Wall Street: The Other Las Vegas
Nicholas Darvas shares his vision of Wall Street as a large casino. The book is split into 8 chapters where He goes deeper into this comparison.
First, Nicolas Darvas describes the Casino. The Casino of course is the Stock Exchange(s). This is where people are betting on the rise or fall of the stocks themselves. He says that people put money into the Stock Exchange with no real understanding of the value or price of stocks - or even that dividend pay outs for holding stocks long term can be so small as to make the investment useless.
This then leads to the second chapter where Nicolas Darvas identifies the Broker as the Casino Dealer. The Dealers makes their money from the constant buying and selling of stocks. Darvas says -
…one bit of advice which I didn’t hear from my friendly broker was: “Do nothing”. Get out of the market … Brokers and their Account Executives are, like casino operators and croupiers, necessarily in business to make money. And on Wall Street that means commissions.
So the brokers are always giving out advice - moving punters from one stock to another. Clipping the commission ticket.
Next, Nicolas Darvas describes the role of the Croupiers. These are the people who are running the markets. And here Darvas is referring to the NYSE and the AMEX. In this chapter there are anecdotes of Market Manipulation and Financial Malpractice. Here Darvas also describes the role of the Specialist in some detail.
Chapter 4 tells about what Nicolas Darvas calls the Touts. The Touts are the people drawing the investors into the market. They could be Brokers or Advisory Services - the latter providing ‘Tip’ services to seduce the public to buy certain stocks. Darvas talks about these people at some length in How I made $2,000,000 in the Stock Market and about how they were the cause of a great many of his losses - often providing contradictory and ambiguous advice.
Nicolas Darvas goes on to warn of entering the Stock Market unprepared and with an attitude of passisivity in chapter 5. Here He writes about people can take such a relaxed attitude to losing money on the Stock Market. He tries to reinforce constant vigilance and seriousness towards trading.
If you really enjoyed How I made $2,000,000 in the Stock Market then chapters 6 - 8 will probably be your favourites. At this end of the book, Nicolas Darvas goes into the details of his buying and selling methods.
His buying methods are encapsulated in his Box Theory - and there are several pages - with diagrams - that explain this in much greater detail than in How I made $2,000,000 in the Stock Market.
His selling method is basically the Stop Loss. Here again, there are several pages devoted to this topic. The main message though is one of Automatic Selling - but also how this method will get you out of the market before a Major Downturn.
Finally, there is a short chapter in which Darvas explain how he watches the market and how you really need to do the work yourself - and be accountable for your actions.
If How I made $2,000,000 in the Stock Market left you wanting to know more about Nicolas Darvas and a greater detail of his Stock Trading Methods, then you really should read this book.