After my frightening experience with JONES & LAUGHLIN, and my more fortunate
stock market predictions experience with TEXAS GULF PRODUCING, I
sat down to assess my position. By now I had been scared and beaten
by the market enough to appreciate that I should not regard the
stock market as a mysterious machine from which, if I were lucky,
fortunes could be extracted like the jackpot in a slot machine.
I realized that although there is an element of chance in all stock
market predictions, I could not base my operations on luck.
I could be lucky once, maybe twice - but not constantly in my stock
No, this was not for me. I must rely on knowledge. I must learn
how to operate in the market. Could I win at bridge without knowing
the rules? Or in a chess game without knowing how to answer my opponent's
moves? In the same way, how?
And so I started. First I examined my past experiences. On one hand, using the fundamental approach, I was wrong. On the other hand, using the technical approach, I was right. Obviously the best method was to try to repeat the successful approach I had used with my TEXAS GULF PRODUCING STOCK MARKET PREDICTIONS.
It was not easy. I sat with my stock market predictions for hours each evening, trying to find another stock like it. Then one day I noticed a stock called M & M WOOD WORKING. None of the financial information services could tell me anything much about it. My broker had never heard of it. Yet I remained obstinately interested because its daily action reminded me of TEXAS GULF PRODUCING. I started to watch it more carefully than my other stock market predictions.
In December 1955 the stock rose from about 15 to 23 & five eighths at the year end. After a five-week lull, its trading volume increased and its price resumed its advance. I decided to buy 500 shares at 26 & five eighths. It continued to rise and I held on, watching its movement intently. It kept moving upward and its volume of trading was consistently high. When it reached 33,1 sold it and took a profit of $2,866.62.
I was happy and excited - not so much because of the money but simply because I had bought M & M WOOD WORKING, as I had bought TEXAS GULF PRODUCING, purely on the basis of its action in the market unlike my other stock market predictions. I knew nothing about it nor could I find out very much. Yet I assumed from its continuing rise and high volume that some people knew a lot more about it than I did.
This is one of my stock market predictions that proved to be correct. After
I had sold it, I found out from the newspaper that the steady rise
had been due to a merger, which was being secretly negotiated. It
was eventually revealed that another company planned to take over
M & M WOOD WORKING for $35 a share, and this offer was accepted.
This also meant that although I was in complete ignorance about
the behind-the-scene deal, I had only sold out 2 points under the
high. I was fascinated to realize that my buying, based purely on
the stock's behavior, enabled me to profit from a proposed merger
without knowing anything about it. I was an insider without actually
being one. This proved much more successful than my other stock
article is actually only a small snippet of Nicolas
Original Method Of Nicolas Darvas... The Young Dancer
Turned Investor Who, Within 18 Months, Turned $25,000
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