Maybe the Turtle story is too perfect. Maybe for some people it is just not believable. The refusal to accept obvious truths is the biggest obstacle to getting more people to adopt sound investment behaviors. Why? People have always struggled with perceptions of truth. It comes down to a general rule: We believe what we want to believe.
Appendix I
Where Are They Now?
“It’s not the uniqueness of the idea that’s the key. It’s the uniqueness of your ability to implement it.”
Anonymous
Salem Abraham, Second-generation Turtle
In 2006, Shaun Jordan (with Abraham Trading) organized a two-day visit for me to Canadian, Texas — Salem Abraham’s home and office location. During the visit, Abraham put William Eckhardt’s utility theory of risk in perspective with an example.
Assume a coin-flipping game. You have $10 million to your name. For the game, you get to bet $10 million per flip. With this coin you have a 90 percent chance of winning another $10 million, but you have a 10 percent chance of losing $10 million—all of your money. Can you really afford to bet it all, even if the odds are in your favor? No. Abraham clarified: “As an odds guy I go ‘That’s a great bet.’ I will take the bet. But, wait a minute. If the upside is $10 million, the downside is $10 million … I’ve seen guys around here in Texas oil and gas businesses and they go broke. They’re great oil and gas guys, but they bet the ranch too many times and lost it.”
Anthony Bruck, Turtle Class of 1983
There is no public information about Anthony Bruck except that he is a board member of the AIDS Foundation of Chicago. He is apparently still associated with C&D Commodities. However, it is not clear if C&D Commodities is still an active business or if it is just a collegial association between Dennis and Bruck.
Michael Carr, Turtle Class of 1983
Mike Carr today is a professional writer whose favorite topic is snow-mobiling and winter recreation. He writes snowmobile travel articles for five different magazines as well as a monthly column called “Making Tracks.” He has been a dedicated sledder for over twenty-five years and has ridden more than 40,000 miles.
Michael Cavallo, Turtle Class of 1983
Michael Cavallo continued to answer want ads after his work with Dennis ended. By answering one such ad, Cavallo eventually became the United States Chess Federation executive director. He is also a former New York City Junior Chess champion, with a then ranking of 2,142. He at one time reached the level of “master.”
Cavallo has also established and funded The Cavallo Foundation, Inc., to assist people who demonstrate moral courage in the workplace, principally whistle-blowers. Recipients have included environmentalists, scientists, and those fighting racism and sexual harassment. Cavallo is also the father of triplets.1
Liz Cheval, Turtle Class of 1983
Liz Cheval declined to be interviewed for this book. Today, Cheval still runs her trading firm EMC Capital.
Jim DiMaria, Turtle Class of 1984
Jim DiMaria likes the way things have worked out over the last twenty-five years. Would he have liked to make more money? Sure. However, there are always trade-offs. He clearly sees those: “Because of the flexibility of trading, if you use technology right, we picked up and moved to France for three years with the kids. So it was great for the family. The kids are native French speakers. We traveled all over the place. We loved it. I think I traded from twenty-three different countries.”
Of all the Turtles, DiMaria did the best job of explaining why blowups happen in the hedge fund world. He saw the root of the problem with “allocators,” the investors with the money who allocate it across a wide grouping of traders: “The biggest single problem with these allocators is they completely confuse volatility and standard deviation with ‘risk.’ The two are completely noncorrelated. They want Amaranth, Long Term Capital Management, and III [name of a hedge fund that blew up] and that’s going to work 95 percent of the time, but when it doesn’t, they’re broke.”
William Eckhardt, Turtle Teacher and Partner of Richard Dennis
The teacher of the Turtles today manages roughly $1 billion for clients. Beyond his trading, he has remained engaged in his own philosophical pursuits. In 1993, Eckhardt’s article “Probability Theory and the Doomsday Argument” was published in the philosophical journal Mind. His follow-up article, “A Shooting-Room View of Doomsday,” was published in the Journal of Philosophy. Both articles made arguments skeptical of the Doomsday Argument as formulated by John Leslie.2 The Doomsday Argument (DA) is a probabilistic argument that claims to predict the future lifetime of the human race given only an estimate of the total number of humans born so far.3
Interestingly, in January 2001, Eckhardt Trading Company took over the employment of a number of people previously employed by C&D Commodities. The world of those associated with the Turtles remains small and close-knit.
Curtis Faith, Turtle Class of 1983
Today, Curtis Faith spends a great deal of time participating in online chat forums. He has also been a vocal critic of my telling of the Turtle story. Faith currently lives in Buenos Aires, Argentina.
Jeff Gordon, Turtle Class of 1983
Gordon, now a private investor, gets his greatest thrill from teaching. He and his wife have been teaching chess to children in Marin County, California, for ten years. His Marin Country Day School Chess Team placed first at the Northern California Regional Chess Championship in 2005.
