Nicholas Darvas put up with the market for what it was and realized that he could not do anything but wait for better times to come. However, during this time he constantly kept his eyes on the stocks.
He selected stocks based on his technical theory but only bought them if their fundamentals were right. This is how he reached his techno-fundamentalist theory.
He knew that he had to find companies that were coming up with something big. For example, automobile giants were once small companies and people who invested in them then made a lot of money. Hence, he decided to find small companies that had a bright future in the coming months or years. These were high velocity, expensive-but-cheap stocks, which means their prices were high but valuations were cheap.
He was now placed with 5 years of experience with lessons he got from his journey –
- The Canadian period trained him not to gamble.
- The Fundamentalist period taught him about industries, dividends, earnings, etc.
- The Technical period taught him how to analyze the price movement of the stocks.
Takeaway- The market does not care about one’s opinion. It's better not to waste our emotional and mental energy cheering on our stock.
Another thing a trader should overcome is their preference. To win in the market one has to really look at what the stock market is doing. It is not about what your opinion is; it is about what the market is doing.
The growth and expectations in earnings can indicate what to buy but the charts display when to buy it.