A Lot Of Factors Can Influence The Current Stock Market

The Nicholas Darvas Current Stock Market Success Story (part 36)

The period that followed I spent like a runner limbering up for the race. Week after week, while I did not have any stock and the current stock market was in a steady downtrend, I followed the quotations in Barron's. I tried to detect those stocks that resisted the decline. I reasoned that if they could swim against the stream, they were the ones that would advance most rapidly when the current changed in the current stock market.
 
 After a while, when the first initial break in the current stock market wore off, my opportunity came. Certain stocks began to resist the downward trend. They still fell, but while the majority dropped easily, following the mood of the current stock market, these stocks gave ground grudgingly. I could almost feel their reluctance.
 
  On closer examination of the current stock market, I found the majority of these were companies whose earning trends pointed sharply upward. The conclusion was obvious: capital was flowing into these stocks, even in the current stock market. This capital was following earning improvements as a dog follows a scent. This discovery opened my eyes to a completely new perspective.
 
  I saw that it is true that stocks are the slaves of earning power. Consequently, I decided that while there may be many reasons behind any movement in the current stock market, I would look only for one: improving earning power or anticipation of it. To do that, I would marry my technical approach to the fundamental one. I would select stocks on their technical action in the current stock market, but I would only buy them when I could give improving earning power as my fundamental reason for doing so.
  
 This was how I arrived at my tecbno-fundamentalist theory, which I am still using today in the current stock market.
   
 As to the practical application, I decided to take a 20-year view of the current stock market. That did not mean I wanted to hold a stock for 20 years. Nothing was more contrary to my intentions. But I looked out for those stocks that were tied up with the future and where I could expect that revolutionary new products would sharply improve the company's earnings.
 
   Certain industries were obvious at once, like electronics, missiles, rocket fuels. They were rapidly-expanding, infant industries and, unless something unforeseen happened, their expansion should soon be reflected in the current stock market. From my research into the history of the current stock market, I knew that the basic principles governing stocks-of-the-future have always held good in Wall Street.
   
 In the years before automobiles, the smart operators went into railroads because they knew these would supersede the covered wagon and the stage coach. A generation or so later, the shrewd investors moved out of railroads into automobiles.
 
   Forward-looking, expanding companies like GENERAL MOTORS and CHRYSLER were comparatively small firms then. But they represented the future. People who bought into them at that time and stayed with them during their expansion period made a lot of money in the current stock market. Now these are well-established stocks. They are not for the forward-looking speculator.

 

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