Gordon provides some food for thought about the dreaded “risk” that everyone must cope with at one time or another: “People’s attitude about risk was a very important aspect of being a trader. Can that be taught? Well, it can be taught intellectually. Can it be taught so that it is in the gut? I am not so sure about that. I am not saying no, but I am saying that it is hard. If you ever try to change some of your basic attitude towards basic things like risk, there are people who are more comfortable with risk than others. It comes from upbringing. It comes from attitude, life experiences, and being rewarded or being burned from taking risk in the past.”
Erle Keefer, Turtle Class of 1984
Erle Keefer was the oldest Turtle hired. He was about the same age as Dennis, thirty-seven years old, when he started out as a Turtle. Describing himself physically he chuckled, “I’m a miniature Rich.”
He also may have had the most diverse work experience prior to his Turtle time. He was a founding member of the London International Financial Futures Exchange, serving on the original membership and rules board. He received his undergraduate degree from the U.S. Air Force Academy and flew Air Rescue “Jolly Greens” in Vietnam.
Military service was instrumental in his development. He said, “Combat forces you to be 100 percent ‘in the now.’ It changes your DNA forever.”
Philip Lu, Turtle Class of 1984
In 2006, an interview was attempted with Philip Lu, now working as a college teacher at Edgewood College in Wisconsin. He threw a curve ball. Lu declined to be interviewed because he believed his confidentiality agreement with Richard Dennis (which expired in the early 1990s) was still in force.
Jerry Parker, Turtle Class of 1983
Years ago, at my first meeting with Jerry Parker, before the allotted time was up, I was quick enough (or dumb enough) to capitalize on the opportunity by asking him to confirm who won the Barings Bank sweepstakes when it imploded. He confirmed the winner. That was the type of confirmation that allowed me to write my first book, Trend Following. Today, Parker continues on as hands-down the most successful Turtle. He still works out of his suburban Richmond, Virginia, office.
Paul Rabar, Turtle Class of 1984
Paul Rabar, the second most successful Turtle managing money for clients, theorized as to why some Turtles were more successful than others: “Perhaps some of the others have preferred to focus less on business management.”4
Rabar actually ran his own version of the Richard Dennis’s original 1983 want ad in the New York Times for new hires. And a rece
nt online search produced not the old ad, but a 2006 one from the Times. Whiners making excuses that they were never afforded a foot in the door in their lifetime, should look harder.
Tom Shanks, Turtle Class of 1984
Tom Shanks appears to have had the most fun as a Turtle. One of his Turtle peers recalled a Las Vegas Turtle reunion years back when Shanks showed up with a well-known sitcom actress on his arm.
Bradley Rotter saw up close the adventurous side of Shanks: “I remember he bought a jet helicopter, and was learning to fly it and wanted to take me out on one of his maiden missions. He said we were going to fly underneath the Golden Gate Bridge. I said as a matter of principle, I try not to fly with traders at the wheel.” Rotter turned serious in the next breath. “He is one of the finest individuals that I have ever met. He has unquestionable discipline.”
Shanks is proudest of his first client. That investor put in $300,000 in 1988. Despite redemptions of more than $1 million, the client’s account has grown, without further additions, to over $18 million.5
Michael Shannon, Turtle Class of 1984
Michael Shannon’s career after the Turtles brought him into contact with some of Wall Street’s biggest names. He worked on a fund with legendary T-bond trader Thomas Baldwin (profiled in Market Wizards) and later worked with Dr. Kaveh Alamouti (who would later run money for Louis Bacon). Today, he enjoys a quiet life outside the United States.
Jiri “George” Svoboda, Turtle Class of 1984
Jiri “George” Svoboda is a Turtle mystery. While he did initially register with the National Futures Association (a government-sanctioned regulatory body) to trade money for clients in 1988, the association never actually granted him final registration, presumably because of his 1988 felony convictions for producing false identification documents and making a false statement in an application for a passport, as well as his failure to disclose such felony convictions to the NFA.
Why a fake passport? As an accomplished card counter, Svoboda was presumably searching for a way to play blackjack abroad and get his winnings back into the States anonymously. This circumspect history aside, several of his peers had great praise for Svoboda; one even said, “He’s a very practical person. He’s an extremely ethical and honest person who lives in a very black and shades-of-gray world.” And one Turtle, who declined to be interviewed on the record, was a big fan of Svoboda’s: “His performance is probably the best of all of the Turtles since 1988.”
The Turtle grapevine did say that Svoboda has, over the years, provided advice to major Las Vegas casino owners on how to stop cheaters. Beyond that, Svoboda remains an enigma—which is probably just how he likes it.
