The Complete TurtleTrader
Page 25
Her speech reinforced everything my research had uncovered about the Turtles, their training and their beliefs, but I could not get close to her after her speech. So why wouldn’t she grant an interview? For one Cheval was never a fan of TurtleTrader.com. She apparently did not like the fact that anyone beyond a “Turtle” could possibly profit from the word “Turtle” (that faulty logic would eliminate just about every member of the media and/or biographer from writing on any subject of any kind). But her push back never really made any sense given that my depiction of the Turtles for all these years was very positive.
There were a few possible reasons that might explain her reluctance. Cheval’s first-year 1984 Turtle performance of -20.98% is missing from her current-day performance track record. It was actually Turtle Jeff Gordon who noted the omission in passing during his interview. It was clear that once Cheval began trading for clients in 1988 her track record started with her 1985 performance of +51.65%, not that negative first year.
But as book research neared completion, the animosity Cheval bore toward a Turtle book project accelerated. In the fall of 2006 a jazz music producer in New York City, Charles Carlini, came to me shopping a Turtle film documentary idea (not yet knowing my Turtle book was in the works). He was excited because he had been in contact with Cheval, who was promising access to all of the Turtles for his film. All? There was no way that was going to happen.
Given Carlini’s lack of detailed knowledge of the Turtles and given Cheval’s disdain for a Turtle book project, the film appeared to be a way to get another version of the Turtles out there before my book. What in blazes was her fear of an objective Turtle book? That said, it was crystal clear that a race with people who could trump my book was on. Pressure? Just a little.
One Turtle sarcastically called the drama created the “conspiracy of the stupid.” However, in an attempt to bury the hatchet with Cheval, I made a final sincere effort to assuage her feelings. Bottom line, I had no personal gripe with her. Her email response in the form of a peace offering was suspect. My first thought? “Trojan horse”:
“Are you the original founder of the TurtleTrader.com website? I know it’s changed quite a bit over the years. I think it’s a great resource. Just wasn’t sure if you were the original founder and if so, and do you have any contact information for Russell Sands and other Turtles? Rich asked me to put together a list for him and I think you have more up-to-date information than I do. I would appreciate a list of email addresses or other contact information on as many Turtles as you have.”
It was satisfying to hear Cheval be positive, but it did not seem like a good idea to give out a list of Turtle interviewees to another Turtle (again) and then have them be used to slow down the book. However, once the book was released in October 2007, there may have been another reason for Cheval’s negative actions: Lucy Wyatt Mattinen—the other female Turtle.
Little did I know what a tempest was brewing once I declared that there were two female Turtles. Like my book, my December 2007 Turtle exposé in Trader Monthly magazine revealed the existence of two female Turtles. When verifying my article content with Cheval, Trader Monthly was told by her that she was the only female Turtle. The magazine, however, stood by the notion of two female Turtles and referred to “women” in my article.
While there was no opportunity to interview Lucy Wyatt Mattinen before my book was released, she came calling once it was out. She was incensed that she was described in the book as “doing her nails” by another Turtle (in another article I used the term “manicurist”—which was false). She vehemently denied the descriptions of her. After some time we both decided to sit down for an in-person interview on April 12, 2008—an interview that quickly added more to the genesis for the Turtle experiment and established perhaps how important Wyatt was to the creation of the Turtles.
La Mere Vipere, often called the world’s first punk dance club, opened in Chicago on Halsted Street in 1977. It subsequently burned down in 1978. The La Mere Vipere bar was where Lucy Wyatt met Richard Dennis’s brother Tom Dennis (also a trader). There is a very good chance the Turtle experiment would never have happened if not for that chance encounter between Lucy Wyatt and Tom Dennis (and that chance encounter surely included the Sex Pistols’ Johnny Rotten belting out at least once that night “God Save the Queen”).
It turns out that after becoming friends with Tom and Richard Dennis, Wyatt subsequently met Dennis’s childhood friend William Eckhardt. Eckhardt and Wyatt then dated off and on, but before the Turtle experiment had officially commenced, Eckhardt taught Wyatt trading and she subsequently made hundreds of thousands of dollars in the early 1980s when she was only a few years removed from her teens. Wyatt told me that Eckhardt had needled Dennis that her success was due to a “woman’s intuition.” Dennis of course never bought the intuition argument—the fundamental reason for his launching the Turtle experiment. Within a few years the Turtles were picked and Wyatt joined the Turtles in the Turtle room as an original Turtle.
As a side note Cheval’s name came across my desk again in 2008. She must have finally been happy with The Complete TurtleTrader as she was now eagerly paying Google to have her firm’s ad pop up every time someone searched for the term “Michael Covel.”
Jiri Svoboda
Along with Wyatt another Turtle who I could not find during the research process was Jiri “George” Svoboda. In turns out that today Svoboda is an accomplished guitarist who plays all kinds of musical styles from Latin to acoustic and Klezmer music. He happens to be the only original Turtle currently with a MySpace.com page. Is he trading still? Turtle Tom Shanks told me that Jiri “George” Svoboda probably has the best returns for any Turtle since 1988. But forget returns for a moment, his online videos are awesome.
