Nicolas Darvas: How he made $2,000,000 writing a book
I like Nicolas Darvas’ book, How I Made $2,000,000 In The Stock Market, and I even recommend it to people - it’s on my book list. Basically it’s just a book about how to profit from trends, by a professional dancer. But I found some of the reviews on elitetrader very interesting:
“Not too long after Darvas’s book was published, a public inquiry was instigated by Louis Lefkowitz, then US Attorney General. The purpose of the inquiry was to ascertain the validity of the claims made by Darvas, given the influence the book was exerting over what could be a dangerously gullible public. The investigation strongly indicated that the overall claim of the book could be totally fictitious. There seemed to be considerable falsification by omission. While Darvas proudly wrote of the profitable trades he had made, the investigation revealed a number of loss-making trades made by Darvas which never appeared in the book. If the loss-making trades made by Darvas - which never appeared in the book - were deducted from the profit-making trades - which did appear in the book - it was difficult to see how Darvas had made 2 million dollars in the stock market … if he had made anything at all!
… After studying the findings of the Darvas investigation the Attorney General launched a criminal action against him, alleging that certain statements he had made were fraudulent. Darvas’s legal advisers countered with an action against the Attorney General and the United States for defamation of character. Lefkowitz decided the public interest would not be served by embarking on a long, tedious and complicated trial that was likely to give Darvas even more attention than he had already received. He therefore decided to drop the criminal action on condition that Darvas withdrew his action, giving an undertaking never to transact any type of securities dealings in the United States, or to become in any way involved in the US securities industry. Darvas agreed. He then left the United States to become an exile in Europe. Whether or not Darvas actually made 2 million dollars in the stock market has yet to be proved. It is a matter of public record, however, that he made several million dollars from the sale of his book. But by the time I met him in 1976 in the Dorchester Hotel in London, there was every indication that most of the royalties had been whittled away. There had certainly been no profitable share dealing using the `box system’. At the time, Darvas had very little to say about the stock market. By this time he was trying to make a personal comeback with a new book he was writing. It was called How to Be Your Own Doctor. We met on several occasions after that. The man fascinated me. l really wanted to know what made him tick! I’ve known several successful stock market operators over the years, all of whom shared certain characteristics. Darvas was a showman and a promoter of the highest order. But the qualities which comprise the successful stock market operator were nowhere to he found in my assessment of his character. A few months after our initial meeting Nicholas Darvas checked out of the Dorchester Hotel without leaving a forwarding address. It was to be several years before I heard the name again. The last occasion his name came up was the result of a telephone call I had from a firm of lawyers. It seems I have acquired a reputation as a central information bureau for every stock market operator coming in and out of London. The lawyers wanted to know if I could held them find Darvas. They had a bankruptcy petition against him. It was long overdue for service!”
Darvas’ book has very little (if anything) on risk management, so I wouldn’t be surprised if this were true. It is possible to make money from trends - but not without managing your risk.
