In the following pages the AMERICAN RESEARCH COUNCIL presents a series of specially prepared charts of weekly prices and volume for the major stocks that netted Nicolas Darvas $2,000,000. While this amount was accumulated by Darvas in a little over 18 months, we have in­cluded the record for a full three-year period—1957 through 1959—to show the history of each stock's movements before and after, as well as during, the time that Darvas held it.

In addition, explanatory notes by our editors highlight the reasoning behind Darvas' choice of each stock, the timing of his buys, and his use of the trailing stop-loss—based on his techno-fundamentalist theory as explained in the text of the book.

The charts are arranged in the order in which the stocks are discussed in the book so that the reader may more easily follow the sequence of Darvas' transactions as they occurred.


Darvas asked for daily quotes on this stock after observing the sudden rise in volume at (A) when it "began to emerge from the swamp of sinking stocks like a beacon."

He bought his first 200 shares of lorillard at 27½(B) with the very narrow stop-loss of 26. A few days later a sudden drop (C) touched off this stop-loss and he was sold out.

The immediate rise, which followed, convinced Darvas that his first assessment was correct, and he bought his 200 shares again at 28¾ (D).

As the "boxes" piled up, Darvas bought another 400 shares at 35 and 36½ (E). The stock rose rapidly to a new high of 44⅜.

A sudden drop to a low of 36¾ on February 18th scared him into raising his stop-loss to 36. This was not touched off, and the stock picked up momentum immediately, so he pur­chased a final lot of 400 shares at 38⅝ (F)*

As lorillard continued its sensational rise in price and vol­ume, Darvas was strongly tempted to sell for a quick profit. But he adhered to one of the basic principles of his theory— "There is no reason to sell a rising stock"—and trailed his stop-loss at a safe distance behind the rise.

Except for the possibility that, with a very close stop-loss, he might have been sold out in June when there was a sudden drop to 53⅜, Darvas might easily have continued with lorillard on its phenomenal rise into the 80's at the end of the year.

However, in May he became extremely interested in the move­ments of another stock for which he would need all the capital he could get. It was for this reason that he sold his 1,000 shares of lorillard early in May at 57⅜ (G) for a substantial profit of $21,000. He was now ready to invest in e. l. bruce.


Although this stock had shown a rising price pattern in the first half of 1957, this rise was not marked by an accompanying increase in volume. It was only at (A), when after a 2-for-l split there was a sudden sharp jump in volume, that Darvas be­came seriously interested in diners’ club. He found that the company was a pioneer in a new field with a definite upward trend in earning power.

Satisfied on this "fundamental" point, he bought 500 shares at 24½ (B). As the stock continued to advance, he followed through with another 500 at 26 1/8within a few days (C). He watched complacently as the pattern of pyramiding "boxes" developed, accompanied by a tremendous rise in trading volume. As the price rose, so did his stop-loss—to 27, then to 31.

After reaching a new high of 40½, the stock suddenly seemed to Darvas to have "lost its will to rise. It looked as if its last pyramid would hesitate on the brink of going into reverse. It almost seemed ready to tumble." Fearing collapse, Darvas moved up his stop-loss to 3654.

In the fourth week of April, "the event against which I had insured myself occurred." diners' club took a dive and Darvas was sold out at (D), with a profit of over $10,000.

He had acted on purely technical grounds, completely un­aware at the time that American Express was about to enter the credit-card field in direct competition with diners' club. It was the successful timing of this operation that fully con­firmed for him the correctness of the technical side of his ap­proach.


At the time that he had all his funds invested in lorillard and diners' club, Daryas suddenly noticed (A) "a great in­terest springing up in a stock called E. L. bruce, a small Mem­phis firm". While it did not meet his qualifications as to funda­mentals, "the technical pattern was so compelling that I could not take my eyes off it".

A phenomenal rise from 18 to 50 was followed by a reaction to 43½, but to Darvas' trained eye this seemed "only a tempo­rary halt, a refueling". Despite the lack of a fundamental rea­son, he determined to buy as much as he could if it went over 50. Fully confident that the "rhythm of the advance was there", he sold out lorillard in order to have all his funds available for immediate investment in bruce.

Within a period of three weeks at the end of March, he bought a total of 2,500 shares at an average price of 52 (B).

His timing, as the chart shows, turned out to be perfect. bruce "began to climb as if drawn upwards by a magnet . . . It was spectacular". By the time the price reached 77 "it was obvious even in faraway India that something fantastic was happening on the American Stock Exchange".

The situation was indeed fantastic. Short-sellers operating on a "value" basis were desperately trying to cover their positions. Trading was suspended on the Exchange, but Darvas was offered $100 per share over-the-counter. It was then that he made "one of the most momentous decisions of my life". He refused to sell this "advancing stock". A few weeks later he received prices averaging 171 for a profit of $295,000.


"A little, unknown company called universal products" caught Darvas' eye in July 1958, after a sudden enormous spurt in volume (A) was accompanied by a price rise from below 30 into a 32-36 range.

In the beginning of August he made a cautious pilot buy of 300 shares at 35¼ (B). Two weeks later, as the stock began to "firm up", he purchased 1,200 shares at 36½ (C). Up it went, and days later he acquired 1,500 more at 40 (D).

Shortly afterwards, the company's name was changed to universal controls and the stock was split 2-for-l, so that he now had 6,000 shares.

In January 1959 Darvas landed in New York and embarked on a series of operations that came near to ruining him. Fortu­nately, universal controls performed beautifully during this period and gave him not a moment's concern.

But in March something began to happen to universal that "spelled trouble and trouble surely came". After a wild 3-week rocketing from 66to 102, "it switched its momentum and began to go in the other direction. I did not like the look of this drop at all. It fell as if in an air-pocket and there seemed no sign of a rise."

