Michael Covel is the author of the internationally bestselling book Trend Following

MFA's Network 2008 Panel

December 31, 2007

I am moderating a Managed Funds Association panel at The Ritz-Carlton, Key Biscayne, FL (February 11-13, 2008). This is for the MFA's Network 2008.

Malcolm Gladwell: What We Can Learn From Spaghetti Sauce

December 29, 2007

Malcolm Gladwell is an interesting guy.

Success & Motivation

December 27, 2007

From Mark Cuban comes reinforcement for entrepreneurs.

Turtle Exam Questions

December 26, 2007

The following true/false questions were sent out to the second group of Turtles. These questions were used to help decide who was picked and who was not:

1. One should favor being long or being short whichever one is comfortable with.
2. On initiation one should know precisely at what price to liquidate if a profit occurs.
3. One should trade the same number of contracts in all markets.
4. If one has $100,000 to risk, one ought to risk $25,000 on every trade.
5. On initiation one should know precisely where to liquidate if a loss occurs.
6. You can never go broke taking profits.
7. It helps to have the fundamentals in your favor before you initiate.
8. A gap up is a good place to initiate if an uptrend has started.
9. If you anticipate buy stops in the market, wait until they are finished and buy a little higher than that.
10. Of 3 types of orders (market, stop, and resting), market orders cost the least skid.
11. The more bullish news you hear and the more people are going long the less likely the
uptrend is to continue after a substantial uptrend.
12. The majority of traders are always wrong.
13. Trading bigger is an overall handicap to one’s trading performance.
14. Larger traders can “muscle” markets to their advantage.
15. Vacations are important for traders to keep the proper perspective.
16. Undertrading is almost never a problem.
17. Ideally, average profits should be about 3 or 4 times average losses.
18. A trader should be willing to let profits turn into losses.
19. A very high percentage of trades should be profits.
20. A trader should like to take losses.
21. It is especially relevant when the market is higher than it’s been in 4 and 13 weeks.
22. Needing and wanting money are good motivators to good trading.
23. One’s natural inclinations are good guides to decision making in trading.
24. Luck is an ingredient in successful trading over the long run.
25. When you’re long, “limit up” is a good place to take a profit.
26. It takes money to make money.
27. It’s good to follow hunches in trading.
28. There are players in each market one should not trade against.
29. All speculators die broke
30. The market can be understood better through social psychology than through economics.
31. Taking a loss should be a difficult decision for traders.
32. After a big profit, the next trend-following trade is more likely to be a loss.
33. Trends are not likely to persist.
34. Almost all information about a commodity is at least a little useful in helping make decisions.
35. It’s better to be an expert in 1-2 markets rather than try to trade 10 or more markets.
36. In a winning streak, total risk should rise dramatically.
37. Trading stocks is similar to trading commodities.
38. It’s a good idea to know how much you are ahead or behind during a trading session.
39. A losing month is an indication of doing something wrong.
40. A losing week is an indication of doing something wrong.
41. The big money in trading is made when one can get long at lows after a big downtrend.
42. It’s good to average down when buying.
43. After a long trend, the market requires more consolidation before another trend starts.
44. It’s important to know what to do if trading in commodities doesn't succeed.
45. It is not helpful to watch every quote in the markets one trades.
46. It is a good idea to put on or take off a position all at once.
47. Diversification in commodities is better than always being in 1 or 2 markets.
48. If a day’s profit or loss makes a significant difference to your net worth, you’re overtrading.
49. A trader learns more from his losses than his profits.
50. Except for commission and brokerage fees, execution “costs” for entering orders are minimal over the course of a year.
51. It’s easier to trade well than to trade poorly.
52. It’s important to know what success in trading will do for you later in life.
53. Uptrends end when everyone gets bearish.
54. The more bullish news you hear the less likely a market is to break out on the upside.
55. For an off-floor trader, a long-term trade ought to last 3 or 4 weeks or less.
56. Other’s opinions of the market are good to follow.
57. Volume and open interest are as important as price action.
58. Daily strength and weakness is a good guide for liquidating long-term positions with big profits.
59. Off-floor traders should spread different markets of different market groups.
60. The more people are going long the less likely an uptrend is to continue in the beginning of a trend.
61. Off-floor traders should not spread different delivery months of the same commodity.
62. Buying dips and selling rallies is a good strategy.
63. It’s important to take a profit most of the time.

Short Answer Questions

On the back of the true/false answer sheet, please answer these questions with one sentence each.

