Nicolas Darvas was a renaissance man.

Literate as well as athletic, he was good at a wide range of activities.

He trained to be an economist at the University of Budapest.

He earned a living at occupations as disparate as creating crossword puzzles and sportswriting.

He played championship pingpong. He toured Europe and the U.S. as one of the world's highest paid ballroom dancers, book publisher Lyle Stuart noted in the preface of one of Darvas' works.

Darvas' most enduring feat was conquering Wall Street — in his spare time. Still dancing full time, he parlayed a $3,000 bet on a speculative Canadian mining stock into a series of investments that culminated in a $2.25 million portfolio.

That success earned him a profile in Time magazine.

His 1960 book "How I Made $2,000,000 in The Stock Market" was a best-seller. It still pops up on reading lists for investors.

Darvas' book is notable for its skepticism about Wall Street's conventional wisdom.

He wrote in a later book titled "Wall Street: The Other Las Vegas": "Wall Street is nothing more than a huge gambling casino, bristling with dealers, croupiers and touts on one side and winners and suckers on the other. . . . I had been a winner and was determined to stay one."

He stayed one through his discovery of a strategy based on patterns formed by stock share prices. It was a strategy that involved no recommendations from analysts or brokers, no hot tips, no financial stories.

Box Theory

The crux of his strategy was price and volume data.

Darvas (1920-77) developed what he called his box theory. As some stocks climb, their share prices stay within a range. Some break through the bottom of that range — or box — and are less likely to rally much soon. Others rise and set up a new, higher box.

As soon as a stock climbed to start a higher box, Darvas liked to buy.

Gradually, Darvas realized institutional support from big money on Wall Street helped keep top-performing stocks from falling out of their boxes.

What Darvas' strategy boiled down to was capitalizing on winning stocks' price gains.

That approach would be familiar to investors who use IBD's CAN SLIM technique and know the importance of charting stock patterns.

But his strategy was not nearly as comprehensive as CAN SLIM.

Darvas arrived at his technique through a mix of circumstance and trial and error.

Born in Hungary, he studied to be an economist at the University of Budapest. With the outbreak of World War II in 1939, he grew fearful of Nazis and communists vying for control of his country.

At age 23 with a forged visa and a little money, he fled to Turkey. Teaming with his half-sister Julia, they became one of the most popular professional dance duos in Europe and, later, the U.S.

In 1951 he came to the U.S. He trained diligently eight hours a day to hone his hoofer skills.

During downtime, he applied his dogged determination to learn about stocks. Soon he had read some 200 books on investing.

His first stock was offered to him in 1952 by two Toronto nightclub owners. The impresarios said they would pay him for a dancing engagement with 6,000 shares of Brilund, a Canadian mining firm. The stock then was worth 50 cents a share.

Darvas didn't take the Toronto gig. But to show goodwill, he bought their Brilund stock for $3,000.

He forgot about the stock until months later. He glanced at the stock's price in the paper. "I shot upright in my chair," he wrote in "How I Made." "My 50-cent Brilund stock was quoted at $1.90. I sold it at once and made a profit of close to $8,000."

Through a Canadian broker, Darvas bought 1,000 shares of a gold mining firm at $2.90. The following weeks it slid to $2.41. He sold.

Still, he began to buy a series of Canadian mining stocks. He acted on hunches, rumors, news about oil strikes. After seven months, he had lost about $3,000.

He tried to wean advice from advisory newsletters. He switched to a broker in New York. He tried more newsletters.

He plumbed the over-the-counter market for investments. When that didn't work, he switched to the Big Board. His hunt for winning stocks resembled hopscotch. He spotted companies with top earnings. He jumped to stocks paying big dividends. He leapt to industry leaders.

One was steel maker Jones & Laughlin. He raised money to buy shares by mortgaging his home and borrowing against an insurance policy. He asked the Latin Quarter nightclub in New York for an advance against his long-term contract.

He spent $52,652.30 for 1,000 shares.

But the stock dropped. He lost more than $9,000. "I was crushed, finished, destroyed," he wrote.

Depressed and facing bankruptcy, Darvas still spent hours daily studying newspaper stock tables. He spotted Texas Gulf Producing. He knew nothing about the company. All he saw was that its shares kept rising.

He bought 1,000 shares at 37 1/4. He watched it rise for five weeks. He sold at 43 1/4.

"The stock that saved me from disaster was one about which I knew nothing," he wrote. "I picked it for one reason only — it seemed to be rising."

Darvas battled to learn from his mistakes with his usual persistence. He was resolute about not clinging to what he once thought should work — but obviously did not.

After strenuous dance performances each night, he poured over stock tables. Now he ignored all of the factors he once thought were essential — everything from newsletters to fundamentals.

"Clutching at a straw, I decided to make an extensive study of individual stock movements," he wrote. "How do they act? What are the characteristics of their behavior? Is there any pattern in their fluctuations?"

He read more books. He inspected charts. He noticed that as stocks moved up, they traded within a range. Leading stocks moved up again, trading in a higher range. He called each range the stock's box.

When a stock pulls back within a box — but not falling out of it — that is often a sign it is about to vault into a higher box.

Set To Spring

"Before a dancer leaps into the air he goes into a crouch to set himself for the spring," Darvas wrote.

Once Darvas spotted a stock ready to make its move, he could tell his broker to buy at a certain price.

He did all this no matter where he was. In New York, he studied stock prices at a favorite table in the popular Oak Bar of the Plaza Hotel. Abroad, he stopped at U.S. embassies to read newspaper stock tables.

Darvas had detractors. Dubious about the box theory, New York's attorney general in 1960 called Darvas' book fraudulent advice, but later settled out of court, according to the Boston Globe.

Other critics said Darvas was simply a shrewd stock picker who benefited from price momentum.

Darvas urged investors not to chase shortcuts. He wrote: "I have discovered no loss-free Nirvana. . . . My method obviously wouldn't work for everyone. It worked for me. And, by studying what I did, I hope you find this book helpful and profitable for you."

BY PAUL KATZEFF