Darvas performed exactly as he had done with diners’ club in a similar situation. He raised his stop-loss to just below the last closing price and was sold out (E). His prices, ranging from 86¼ to 89¾, were more than 12 points below the high but he was "well content with this. There was no reason why I should be unhappy. I had had a good long ride and ... a profit of $409,000."


In Tokyo early in 1958, Darvas noticed sudden heavy trading in this stock following a 2-for-l split (A). It remained quiet for some months afterwards, but to Darvas this "tranquility" had the feeling of "a calm that precedes the storm".

Soon after Darvas started getting daily quotes, thiokol "looked as though it was flexing its muscles for an upward jump" from 45, and he made a pilot buy of 200 shares at 47¼ (B). For four weeks the stock kept pushing toward 50, and at (C), just as Darvas felt it was ready to break through, he bought 1,300 shares at 49⅞-

On the heels of this purchase came thiokol's issuance of stock rights. In an inspired series of transactions, which are fully explained in the text, Darvas took maximum advantage of the tremendous credit that is available when rights are exercised. Through the purchase of 72,000 rights (and the sale of his first 1,500 shares at 53½), he acquired 6,000 shares of thiokol stock at the subscription price of $42 per share (when the quoted price was in the middle 50's). His cash outlay was only $111,000 towards the total purchase price of $3 50,000.

Three months later (D) his broker wired him that he had a profit of $250,000 on his thiokol investment. As he walked, tormented with temptation, through the streets of Paris, "every fiber in my being seemed to be saying ‘sell, sell’ "—but he held on to the stock.

Of course, Darvas never for a moment forgot to move his stop-loss up as the stock rose, but with thiokol he allowed a greater leeway of movement so as not to risk being stopped out on a short-lived reaction such as did occur at (E). The rise which followed, and which continued after the 3-for-l split at the beginning of May, culminated in a high-point of 72 accompanied by such hectic trading that the N. Y. Stock Ex­change suspended the use of all automatic on-stop and stop-loss buy and sell orders for this stock. For Darvas this meant "they had taken my most powerful tool away, and I could not work without it". He sold his 18,000 split shares at an average price of 68 (F), for a total profit of $862,000. The momentous decision in Paris - "You have no reason to sell a rising stock" - had paid off.


After his sale of universal controls, Darvas "took a care­ful look at the market . . . for an actively traded, high-priced stock" in which to invest over a half-million dollars. With such a large sum involved, he had also to allow for the possibility that his buying might affect the market.

Except for some slightly erratic behavior at the end of 1958, texas instruments had been moving steadily upward for over a year, and the velocity of its advance had increased coincidentally with a marked rise in volume (A) in October.

Darvas bought 2,000 shares the second week in April (B) at an average price of 94⅜. The following week, "as the stock continued to act well", he acquired 1,500 more at 97⅞ (C). Within a few days he made a final purchase of 2,000 shares at an average of 101⅞ (D)•

On July 6th, texas instruments closed at 149½ (E), and it is at this point that Darvas takes off for Monte Carlo at the end of Chapter 10, with a new set of adjusted stop-losses waiting somewhere below the closing prices of his more than $2,250,000 worth of holdings.


The sale of thiokol left Darvas with an investment capital of over $1,000,000. Having decided to divide this into two parts, he narrowed his choice to four stocks, which he had been watch­ing for a long time and which were "all suitable as far as my techno-fundamentalist theory was concerned".

One of the stocks that survived a test buy to determine the relative market strength of the four was fairchild camera.

fairchild had been very stable in price throughout 1957 and most of 1958 despite two periods of tremendous increases in trading volume. But at the end of 1958 a new jump in volume (A) was complemented by a rapid and almost continuous rise in the price of the stock, at which point it became interesting to Darvas.

He made his pilot buy of 500 shares at 128 (B), when the stock had established itself in a ll0/140 box. Having removed the arbitrary 10% stop-loss, which was too close with respect to the lower limit of the box, he was unaffected by the low of 110¼ which occurred two weeks later. On the contrary, as the stock re-established its upward momentum almost immediately, he bought 4,000 additional shares at (C) for prices ranging from 123¼ to 127.

With his holdings of 4,500 shares of fairchild camera along with zenith radio and Texas instruments, Darvas was now in a position to sit "on the sidelines just keeping vigil while my stocks continued to climb steadily like well-made missiles". As of the end of this book, fairchild camera closed at 185 (D).


This is the second of the stocks into which Darvas switched the capital that thiokol had built for him, and it is quite dif­ferent from fairchild in its pattern prior to the time of this investment. Peak trading in zenith at the end of September 1958 was accompanied by an explosive price advance for this already volatile stock.

Darvas made his pilot buy at 104 (A) on a "when-issued" basis just after announcement of a 3-for-l split. As with fairchild, he dropped the arbitrary 10% stop-loss, which he had set up to eliminate the weakest of the four stocks, he was in­terested in. Had he kept it there, he would have been sold out the following week when zenith dropped to 93. However, as the price immediately started an upward move, he proceeded as planned and bought 5,000 shares at prices ranging from 99¾to 107½ (B).

zenith moved along nicely after that, and it is worth noting that though its progress was unspectacular compared to its pre-split rise, the "little" difference between his average buy price of 104 and the closing price of 124 (C) on July 6th, when the book ends, represented a profit for Darvas of more than $ 100,000.

When they were writing up these charts, our editors pointed out to Darvas that his purchase of zenith so late in its rise looked anticlimactic. He agreed and said, "By hindsight it seems to have been late in its rise—at the time it looked to me like the beginning of a new rise. After all, I only expect to be right half the time."

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