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The Reminiscences of A Stock Operator

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Book title: Reminiscences of a stock operator 
Author: Edwin Lefevre
Year published: 1923 (reissue 2006)
Category: Stock trading experts (fictionalized biography)
 
Synopsis
First published in 1923, Reminiscences of a stock operator is the most widely read, highly recommended investment …

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How I Made $2,000,000 In The Stock Market

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Title: How I made $2,000,000 in the stock market

Author: Nicholas Darvas

Year published: 1960

Category: Stock Market Experts / Technical Analysis / fundamental analysis

Darvas

Synopsis

How did a world-famous dancer with no knowledge of the stock market, or of finance in general, make 2 million dollars in the stock market in 18 months starting with only $10,000? Darvas is legendary, and with good reason. Find out why.

 

Author

“Darvas studied economics at the University of Budapest and moved to the US in 1951. Darvas trained with his half-sister, Julia, to be a ballroom dancer, becoming extremely successful and touring the world by 1956. It was on a two-year tour of the world that he initially developed his ‘Darvas Box’ method of screening stocks – a method of picking stocks based on the stock’s price and volume – and later went on to refine this to remove any human element from his trading to substantial success. Nicolas Darvas is regarded as one of the best traders in the history of the market and his method, whilst complicated and difficult to master, has been rigorously tested and has been found to be one of the best trading systems yet developed.” Nichoals Darvas also wrote a few other books before he died in 1977.

 

Short summary

This book was written in 1960 when Nicholas Darvas had just made $2,000,000 in the stock market in about 18 months. The story for the book, which is an autobiography, starts in 1952 when Darvas received a stock as payment for a dance performance. He sold the stock at a profit and became very interested in the stock market, and the idea of getting rich from it. In 1952 Darvas barely knew what a stock was, and his books tells the story of his learning experiences. The book is divided into four different parts which represent his phases of learning. In Part 1 The Gambler, Darvas buys stocks based on tips and random impulses, and ends up failing. In Part 2 The Fundamentalist he starts studying annual rapports, industry rapports and speaking to analysts, but this approach also failed him. In Part 3 The Technician he develops his own method of technical analysis which he calls the box theory (basically prices move up and down within a “box” and can break through one “box” and move on to the next). With technical analysis he made some money, and lost some money, but no great performance. Eventually in Part 4 The Techno-Fundamentalist he finds a successful approach by combining technical analysis and fundamental analysis. He then starts making serious money, except for some temporary setbacks, all while travelling the world with his dance act. With regards to inflation, his actual profits were around $20,000,000 in today’s dollars, as opposed to the titles sum of $2,000,000.

 

Readability

“How I made $2,000,000 in the stock market” is very easy to read and understand. The book is written from Darvas’s own perspective and he has an informal style of writing. The book starts out with Darvas having no prerequisite knowledge about stocks or the stock market and Darvas simply explains everything he learned, how he learned it and what worked for him. The narrative style and very entertaining story makes it a perfect read for anyone.

 

Readability score: 10/10

 

Credibility

Although there has been some debate over whether Darvas’s story is 100% true, most people believe it to be so. The attempts that have been made to discredit his story have been unsuccessful. Darvas decided to write his book after being interviewed and portrayed in Time Magazine, which had heard rumors on Wall Street of both his success and incredible story. Along with Jesse Livermore and a few other “legends”, Darvas is probably one of the most quoted and referenced traders in the history of the stock market. He was also one of the first to combine fundamental and technical analysis in the way that he did, and in a way that has become very popular among today’s traders. These factors and more provides a high credibility to his book.