1. What were your standard test results on college entrance exams?
2. Name a book or movie you like and why.
3. Name a historical figure you like and why.
4. Why would you like to succeed at this job?
5. Name a risky thing you have done and why.
6. Explain a decision you have made under pressure and why that was your decision.
7. Hope, fear and greed are said to be enemies of good traders. Explain a decision you may have made under one of these influences and how you view that decision now.
8. What are some good qualities you have that might help in trading?
9. What are some bad qualities you have that might hurt in trading?
10. In trading would you rather be good or lucky? Why?
11. Is there anything else you'd like to add?

"So You Think that Money is the Root of All Evil?"

December 24, 2007

The other day I was forwarded a rant that included this excerpt:

"I drove a Porsche 911 Cabriolet, flew a Beechcraft Baron 58P, lived in a house on the lake in Tahoe that recently was listed for $10 million, had two boats on the lake and a 50 foot yacht in the Caribbean when I was 23 years old. Money, my friends, means nothing."

I could not disagree more with that last desperate sentence. A speech (read) that backs my contention more eloquently than I could ever state myself. The best excerpt from that speech?

"Let me give you a tip on a clue to men's characters: the man who damns money has obtained it dishonorably; the man who respects it has earned it. "Run for your life from any man who tells you that money is evil. That sentence is the leper's bell of an approaching looter. So long as men live together on earth and need means to deal with one another--their only substitute, if they abandon money, is the muzzle of a gun.

Patton Speech & Flashback

V for Vendetta Televised Speech & Trailer

An excerpt from one of the best movies of the last few years:

The trailer:

The Fountainhead: Howard Roark Speech

As I reflect on the year that was 2007 I am reminded of wisdom from years back:

As you consider that great excerpt from "The Fountainhead" consider another character from the same book - "Ellsworth Toohey":

Ellsworth Toohey seeks power to control men and does so under the auspices of "humanitarianism" and a false sense of selflessness. Toohey destroys greatness by exalting mediocrity. He lives to empty souls and fill that void with his own power. Through encouraging sacrifice, removing some form of a man's desire, he hopes to be there to collect on that sacrifice, as he says on p. 666 "When there's service, there's someone being served." He is the 'benevolent dictator' bent on making men subservient so he can control their destiny and "well- being", effectively promoting the slave/master relationship that he extols as having existed throughout mankind (this is also noted by Roark in his courtroom speech at the end of the book). Toohey's target in this conquest is man's mind, and he sets out to muddle it by pitting men against men and establishing a sense of doubt in their being. He plots to destroy their ability to judge on their own, inciting them to think first of everything and everyone but themselves.

Film Update

December 22, 2007

Earlier I posted screen shots of interviewees for the film I am producing. Here are more:

Harry Markowitz (Nobel Prize Winner)
Barry Ritholtz (Fund Manager, CNBC personality)
Peter Borish (Fund Manager)
Rich Blake (Magazine Editor)
Tala McDonnough (Model)
Karina Jett (Pro Poker Player)
Evelyn Ng (Pro Poker Player)
Chris Ferguson (Pro Poker Player)
Antonio Esfandiari (Pro Poker Player)
Howard Lederer (Pro Poker Player)
Steve Zolotow (Pro Poker Player)
Paul Wasicka (Pro Poker Player)
Me in Macau

The back and forth crossover from the world of cards (bridge, poker, etc.) to Wall Street is much more prevalent than the average person might know.

"The basic concept that applies to both poker and trading is that the primary object is not winning the most hands, but rather maximizing your gains."
- Jeff Yass

Small World Story

December 20, 2007

I received a call the other day from a guy who wanted to buy a domain I own for his daughter's rock band. Turns out that he runs all alternative investments for one of the top five U.S. banks. When he called me he had no idea who I was or what I did. He just had a phone number. I took the liberty to ask him about the investing styles he was associated with assuming that trend following trading had crossed his desk. Not only had it crossed his desk, he had read my first book. Now that is a small world random story! To top it off he had earlier in his career worked many years for one of the top trend followers of the last 25 years. Not sure I want to sell the domain in question as I have a use in mind for it, but it does say something about returning people's calls. You never know who you will bump into.

The Bear Flu: How It Spread

A novel financing scheme used by Bear Stearns' hedge funds became a template for subprime disaster.

Not Norwegian Wood, But Oil

December 18, 2007

Feedback tonight:

I am in the trading department of Norway's Statoil and observing the behaviour of 'professional' traders everyday, I have no doubts that what you wrote in Trend Following and The Complete TurtleTrader holds true. For years I have been pondering on a 'better' way to approach the markets and I believe the trend following concept is my 'holy grail', albeit one that involves hard work, preparation and stomach churning volatility. You deserve praise for enlightening the world with the concept.