When looking at his online YouTube videos while he and a partner played at San Diego State University, it was easy to wonder how many students walking around campus realized that day that the guy playing classical guitar in the courtyard knew more about trading and making money than the entire finance faculty at the university.
There was no finding Svoboda to interview the first time around, and no finding him for my Afterword either, but to my good fortune one individual who had worked for Svoboda (ten years after the end of the Turtle experiment) randomly contacted me in email.
He told me that while he worked for Svoboda they traded two systems very similar to the Turtle system, a slow and a fast system. Some of the parameters had been tweaked slightly due to results from extensive back-testing, but the basic trading rules were the same as in the original Turtle days. At the time this individual was working for Svoboda their trading day started at around 7:00 P.M. Pacific Time because they were trading Australia and Hong Kong markets and needed the next day trades by no later than 5 P.M.:
“We loaded the daily numbers into the programs and about 15 minutes later we had the next days’ trades. [Svoboda and partners] were incredibly secretive toward me; it was a very tight-knit group. George and his partners very much valued their privacy. I think that they were worried about notoriety and the loss of personal freedom.”
Clearly, many outsiders experienced the Turtles’ secrecy and paranoia, but my strangest experiences by far involved the youngest Turtle.
Curtis Faith
A business trip to the U.S. Virgin Islands in 2001 first brought me into contact with Curtis Faith. I welcomed the opportunity to meet another of Dennis’s famed Turtles. Faith picked me up at the Frenchman’s Reef Marriott on St. Thomas and after squeezing into the backseat of his beat-up sub-compact rental car we took off to the beach for a chat.
First impression? St. Thomas is the Caribbean. It’s an island and there is that certain laid back vibe when you hear steel drums nonstop. Oddly, almost immediately I thought I detected an inferiority complex in Faith, but he was a Turtle and judging a book by its cover in this business was not wise. Faith was around 40 years old by then, but appeared older (tired might be the apt description).
That night over dinner, Faith was complimentary to the Turtle-Trader.com website: “Not sure how you assembled it all, but you got it right.” However, it was easy to come away from meeting this Turtle with a distinctly different feeling than meeting Jerry Parker, a man known beyond a shadow of a doubt to have found immense success. Later, due diligence on Google turned up Faith’s résumé posted online. A famed Turtle, the one who had positioned himself as the most successful Turtle, was looking for employment? While I had no immediate proof my instinct told me that this Turtle had not achieved great wealth. Faith was a direct contradiction to the legend of all Turtles making “it.”
It turned out that there were a handful of people who had surrounded Faith attempting to piggyback off of his Turtle fame for assorted business purposes. Those people started talking freely to me and confirmed that Faith was allegedly in monetary straights.
I had no further contact with Faith after those few random meetings, but Faith soon offered a different perspective regarding my efforts. In 2003 he announced publicly that, “You won’t get any expert advice from the guy who runs TurtleTrader.com. All you will get is the regurgitation of advice from other traders not tempered by the experience of a successful trading career. Paying for advice from this source is a lot like hiring a blind guide.”
Once my book The Complete TurtleTrader was released in October 2007, Faith was the one Turtle to express angry dissent. With his own book out touting himself as super successful, Faith’s need to defend his legend was apparent: “In my opinion, [Covel] is a parasite who lives off of the creation and energy of others instead of contributing something to humanity.”
Someone posting under the screen name “Priapus Maximus” (probably Faith) continued: “Mike’s [Covel] last book [Trend Following] was a sales brochure for his trading course crap and I think it is pretty obvious which book will do better. I’ll bet Mike really hates Curtis now.”
The zaniness did not end there. As explored in chapter 12, the one trading firm started by Faith in the twenty years since the Turtle experiment ended was a disaster. In trying to investigate that firm with the government, the bureaucratic process to obtain documents was painfully slow. In fact, as my book went to print in early 2007 all of the details of the case were not in. However, shortly after the release of my book the government finally provided the legal depositions involving their investigation and dismantling of this small trading firm Faith co-founded (the firm name was Acceleration Capital).
As a writer you quickly learn that the maxim “truth is stranger than fiction” is of course true, but when the United States government depositions revealed that Acceleration Capital’s trading system was simply the venerable Donchian trend trading system, unchanged, it felt like I had uncovered a shell game.
While this firm’s cachet was built off the Curtis Faith Turtle trading “legend,” Faith’s partner Yuri Plyam painted a picture in depositions of Faith missing in action providing no real value to the trading operation. Further, Toby Denniston, an employee associated with Acceleration Capital (see chapter 12), was stealing money from Faith’s firm to buy trips, cars, a payment for his gastric bypass surgery, various gifts for his boyfriend and lastly, to start a Barbie doll collection.
