At the beginning of December, when I saw that UNIVERSAL CONTROLS was behaving
correctly, I recommended the technical analysis commodities to my
secretary. I told him to buy it at 31 & three quarters. I said:
If the technical analysis commodities go below 30 take a loss and
sell it, otherwise hold it for a big rise. If you have to take a
loss I will cover it.
It so happened that his father was an old-fashioned, pure fundamentalist and
when he heard what I had suggested, he told his son not to be such
a fool. His argument was: What was the point of buying technical
analysis commodities if it might go down? He reckoned you should
only buy technical analysis commodities that was sure to rise -
as if anyone could be sure. He also said he wanted to examine the
books of the company to see if it was in good condition.
My secretary took his father's advice. He did not invest any money, but waited while the old man was carefully examining the books. While he was engrossed in this task the technical analysis commodities went up to 50.
Simultaneously with UNIVERSAL CONTROLS, I was watching other technical analysis commodities whose actions were fascinating to me. It was THIOKOL CHEMICAL.
There technical analysis commodities first attracted my attention in February 1958, when I was in Tokyo. It had just split 2-for-l and was the object of heavy trading before it quieted down into a 39/47 box. It stayed calmly in this area for several months.
As I regularly checked it in Barron's, this area of tranquility looked like a pond on a summer's day. But somehow I had the feeling it was a calm that precedes the storm. In March I cabled New York:
The technical analysis commodities quote duly arrived but, except for a few
weeks of short-lived flurry in April, nothing noteworthy happened.
After a few weeks I sent the following cable from Hong Kong:
"STOP THIOKOL QUOTES START QUOTING AGAIN IF RISES OVER 45"
"BUY 200 THIOKOL 47 & A QUARTER"
The order was executed at this price for a cost of $9,535.26. After that it took three weeks for THIOKOL to find its true dynamics. At the end of August I felt the moment had come. I cabled New York:
BUY 1300 THIOKOL 49 & A HALF ON STOP
A week later I received notice that Thiokol had decided to issue stock-rights.
These were given as bonuses to the holders of the technical analysis
commodities at the rate of one right per share. In turn, with 12
of these rights you could buy one share of THIOKOL at the special
price of $42. As the technical
analysis commodities was quoted over 50, this was cheap indeed
- if you wanted to exercise your stock-rights. If not, you could
sell them on the American Stock Exchange where they were listed
and traded for a limited period.
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
Read The Full Story Online And 100% Free For A Limited