Customer Reviews

How I Made $2,000,000 in the Stock Market

5 star:		(43)
4 star:		(12)
3 star:		(1)
2 star:		(4)
1 star:		(3)

 

 

This book was interesting to read as a success story, however when it comes to points on how to invest in the stock market - it's almost useless. It seems that the guy was almost lucky to pick the stocks that skyrocketed. He describes the events very carefully, but when it comes to details on HOW he actually picked the stocks he fails to give up the most important information.

I shunned this book 10 years ago because of its title and its use of margin. Following the recommendation of Investors Business Daily I bought the book and started reading it. The author's experience of trading stocks echoed with mine sentence by sentence and I was totally absorbed. I admired his relentless pursuit of how the stock market actually worked and he finally figured it all out to make two million dollars. To create tremendous wealth you must concentrate on the best acting stocks in the market and use trailing stop loss orders. I am glad the author, a dancer, was willing to share a secret that Wall Street pros will trash but who made $2 millions? The book has already doubled my net worth and whoever follow these words of wisdom will become the millionaire next door!

A bookseller gave me a copy of Darvas' book with the comment "Read this if you get a chance--it almost seems possible". This book changed my life. I never had any interest in the stock market until I read this book. Darvas made every mistake but kept on and finally came up with a method of buying stocks that really works. This edition is great because it has a section at the end of the book entitled Questions and Answers that did not appear in the original hardback edition. By the way Darvas was Hungarian and he pronounced his name DAR-vash not DAR-vas. This is a must read.

The three reasons why this 40 year old book is still the most exciting stock market story ever told are: 1) Mr. Darvas's innate storytelling acumen, 2) his honesty about his hubris and gullibility, and 3) the happy ending, in which he hits the jackpot. Best of all, he wins because of his determination, not a fairy godmother. This book is a must-read for individuals considering managing their own money, but investors and speculators should beware that it was written strictly for your entertainment; Mr. Darvas makes no attempt to teach the reader how to achieve his enviable profits. For those who wish to try, do so at your own risk (I must confess: I am trying. Wish me luck!)

If one looks at the biggest winners of the past several decades, one finds that practically all show the same "chart behavior" that he writes about in his book. Learn from the past. A word of caution to value-oriented investors: This will probably be a waste of your time. But for the person who naturally gravitates to growth stocks, and who doesn't shy away from a stock due to its high valuation, this is second only to William J. O'Neil's "How to Make Money in Stocks" as the best book written on how to use charts to limit risk, yet expose yourself to each year's big winners.

The delightful thing about this book is the author's honesty, especially in the beginning, about how he made all the classic tyro errors. I also found the deterioration of his investment results when he had too much information to be very true, and this was in the pre-Internet age! I think if you read this book and no other, you can do well in the market, if only because you will keep it simple. So often people hold on to losing stocks, hoping and praying they will come back, whereas his approach mechanically and automatically forces you to cut your losses early. The charts in the back are very good despite their skimpiness, and illustrate how he would purchase a stock as it is making a new high out of a base (a "box," to use his terms). Very entertaining and inspirational.

This book details the trades of an investor/trader who turned a small stake into $2 million in 18 months. As with most successful investor/traders he survived years of failure before developing a system and the discipline to adhere to that system which would make him rich. This is NOT your typical "I get rich by selling the book" publication. This is real, and readable.

the theory of "boxes" was enunciated by jesse livermore in the book "reminiscences of a stock operator" about 40 yrs before darvas published his book. livermore used it in the early part of the 20th century to amass millions. darvas may have stumbled on the theory independently, and i believe such a methodology can work. my only reservation is that the book itself is written in the same way i would write a book if i wanted to create a fictional account of how i "made $2,000,000". there's just something about the organization of the book and the writing style that doesn't ring true. it's too "neat".

neverthless, the system is valid, and, although the author didn't use it this way, it can be used to short stocks in bear markets, too, by selling weak stocks as they fall through the bottom of their boxes and placing buy stops just above the tops of new boxes.

the book does a good job of describing the system. in reading some of the negative reviews, i believe these people haven't quite grasped what darvas was trying to say. but it is all here.

Nearly everything has a crude origin and, as time passes, becomes refined and developed. Mankind didn't start communicating by beaming an email to the other side of the country in a matter of seconds, rather, we used horse-bound messengers and slow-moving trains to make contact with others in distant places. Mankind didn't begin by driving to a restaurant and ordering a steak but rather, by going out and growing or hunting down food and cooking it over an open fire. Likewise, investors did not begin trading by typing a ticker symbol into a software program and picking a buy point on a bar chart based on well-established technical analysis patterns, rather, they bought stocks based solely on fundamental analysis.

After years of losing money in the market by taking others' advice and by using fundamental analysis as his sources for picking stocks, Nicolas Darvas developed technical analysis theories based on volume and price movement. Thanks to people like Darvas, who use their creative thoughts to question well-established principles when they believe them to be incorrect, traders now have a greater understanding of how to use technical analysis to make money.
In How I Made $2,000,000 in the Stock Market, Darvas describes how he would follow stocks and watch them bounce inside "boxes" of various shapes and sizes. Darvas would buy stocks as they were moving out of the top of their box and he would sell stocks if they fell out of the bottom of their box. Some of the other major lessons that Darvas learned during his journey to success include:

Only buy stocks that are in a consolidation, or better yet, focus only on stocks that are breaking out of a consolidation area.

Always place stop-loss orders just under the bottom of the consolidation area and use trailing stops to lock in swiftly made profits.

Develop your own successful system based on principles you know to be true and which you have confidence in.

When you find a system that you believe in and which is successful you should not allow others to influence you. Stick to your proven, successful plan and don't be influenced by others.

Traders should focus on only a few stocks. Darvas traded no more than 3 stocks at a time and his account was well over $1 million.

Volume spikes on up days indicate that there is a large interest in the company and that future advances are likely.

How I Made $2,000,000 in the Stock Market by Nicolas Darvas is an entertaining and thought-provoking book about how a man with no background in business (Davis was a professional ballroom dancer) used his own trading system based on technical analysis to turn $10,000 into more than $2 million by focusing on price action. This book is a great read for students of trading or for people who enjoy the burst of hope that often accompanies reading about the success of others.

As an older book for making money in the stock market, it is worth reading today for a few reasons. First, it reinforces the point that it is more important to avoid losses than to strive for gains. Darvas includes his rules for limiting losses. Second, this investing theory is oriented toward active, moving, growth stocks. With increasing volatility in the market, most stocks go through cycles, taking even many of the former value plays into a "growth cycle" arena for part of the year. Third, many people shy away from buying on margin, and maybe they should, but here is one philosophy for buying on margin that takes some of the risk out. This book would have been better if there were more details on what, how and when to do what is described. Other books since then have addressed these issues. One of the real problems that investors face is The Disbelief Stall: The idea that they won't really make money in the stock market. That leads to behaviors and bad decisions that reinforce that idea. Then based on those few experiences, they fall in to The Misconceptions Stall: That they may lose on each trade. That leads to The Procrastination Stall: Not getting out in time and incurring more losses. To learn more about these stalls that get in the way of being successful, you should also read THE 2,000 PERCENT SOLUTION. Books like HOW I MADE $2,000,000 IN THE STOCK MARKET, HOW TO MAKE MONEY IN STOCKS, and the new books on E-trading help to break The Communications Stall and explain what to do, how to do it, and which investing style is comfortable for you based on each individual's objectives. With the right information, you will find your 2,000 percent or $2,000,000 solutions!