Interesting Question: What Is the Purpose?

I received some feedback about "The Complete TurtleTrader" from a trader/money manager who has been at it for 15+ years:

Michael, spent a lot of time with the book this evening, you've done a good job. [In] some ways it would have been better if the book was written in the early 90's for those who were following the whole Dennis story in real time, but it's for those who were around then and I can see its value for younger guys as well. I would be interested to know what you think the book is about in a single sentence and what do you believe is its purpose?

"The Complete TurtleTrader" is an autopsy of a money-making legend, warts and all. It's purpose is to educate the majority who don't know and confirm for the minority who do know.

All The Answers A Week Before X-Mas!

December 17, 2007

Who wants to bet their cash on this analysis?

Ultraman Salute

My Japan travels of the last few years have forced me to revisit my youth and Ultraman. One particularly cool T-Rex inspired monster from Ultraman is here. My four & five-year-old nephews are of course excited every time I bring back more Ultraman monsters. But here is my question: how can I import these things? While most American kids are unfamiliar with Ultraman, I am willing to bet that if I have thousands of these monsters they will sell like hot cakes (for a premium) in the States. Work for Bandai? Drop me a line!

China

No shortage of information here.

The Most Successful TurtleTrader

In "The Complete TurtleTrader" I tell the story of seeing Jerry Parker's original office outside Richmond, Virginia for the first time. Just finding the place was an adventure. While Richmond was only ninety miles from my house and I had a street address, there were no MapQuest turn-by-turn driving directions available around 1994. I used a good old-fashioned hard copy map from AAA. While I got down to the general area in ninety minutes, I spent another two hours in rural Virginia trying to find his office.

Finally, I stopped into a local country bank and asked if they had ever heard of Parker's firm Chesapeake Capital (remember, I had no appointment to visit Chesapeake, I was just dropping in, hence I did not know where I was going). At first I was met with blank stares in the bank, but then one lady said that Chesapeake might be a 'mile up the street'. She was right. Upon reflection I was struck by the fact that while she kind of knew where Chesapeake was located she had no clue what they did. She was probably making $35,000 a year (nothing wrong with that), but at the same time Jerry Parker was literally a baseball throw away making $35 million a year. While I might sound manic, my first thought was just to shake her and say, 'don't you get who is working down the road? Forget teller jobs, go be an intern for Parker!'

I did not meet Parker that summer day. My first face to face did not come until December 1995 at Parker's new suburban Richmond office (about 18 months later). I had pestered him for an informational interview for some time, and finally his assistant Jonathan Craven responded with the good news that my persistence had paid off. Parker's private office was surprisingly barren except for a small glass turtle on his desk. We talked about Wall Street in general terms.

Yet before the allotted 30-minutes was up, I did capitalize on the face-to-face opportunity by looking at Parker straight in the eye and asking for confirmation of who had won the Barings Bank sweepstakes earlier in the year. My proffer of a 'name', garnered a raised eyebrow, but his one word answer was confirmation. In that instant much of my understanding of trend following trading was solidified.

Later, the broker Parker recommended had me over to his suburban Richmond, Virginia home for chili. This broker was a transplanted Chicagoan who was clearly enjoying financial success in the Deep South (I remember his cool indoor pool). He was a broker archetype: a down to earth, everyman. At one point he mentioned that Parker had given pointers to one of his distant 'relatives' in trend following (the relative was by way of a distant marriage). It would be years before I knew he was talking about second generation Turtle Salem Abraham (who is in my book).

My path did not cross Parker's again for years, long after the website TurtleTrader.com was established. For this visit, Parker, John Hoade, Keith Byers, his IT head and I met in his conference room at his Forest Avenue office. The furnishings of his sparse conference room gave no indication of what Chesapeake Capital did except for a huge Swiss alphorn leaning against the wall. Its 'thank you' engraving to Parker and Chesapeake Capital from a Swiss 'concern' spoke volumes about his firm's reach.

Why the meeting with me to begin with? Chesapeake Capital was a billion dollar fund at the time, but they still wanted fresh ideas. They were investigating whether the Internet could enhance their business, and if so, how to best use it. Our meeting must have given them some good food for thought because shortly thereafter Parker sought to acquire the domain trendfollowing.com from me. It was a wise move not to part with it, since that domain name became a catalyst in launching my first book 'Trend Following' four years later.