Appendix II
Related Websites
More information on the Turtles and their teachers Richard Dennis and William Eckhardt can be found at:
www.abrahamtrading.com (Salem Abraham’s website)
www.daledellutri.com (Dale Dellutri’s website)
www.eckhardttrading.com (William Eckhardt’s website)
www.emccta.com (Liz Cheval’s website)
www.hawksbillcapital.com (Tom Shanks’s website)
www.jpdent.com (Jim DiMaria’s website)
www.markjwalsh.com (Mark Walsh’s website)
www.michaelcovel.com (Michael Covel’s website)
www.saxoninvestment.com (Howard Seidler’s website)
www.trendfollowing.com (Michael Covel’s website)
www.turtletrader.com (Michael Covel’s website)
Appendix III
Turtle Performance Data
“In a world of constant change, risk is actually a form of safety, because it accepts that world for what it is. Conventional safety is where the danger really lies, because it denies and resists that world.”
Charles S. Sanford, Jr.
Jerry Parker was not the only Turtle to assemble a continuous track record since the Turtle program ended in 1988. Several other Turtles have gone on to have professional trading careers. Their careers are concrete proof of what sticking with a system over the long haul can do for a trading account. Table Appendices 3.1 and 3.2 graphically illustrate the month-by-month processes and performances of Jerry Parker and Salem Abraham. Table Appendix 3.3 illustrates the yearly performance history of Dennis’s former partner William Eckhardt and the performance histories of the other Turtles continuously trading since 1988.
Table Appendix 3.1: Annual and Monthly Returns, 198–-2–06, for Jerry Parker’s Chesapeake Capital.
Month-by-Month Returns with Annual Total Return
Table Appendix 3.2: Annual and Monthly Returns, 19–-2–06, for Salem Abraham’s Abraham Trading.
Month-by-Month Returns with Annual Total Return
Table Appendix 3.3
Appendix IV
Turtle Performance While Trading for Richard Dennis
The following performance data have never been published. They are the actual Turtle performance trading results while the Turtles traded for Richard Dennis, along with the amount of money they traded each month.
Table Appendix 4.1: Mike Carr Turtle Performance, January 1984-April 1988.
Table Appendix 4.2: Mike Cavallo Turtle Performance, January 1984-April 1988.
Table Appendix 4.3: Liz Cheval Turtle Performance, January 1984–April 1988.
Table Appendix 4.4: Jim DiMaria Turtle Performance, January 1985-April 1988.
Table Appendix 4.5: Jeff Gordon Turtle Performance, January 1984-April 1988.
Table Appendix 4.6: Philip Lu Turtle Performance, January 1985-April 1988.
Table Appendix 4.7: Jim Melnick Turtle Performance, January 1984-January 1988.
Table Appendix 4.8: Mike O’Brien Turtle Performance, January 1985-April 1988.
Table Appendix 4.9: Stig Ostgaard Turtle Performance, January 1984-April 1988.
Table Appendix 4.10: Jerry Parker Turtle Performance, January 1984-April 1988.
Table Appendix 4.11: Brian Proctor Turtle Performance, January 1985-April 1988.
Table Appendix 4.12: Paul Rabar Turtle Performance, January 1985-April 1988.
Table Appendix 4.13: Howard Seidler Turtle Performance, January 1984-April 1988.
Table Appendix 4.14: Tom Shanks Turtle Performance, January 1985-April 1988.
Also by Michael W. Covel
Trend Following:
How Great Traders Make Millions in Up or Down Markets
About the Author, Michael Covel
“Call me arrogant, cocky, crybaby, whiner or whatever names you like. At least they’re not calling us losers anymore. If people like you too much, it’s probably because they’re beating you.”
Steve Spurrier,
University of South Carolina football coach
Taking very little at face value is my modus operandi. In fact, since childhood I’ve challenged the accepted norms regarding access to the truth. Along the way I’ve challenged a number of people who have wanted to keep the curtains closed. In this small world, one of the more unlikely people to have asked me, “How do you go about unearthing details?” was Mikhail Gorbachev (This happened at a reception sponsored by Christian Baha, who runs the managed futures firm Superfund).
The former president had been told in Russian that I write about men who trade big money, so when we were introduced he asked me in Russian, “What is it like to write about these men?” Realizing his time was limited, I kept it short: “Very interesting.” He waited for the translation. “It must be difficult to get behind the scenes; how do you do it?” I smiled, “Oh, I am very good at digging.” He laughed. No translation needed there. He understood my English perfectly.
Walking into the world of Turtles was not planned. It was an unconventional journey. Spring 1994 was the “get your act together, now is the time” year for me. I had just finished an MBA at Florida State, having spent my final semester in London studying international relations.
Back in the States, armed with the so-called prerequisite advanced degree and a deep desire to become rich, Wa
ll Street called. Unfortunately, Virginia, my home state, was not the place to start looking for a mentor or an opportunity that would lead to big money. Most of my friends were products of government workers, not the types looking beyond security or “fitting in.”
So, I tracked down one of the few Florida State alums on Wall Street, recently retired James Massey. He had made millions at Salomon Brothers and was memorably portrayed in Michael Lewis’s classic Liar’s Poker.
The Complete TurtleTrader Page 26
