is always So WHY should a stock go up because of this? I am
always left with a blank expression. They simply had no valid reason to trade
these stocks. It had no common sense reason to go up. And I found most
complicated technical analysis is like this. Great on theory short in common
sense. Traders are much better spending their time on managing them-selves and
managing their money than trying to find a new secret to the markets. Talking of
time. How long on average pr day do you spend managing your trading account?Nic:
I religiously read Barrons every day. Well not read it but scan through it and
from this I can see the trend of the overall market the leading sectors in that
market and the leading stocks. Thats about all I need to know. This takes about
10 minutes. If I am in the market I then look at the quotes for my individual
stocks to see if I need to move trailing stops. If I do I will wire my broker
with my new orders. This takes about another 10 minutes. Thats about it. By Mark
Crisp ©So on average you manage your multi-million dollar portfolio in 20
minutes a day? Most Mutual funds and some private investors will be shocked at
this. Can you explain why they spend 8 hours+ a day managing their portfolios?
NIC; Well it basically comes back to human psychology. A Mutual fund managing
many millions of dollars for one Mutual Funds simply do have the flexibility to
jump in and out of most the momentum stocks Peuterey outlet. This is the single
biggest advantage that most individual traders have over the large mutual
funds.You also have to realise the process that goes behind managing stocks in a
mutual fund. They cannot simply see a stock going up and buy it. They have to go
through a whole process of and meetings with the management, shareholders,
analysts. And this can mean buying a stock is a process that can take many
weeks. Under this time, the stock and wealth advanced 10, 15 20%+. This puts
them a huge disadvantage.I'm not dead against mutual funds at all are simply
believe a good individual trader can easily outperform in and wipe a 5%
management fees. When he can do much better by yourself.So to answer the
question, the answer is simply about five to 10 minutes a day. I think any
longer than this and it can actually be detrimental to your trading account.Nick
going through the book : How I Made 2 million in the Stock Market. It it's quite
obvious that you took some enormous risks early on in your trading career. I
mean, at one stage, you are trading your whole account, on 50% margin, and if I
had have gone wrong. It's safe to say, you probably wouldn't be the position you
are now. Some people might even call you a plunger and stock market got lucky.
What would you say is that, how would you answer those critics? NIC: Critics?
You are talking about my trade in E.L Bruce..right? What can I say? Sure maybe
in hindsight it was a bit a gamble but it sure paid off to the tune of $295,000
Everything seems so right at that time. The markets were strong. That stock
price and volume action was fantastic. I had made enormous profits in Lorillard
and Diners club just previous to this trade. I figured if I placed a tight
initial stop loss I would only be losing a small percentage of these profits.The
gamblers are the people who buy and hope. Sure I traded big but ONLY WHEN all
the right element pieced together. I could easily go months without a trade. I
even went 2 years without making a trade. I have no need to lose money in the
stock market trading any old stock. It either hits me right in the face as a
great trade or I ignore it. AND when I am wrong I get out with a small
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