Parker's firm today has no web presence to speak of, but that has not hurt them. He is still far and away the most successful Turtle by a long country mile.

More to come.

Turtle Silence Then Acceptance

December 16, 2007

Writing "The Complete TurtleTrader" was a roller coaster ride; a journey filled with unexpected insights from disparate sources, insights that often connected in unpredictable ways. At times it seemed as though I was playing a fantasy video game, where the secrets clues and hidden meanings kept popping up each step of the way. By the time the ride was over, it was clear that this was a story some people wanted told and others did not.

However, before my book there was a website. Most people probably don't remember, but it was TurtleTrader.com that revived the Turtle legend for a new generation. Gibbons Burke of Futures magazine wrote back in 1998: 'While the proprietors [of TurtleTrader.com] indeed are capitalizing on the Dennis trading legend, they do so in exceedingly good taste and without a trace of snake oil. The message is open, honest, straightforward and makes no hyped-up promises. It sticks to the facts. It is one of the best system trading sites for futures traders I have seen.'

Burke wasn't the only one to notice TurtleTrader.com. David Penn weighed in from Technical Analysis of Stocks and Commodities magazine in 2003: 'As one of the administrators of TurtleTrader.com suggested in e-mail, all Turtle trading amounts to, in the end, is trend-following. Indeed, there were successful trend-followers long before Richard Dennis and William Eckhardt's Turtle trading experiment.'

Shortly thereafter my book project was launched and I quickly came up against resistance. Others had been down that road too. In conversation with Jack Schwager about his 'Silence of the Turtles' chapter in his book 'The New Market Wizards', he was quick to remind me how little substantive comment he received from Turtles when writing his books.

In 2006, however, it seemed things had finally changed. One Turtle said he would be happy to do an interview, by phone if necessary. Another said that he would be happy to discuss the Turtle experience. Another Turtle only wanted to provide written answers to questions. Yet another said he wouldn't mind if the circumstances were right. Ultimately those responses resulted in thoughtful, incisive interviews.

Moreover, as the research process gained steam, the more Turtles I discovered. Names of Turtle students never before mentioned in the press popped up. For example, there was Rudolf Papirnik. Robert Moss, Dennis' trading floor chief, called Papirnik a Turtle. Papirnik worked for Dennis before, during and after the Turtle program. He definitely had 'Turtle knowledge'. Jim DiMaria backed Moss' view on Papirnik as a Turtle too.

Many Turtles were quick to express their concern that Dennis would be portrayed as their primary if not only trading teacher. They didn't want me to diminish the importance of Bill Eckhardt. Jeff Gordon was emphatic, 'Bill [Eckhardt]. Very smart guy. It seemed like every time he spoke, I learned something. And they're very few people in the world that I have ever met that I can say that about. I was always learning things from him.'

Another of the more interesting side notes of the Turtle program was genesis of their original nickname. Mike Shannon added a twist to the legend, 'Our original name, in the first year of our existence, was the 'Disciples.' Because it was the name, at the time, of a prominent street gang on Chicago's West Side, we agreed to go with the 'Turtle' idea.' Accurate? Lucy Wyatt Mattinen, one of the two female Turtles, said the name actually traced back to a fondness by Dennis of the music group 'The Turtles'! The Singapore Turtle story? Well, I have now heard three versions about the origination of the Turtle name!

Despite these colorful nuggets the big picture was that some Turtles just did not want an objective treatment of their story made public. For example, the confidentiality agreement signed years ago by all Turtles has long expired. The agreement, while not word for word in my book, is public. However, in 2006 when trying to interview Philip Lu, who was now working as a college teacher, I was thrown a curve ball. Lu, via his Edgewood College email address, was blunt, 'It is my belief that my confidentiality agreement with Richard Dennis is still in force. Therefore I do not give interviews.'

Lu is an intelligent man (graduate of Brown). He made a lot of money as a Turtle and is well respected by many other Turtles. One Turtle sprang to Lu's defense saying that he could have been in the same league as Parker and Rabar. 'Phil actively chose not to take over a certain amount of money. He didn't want to manage a billion dollars.' Taking another perspective Sam Denardo clearly respected Lu for saying their confidentiality agreement was still in tact. 'He knows that that system can still work. And the more people that use it, the less effective it's going to be. He probably feels blessed like a lot of us that we've had the experience.'

