Darvas Article revealing the true essence of successful speculation

[idaxtrader]

I believe the article in time magazine on Nicolas Darvas reveals the essence or key secret to successful trading. I thought we could play a little game since reading this short article could benefit all traders who read it. Please give your opinion as to what you think this key secret is. The point of all of this is that there are several core virtues that pertain to trading that are listed in the article. It would be interesting to see what people on this board think are the most important. Thank you in advance for your contribution to every ones education if you take the time to interact with this thread.

the official article can be found at: http://www.time.com/time/magazine/ar...865930,00.html

Here a cut and paste copy:

The lights go low at Manhattan's garish Latin Quarter nightclub. Onto the stage glides a slim-hipped, broad-shouldered man in white tie and tails. He grasps his partner, a stunning redhead in black tights, whirls her over his head on one arm, hurls her dramatically in a split-legged fall to the floor. The dance team is Nicholas Darvas and his half-sister, Julia, one of the top acts in the U.S. What the tired businessmen watching the show do not realize is that Hungarian-born Nicholas Darvas, 39, is a better money man than most of them; he is a top stock-market speculator who has parlayed his considerable weekly income ($3,500 currently) into a fortune of more than $2,000,000.

 

[dbphoenix]

Does the article happen to mention how much of the 2m was a result of the warrants Darvas purchased?

 

[Rhody Trader]

The link above doesn't seem to work, but this one might:

Pas de Dough - TIME

By the way, the article is from 1959. There's another one later on which seemingly blames Darvas for introducing stops to the public, causing market volatility.:

The Darvas Effect - TIME

 

[dbphoenix]

By the way, the article is from 1959. There's another one later on which seemingly blames Darvas for introducing stops to the public, causing market volatility.:

The public uses stops? . . .

 

[counter_violent]

The public uses stops? . . .

bus stops maybe !

 

[fibonelli]

".........As I noted at the beginning of this article, Darvas’s results cannot be easily duplicated. The reason is because of a Darvas idiosyncrasy he shared with Jesse Livermore. He was a plunger. He followed very few stocks and invested in even fewer. And when he did, he went whole hog and used margin, a dangerous prescription.

For example, after some initial successes had built up his capital position, he bought 500 shares of E.L. Bruce (makers of Bruce Hardwood Flooring which is still around today) at 50 ¾ . He bought another 500 shares at 51 1/8, another 500 at 51 ¾ another 500 at 52 ¾ and a final 500 shares at 53 5/8. He bought $130,687.55 worth of this one stock. It was his only holding and 50% of that was on margin. Plunger indeed!

Then Darvas got very lucky indeed. Unknown to the general public, Bruce was the subject of takeover negotiations. Short sellers, not knowing this, pooh-poohed the rise in price and start selling short. As the price continued to rise, the shorts were in a frenzy trying to sell and close their positions. Things got so crazy that trading in the stock was halted. The shorts scrambled to buy the stock over-the-counter privately. Darvas broker told him he could sell out for $100 a share. Then he did something most people would probably not have the guts to do. He told his broker no and hung on. The offers went up and eventually Darvas sold out all his Bruce at an average price of $171. He made a profit of $295,305.45.

Now that is a combination of skillful stock picking, high risk (by ignoring the usual advice of diversifying), guts and just plain good luck. So replicating Darvas would take a combination of guts and foolishness most people just do not have............".

Applying the Darvas Method

 

[dbphoenix]

So replicating Darvas would take a combination of guts and foolishness most people just do not have

Guts, foolishness, the aforementioned and not to be overlooked luck, plus a roaring bull market, one aspect of all this that too often goes unmentioned. The Dow tripled during the fities and doubled from "62 to '65. Then it went nowhere for nearly twenty years.

Which goes to show that the prudent trader heeds Will Rogers' advice:

Don't gamble. Take all your savings and buy some good stock and hold it til it goes up then sell it. If it don't go up, don't buy it.