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The Nicholas Darvas US Stock Market Trading Success Story (part 11)

Another stock market saying that began to fascinate me was "Buy Cheap, Sell Dear." This sounded even better. But where could I buy something cheap for stock market trading? As I searched for a bargain, I discovered the over the counter market, the market of unlisted securities. I knew from my books that in order to get its stock listed for stock market trading on the stock exchange, a company has to observe very stringent financial regulations. I had read that this did not apply to over the counter stocks.

This stock market trading, therefore, seemed to me the perfect place to find a bargain. I naively believed that because these stocks were not listed, few people knew about them and I could buy them cheap. I hurriedly subscribed to a monthly booklet called Over-the-Counter Securities Review and started hunting.

I searched eagerly among the thousands and thousands of names for the stock market trading bargains that seemed to be offered. I bought stocks like PACIFIC AIRMOTIVE, COLLINS RADIO, GULF SULPHUR, DOMAN HELICOPTER, KENNAMETAL, TEKOIL CORPORATION and some of the more obscure ones. What I did not know was that when I came to offer them for sale, some of these stocks stuck to my fingers like tar. I found it very difficult getting rid of them - and rarely at anything like the price I paid for them.

Why? Because there was no rigid price discipline as there is for the listed securities; there were no specialists - professionals to assure a continuous and orderly market. There were no reports where one could see at what price a transaction took place. There were only the "Bid" and "Ask" prices from stock market trading. These, I discovered, were often very far apart. When I wanted to sell at 42, which was the quoted "Ask" price, I only found a buyer at 38, the quoted "Bid" price. I sometimes ended up stock market trading at 40 but that was by no means certain.

When I stumbled into the over the counter stock market trading market, all this was unknown to me. Fortunately, I quickly came to realize that this is a specialized field and is only lucrative for experts who really know something about the affairs of a particular company.

I decided to give it up, and returned my attention to listed securities. All this time, I never once questioned the truth of any Wall Street rumors. I had no way of knowing that they are just as ill-founded and dangerous as rumors in the Canadian or other stock market trading markets.

What I believed to be solid information, piped straight from Wall Street, had the most sensational lure for me. 

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