The desire to keep things silent did not stop with Lu. During 2006, as I completed research for my book, I sent out final requests for interviews. Many Turtles agreed to talk. However, there were some no's. One Turtle responded by asking who gave away his email address. Another Turtle responded via email that he was not interested. Months later that same Turtle appeared to warm up when his assistant asked for a list of those who had agreed to cooperate. A detailed response to that question brought back, 'no.'

Unknown to me at the time that exact list was the one used to contact prior interviews to get them to stop talking (which did not work). Was I thinking that some of this reaction was beyond paranoid? Yes! I kept asking myself, 'What could be so negative about their story? If they knew a book was being published why not get their story out there?' Particularly since those who agreed to talk said they did so for that exact reason.

However, the book is out now and the reception, save for one Turtle, has been very positive. For example, yet another email from someone in the know came in unsolicited the other day. The subject of the email was "The Silence of the Turtles":

Dear Michael:

XXX
XXX Capital

I asked that same individual if he/she liked my book. The response:

"Regarding your new book ["The Complete TurtleTrader"], I can say that after hearing the turtle story many times from many of the people that are part of the story and after reading many articles about such story, this is by far the most entertaining, inspiring, extensive, and honest story of the turtles I have ever read."

It is nice to hear the positive feedback, but I still wonder about the energy expended to try and keep assorted Turtle details locked away. Some Turtles definitely lost sight of the big picture - their great inspirational story and tremendous success (at least for most Turtles). That said, I always knew criticism would come my way from a minority. So what, that's healthy. The outspoken billionaire Mark Cuban has said:

"The easiest thing in the world to avoid is criticism. All you have to do is nothing. For those of us who set goals and want to have an impact in the business world in particular, criticism is part of the job description. You have to be able to be able to take it and sometimes you can't be afraid to dish it out. If someone puts in the effort and challenges the content and makes me rethink my position, I come out ahead."

I agree 100%. The positives and the negatives of the Turtle story are what make it both entertaining and memorable.

More to come.

There Were Two Female Turtles: Cheval and Wyatt

As I mention in my book there were two female Turtles. This was news to many as the lone female Turtle for all these years had been positioned as Liz Cheval, but my research showed that to be incorrect. Lucy Wyatt Mattinen was a Turtle as well. And it was other Turtles who were the source of confirming Wyatt Mattinen's Turtle existence. But like everything with the Turtles there was a more detailed back story!

I state in my book that Cheval elected to not speak for "The Complete TurtleTrader". She did, however, email me during my book writing process:

Michael,

Thanks.
Liz

Worse than Cheval saying "no" was not even being able to find Lucy Wyatt Mattinen to ask her for an interview during my book writing process. However, once the book was published I quickly heard from Wyatt Mattinen. She was incensed that she was described as "doing her nails" by another Turtle. In no uncertain terms she educated me about her long time involvement with Rich Dennis and Bill Eckhardt. She laid out her trading successes. Clearly, Wyatt Mattinen, while not an active fund manager today, has lived an interesting life. While she did not agree with the "nails" comment she did state in no uncertain terms that my book was bullseye accurate

However, little did I know I had stirred the pot by declaring that there were two female Turtles. In fact, my December 2007 article in Trader Monthly revealed the unexpected. Trader Monthly, in verifying my article details with Cheval, was told by Cheval that she was the only female Turtle. Trader Monthly stood by the notion of two female Turtles and referred to "women" in the article.

Why all of the detail? There are quite a few who are interested in the Turtle back story. For example, once my book galleys, the drafts, started making the rounds, feedback from one person in particular struck a chord. Bob Pardo is a seasoned trader. He is also a skeptic, the kind of person you want to read your book in order to understand the weaknesses. Pardo does not believe in praise as much as constant improvement. And, although his bluntness probably rattles many, his honesty was welcomed.

Pardo confronted me with a number of questions postulating why some Turtles were averse to talking and he wondered if there weren't further lessons to be drawn from Dennis' managed money efforts. He also saw the apparent paranoia from some Turtles as interesting and worthy of further exploration. So in many ways the back stories I have posted are in response to the likes of Pardo and many others who have asked questions since my book's release.

More to come.

The Straits Times Non-fiction Bestsellers List (8 Weeks)

December 15, 2007

The Straits Times Non-fiction Bestsellers for December 16, 2007:

1. (1) The Secret by Rhonda Byrne
2. (2) English As It Is Broken by The Straits Times
3. (3) Tuesdays With Morrie by Mitch Albom
4. (5) Marley And Me: Life And Love With The World's Worst Dog
5. (6) Think Big And Kick Ass by Donald Trump and Bill Zanker
6. (-) The Five People You Meet In Heaven by Mitch Albom
7. (8) The Complete TurtleTrader by Michael W. Covel
8. (-) Having It All by John Assaraf
9. (4) The Age Of Turbulence by Alan Greenspan
10. (9) I Can Make You Rich by Paul McKenna

Second Life

if it is possible to have a second life, is it possible for a second life to have a second life? Is that where we are headed?

