Fund or
affiliation
- One of the masters
of the turtles, with Bill Eckhardt.
Methodology
- Trend following
trading in commodities and futures based on both
systematic and discretionary methods.
Research Techniques
Employed
- He watches how the
market reacts to news to determine how well
defined is the trend.
- He respects Zweig as
an analyst.
Trading Techniques
Employed
- "What you
cannot afford to do is throw away your capital on
suboptimal trades. If you do, you will be too
debilitated to trade when the right position
comes along."
- He tends to weigh
the psychological, opinion-oriented segment of
trading about equal with the technical and
trend-following element.
- He might
deliberately trade a suboptimal parameter set
(for his system) because he thinks the future is
going to be unlike the past in a specific way.
[if the difference of the suboptimal is only 10%,
it is worth it]
- Be as short term or
as long term as you can stand, depending on your
style. The intermediate term picks up the the
vast majority of trend followers. The best
strategy is to avoid the middle like the plague.
Risk Control
Techniques Employed
- "... when you
have a destabilizing loss, get out, go home, take
a nap, do something, but put a little time
between that and your next decision."
- If he has a loss
after a week or two, then he knows he was clearly
wrong. But even if he is breaking even and a
significant time passed, he also considers
himself wrong.
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Philosophy
and beliefs
- One of the worst
mistakes a trader can make is to miss a major
profit opportunity.
- Dennis has a
philosophical disagreement with Bill Eckhardt
concerning whether the skills of a successful
trader could be reduced to a set of rules
[Dennis’ view] or whether there was
something ineffable, mystical, subjective, or
intuitive that made someone a good trader.
- One should expect
the unexpected in this business; expect the
extremes.
- Biggest public
fallacy about market behavior: the markets are
supposed to make sense.
- Fallacy regarding
T.A.: The belief that technical factors are not
as important as the fundamentals.
- Managing OPM offers
potential return with no risk. This allows him to
cut down his own risk and maintain the
profitability. But he changed his mind later
saying it is "more trouble than is
worth".
- He thinks that the
tremendous increase in computerized
trend-following results in the prevalence of
false breakouts. This is a victory of T.A. over
F.A., however, the T.A.’s own success
devalues T.A.
History and other
facts
- Founder of the
Roosevelt Center for American Policy Studies.
- Trained the 23
turtles to prove his philosophical point and
"It’s frightening how well it
worked." They dropped 3 people, the other 20
averaged about 100% per year.
- Thinks that Edwin
Lefevre’s "Reminiscences of a Stock
Operator" captures the feeling of trading
pretty well.
- Advises
"It’s a bit like playing golf: You can
throw your clubs around after making a bad shot,
but while you are making the next shot you should
keep your head down and your eye on the
ball."
Performance Record
- "In the summer
of 1970... with $1,600 borrowed from his
family... eventually transformed that tiny
stake... to appraoch $200M", J. Schwager
1989, MW pp 85. (Assuming from 1,600 to 180M in
19 years: 84% c.a.)
- 25% over 6 years:
"Each $1,000 invested would have been worth
$3,833 when the accounts were closed...
approximately a 25% annual compound...", J.
Schwager 1989, MW pp 115. (works out to be 6
years).
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