Posting these verbatim depositions (which would have been buried forever if not for my Freedom of Information requests), which included the Barbie doll collection story, was just one of many events that put a damper on Faith’s assertion that he was the most successful Turtle. Faith responded to the revelations with guns blazing, “When it comes to trading Covel is an idiot.” Another post from Faith referred to me as “an idiot shyster.” The Faith lawsuit threats started:
“Covel has been duped by his own anger and his own blindness to the possibility that there might be others out there who are not dishonest charlatans. [Covel] cannot fathom why someone who actually was as successful as I was would leave so much money on the table and stop trading. The courts will prove [Covel] the spiteful jealous liar that he is… . Fortunately, Covel made these statements in a magazine published in the U.K. That means that I can sue him for libel there. The English have very tough libel laws because they don’t like people making things up about the royals… . I won’t have to worry about Covel anymore after my suit… . [Covel is] an asshole who has made himself my mortal enemy despite my many attempts to get him to stop… . Mike [Covel’s] continuing actions are only going to make it clearer to a jury that he is being malicious. The punitive damages rise every time he posts more bullshit.”
Faith, explaining his legal logic, stated that he would “Donate 100 percent of the proceeds of the suit against Covel to nonprofit organizations dedicated to alternate energy research, poverty, and desease [sic].”
Then in the spring of 2008 Faith’s childhood friend Tim Arnold spoke up. Arnold confirmed Faith’s Jehovah’s Witness beliefs, among other things. Arnold and Faith had started a small software firm together, but then Arnold bought Faith out. Following the buyout, and seeking more money beyond the original agreement with Arnold, Faith posted messages in chat forums about more supposed lawsuits. In conversation with Arnold you could tell he was exasperated with Faith. Arnold painted a picture of a Turtle who was hanging on to a reputation from twenty-five years ago, but who had now run very short on cash.
The entire Faith story reminded me of my childhood experiences growing up around bantam roosters. Those roosters would strut around their pen in a desperate need to show dominance, to impress, to scare, to bully, but you always knew if you chased them or yelled “boo” they would run away.
What does all of this dysfunctional behavior have to do with the Turtles? Faith has long positioned himself as the most successful Turtle. The evidence says otherwise. More important, if investors take Faith at his word and make him their role model, they will be guided down a path that meanders nowhere.
Most recently Faith was a volunteer for the Barack Obama presidential campaign. In that effort he posted a YouTube video in December 2007. With what appeared to be a washing machine running in the background, Faith spent four minutes preaching to Barack Obama about how he could win the presidency. Even a casual observer could see Faith had no substantive tie to the campaign. There was an eerie feeling of superiority to his words as though an army of followers was waiting on his every word, including Obama himself.
Conclusion
When The Complete TurtleTrader was first released in October 2007 it ran under the radar of top ten sellers except in Singapore. For some reason, and I am still not sure why, the book quickly made The Singapore Straits top ten list for nonfiction. For thirteen weeks it remained right there in the top ten sandwiched in between books by the likes of Alan Greenspan and Mother Theresa. It was an eye-opener about the randomness of who was gravitating to the story and who was not, but given the immense wealth and trading success of Singapore, perhaps it should have come as no surprise.
On the other hand China, who has seen extreme ups and downs in their main stock market over the last few years, has millions of investors who could clearly have used some Turtle philosophy. Consider a May 2008 excerpt from the Washington Post regarding the correction in the Chinese stock market:
“In February, Li, a 25-year-old engineer, jumped from the seventh floor of the building where he worked in the city of Chengdu. His company said he had lost a huge amount on the stock market. On March 30,
a 39-year-old former ice cream-shop owner, also named Li, leapt to his death from his apartment building in the inland province of Shandong after losing a third of the $4,500 he had invested. As China’s stock markets crashed over the past six months, the Communist government reacted in a way most consumer investors like Wang did not anticipate: It watched from the sidelines. It wasn’t until last week, after the Shanghai benchmark index’s fall to a symbolic milestone, below 50 percent of its peak in October, that Beijing finally stepped in. Its announcements that it would slash a tax on stock transactions and control volatility by requiring some big block trades to take place off the regular stock market pushed the market up 14 percent. It has fallen again since then, however.”
It is safe to say that these investors did not know of the Turtles or their lessons. I kept wondering if all of the energy expended to try to keep assorted Turtle “secrets” locked away had caused some Turtles to lose sight of the big picture—their great inspirational story and tremendous success was nothing to hide from and that a further expansion of the story might actually be a good thing for them and everyone else.
At the end of the day what could really be so damaging about the Turtle story reaching a wider audience? For example, the Turtles who still publicly trade have returned these performance numbers over the first three months of 2008, a period where stock markets were in turmoil:
Jerry Parker: up 11%
Liz Cheval: up 17%
Tom Shanks: up 37%
Paul Rabar: up 13%
Howard Seidler: up 28%
Bill Eckhardt (Dennis’s former partner): up 14%
Salem Abraham (second generation Turtle): up 13%
There is no assurance that those performance numbers will continue, as trading as a Turtle is volatile, but the numbers are the numbers. And those are numbers people don’t expect when the nightly news and CNBC are yelling something quite different 24/7.