Recently, I joined Bloomberg’s Joe Weisenthal and Tracy Alloway on thier podcast, Odd Lots, to talk about Trading Places and the Turtles:
If you have any interest at all in finance, then it’s mandatory to have seen the 1983 movie “Trading Places.” You remember, right? Two wealthy Philadelphia commodity brokers bet on whether anyone, even down-and-out Eddie Murphy, can be trained to become a successful trader. What you might not realize is that something very similar happened in real life. In this week’s Odd Lots, we examine the amazing tale of the Turtle Traders. In 1983, successful commodities speculator Richard Dennis took out a full-page ad looking for novices to train in the art of trading. His novices — who did spectacularly well — studied for just a few weeks and were dubbed his “Turtles.” Joining us to tell the story is Michael Covel, who wrote a book on the Turtles, and Jerry Parker, a former Turtle who still trades using the same technique today.
Michael Covel talks about conversations he has had in the past 24 hours. Someone posted an equity curve of Bill Dunn against the S&P, and the criticism of the drawdowns began. They never talk about the S&P going down 50% twice in the past 13 years; they never talk about the NASDAQ going down 77%; they never talk about the NIKKEI going down 77%. It’s always “trend followers have drawdowns”. It’s like a broken record. It’s a surefire sign if someone starts telling you that they are either trying to push an agenda or they have no idea what they’re talking about. Trend following is the meat and potatoes. Don’t just trust Covel: look at the data. Next, Covel talks about advising people in their 20s against buying real estate. Many, many areas of real estate in the US that are underwater: are all of these people simpletons, dummies? Or did they get caught up in the greed and the fear of a bubble, and a black swan hit? Covel goes on to talk about black swans, zero interest rate policy, and bubbles (and why there is a way around it all). Next, Covel talks about nurture vs. nature. Of course, when he talks about nurture vs. nature, the Turtle story must be brought up. Covel plays two excerpts: one from NPR’s Planet Money and another called “Enroll Yourself In The Genius Factory”, which gets at the idea of how people develop talent. Covel discusses the peers of Richard Dennis; emotional intelligence; and trend following in the context of nurture vs. nature.
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