 

Credibility score: 9/10

 

Specific tips from the book

“My objective in the stock market: 1. Right stock 2. Right timing 3. Small losses 4. Big profits. I examined my weapons: 1. Price and volume 2. Box theory 3. Automatic buy-order 4. Stop-loss sell-order.” (From the book). The reasons why there are so many good and specific tips from this short book is because his technique is quite simple (although difficult to master), and because he describes each technique as he learns them and uses them. For example his own “Box theory”, is quite simply but thoroughly explained in theory and through practical examples. “48 – 52 – 50 – 55 – 51 – 50 – 53 – 52. It was now quite clearly establishing itself in its next box – the 50/55 box. The most important argument to why there are many specific tips in this book is the fact that one could develop a trading system solely based on Darvas’s methods described in this book. Whether this system would be as successful today as it was back then, and whether the individual trader is able to be disciplined enough to follow such a system, is another discussion.

 

Specific tips from the book score: 9/10

 

Learning potential

Since Darvas started out knowing nothing about stocks, the book takes you through his own learning experience. Since it is a quite short book, you will only get shorter overviews of what he learned in some instances, and more details in others. Nevertheless, the learning potential from this book for someone who is new to the markets is very good. For the experienced and the experts, Darvas presents an interesting perspective on things, and most likely also they will learn something new.

 

Learning potential score: 9/10

 

Inspirational?

A story of a man who went from not knowing what a stock was, to making $2,000,000 in the markets all while travelling the world with his primary job is quite logically both an interesting and very inspirational story. Darvas’s story is one of the underdog, the amateur and the man on the street, who beats the markets to the ground, and kicks it while it’s down. If you’ve hit a rough patch in the markets, his story will definitely motivate you to give it another try. If you’re interested in the markets, you will become even more interested. And even if you don’t like his methods or theories, you will most likely find the book very entertaining.

 

Inspirational score: 10/10

 

Total score

Readability: 10/10

Credibility: 9/10

Specific tips: 9/10

Learning potential: 9/10

Inspirational: 10/10

Total score: 9.4/10

How I Trade For a Living

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Title: How I trade For a Living
Author: Gary Smith
Year Published: 1999
Category: Stock trading experts & technical analysis (trading autobiography)
 
Synopsis
Master the Markets by Trading from Home!
How I trade for a living “Gary Smith deals in …

A Random Walk Down Wall Street

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Title: A random walk down wall street: The time tested strategy for successful investing
Author: Burton Gordon Malkiel
Year published: 1973 (11 new edition, as of 2012)
Category: Other (popularized market efficiency theory)
 
Synopsis
“Almost every list of must-read …

Warren Buffett Speaks

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Book title: Warren Buffett speaks – Wit and Wisdom from the world’s greatest investor
Author: Janet Lowe
Year published: 1997
Category: Stock trading experts
 
Synopsis
The world listens when Warren Buffet speaks.
“If people want to improve their investing skills, …

The Reminiscences of A Stock Operator

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Book title: Reminiscences of a stock operator 
Author: Edwin Lefevre
Year published: 1923 (reissue 2006)
Category: Stock trading experts (fictionalized biography)
 
Synopsis
First published in 1923, Reminiscences of a stock operator is the most widely read, highly recommended investment …

Stock Market Wizards

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Book title: Stock Market Wizards – Interviews with America’s top stock traders
Author: Jack D. Schwager
Year published: 2003
Category: Stock trading experts
 
Synopsis
“Average annual returns of 70%…90%…220%! Find out how the wizards outperform the market”
“Can you beat …

Technical analysis for dummies

 
Book Title: Technical analysis for dummies
Author: Barbara Rockefeller
Year Published: 2011
 

Technical Analysis

 
Book title: Technical analysis: The complete resource for financial market technicians (2nd edition)
Author: Charles Kirkpatrick II and Julie. R. Dahlquist
Year Published: 2010
 

The Stock Trader

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Book Title: The Stock Trader: How I make a living trading stocks
Author: Tony Oz
Year Published: 2000
Category: Day Trading
 

The Intelligent Investor

 
Book title: The intelligent Investor: The definite book on value investing
Author: Benjamin Graham
Year published: 2006