Say Anything

December 13, 2007

This article states:

A day of exceptionally volatile gyrations in stocks left traders exhausted, and showed how nervous investors still are about the market's prospects. Stocks began the day by soaring on news of a new Federal Reserve program to lend banks money, but then sagged as the day wore on amid concerns that the Fed's efforts might not be enough.

Isn't any explanation plausible after the fact?

Cutting Fruit with Chris "Jesus" Ferguson

December 12, 2007

And the relevance of the following clip? Practice.

Three Interesting Perspectives

December 11, 2007

I spoke with Chris, Howard and Steve today for my film. They had some very interesting perspectives on risk, loss, winning, imperfect knowledge, competition, regulation, games and life to name a few topic areas.

A Review from Down Under

December 10, 2007

Mark Dooley's review of "The Complete TurtleTrader".

The Search for "Value": Sometimes Everything Is Nothing

An interesting take on the search for value.

Ugly People

December 09, 2007

Ugly people fight back.

Straight A’s, With a Burger as a Prize

We can give kids all the free junk food in the world for getting good grades, but if our educational system continues to teach the wrong lessons, the whole debate is silly.

Making Good Decisions? Not Always Fast

The teenage brain, Laurence Steinberg says, is like a car with a good accelerator but a weak brake. With powerful impulses under poor control, the likely result is a crash. That said, does that mean we give the punk who shot and killed Washington Redskin player Sean Taylor a break because he was 17?

Sex, Math and Scientific Achievement

Why do men dominate the fields of science, engineering and mathematics? Read.

Making the Calendar Work?

Seasonals? This guy says he can do it.

Asia Continues to Embrace "The Complete TurtleTrader"

The top 10 rankings (PDF) for The Straits Times for December 9, 2007.

Traders v. Trading

December 08, 2007

I recently saw a comment (intended to be negative) that "The Complete TurtleTrader" was about traders not trading. Putting aside for a moment the validity of that statement, the point and or distinction of it is?

Turtle Feedback on "The Complete TurtleTrader"

I mention in my book that not all Turtles were cooperative. However, since "The Complete TurtleTrader" has been released three of those uncooperative Turtles have now offered feedback. The three included:

1. A Turtle who never responded to my interview request.
2. A Turtle who declined my interview request.
3. A Turtle who I never was even able to track down.

I have now heard from all three of these Turtles. Their feedback in the form of emails, a card and phone calls? They all liked "The Complete TurtleTrader". And since this is by and large a very closed mouthed group that seeks privacy even to this day, I was surprised to hear from them.

Do you support the Treasury's plan to freeze rates on some mortgages?

December 06, 2007

Vote and explain. I am no fundamentalist, but this sure seems like a sign the dollar ain't going up any time soon!

Top 10 Books of 2007

Stocks, Futures, Options Magazine has named "The Complete TurtleTrader" as one of their top 10 recommendations among the best-selling trading, investing and personal finance books of 2007:

A British Take on Subprime

December 05, 2007

Fountainhead Inspiration

It's been a few years since I read it, but a friend reminded me of Ayn Rand's classic "The Fountainhead" the other day. He kept talking of the character Ellsworth Toohey and making the connection to current day society. Sadly, some people no matter what want a "Toohey" in their life.

Another Bubble, "Sausage Fest" or Real Deal?

Spotted on a post by Barry Ritholtz:

Hedgeworld Book Review

December 03, 2007

Chidem Kurdas, New York Bureau Chief for Hedgeworld, recently posted a review of "The Complete TurtleTrader" titled "The Making of Traders".

Ben Stein on Goldman Sachs

NY Times article.

Risk

An excerpt from an interview with Paul Tudor Jones II by Joel Ramin:

Q: How would you describe your general investment philosophy?

Paul Tudor Jones: I think I am the single most conservative investor on earth in the sense that I absolutely hate losing money. My grandfather told me at a very early age that you are only worth what you can write a check for tomorrow, so the concept of having my net worth tied up in a stock a la Bill Gates, though God almighty it would be a great problem to have, it would be something that's just anathema to me and that's one reason that I've always liked the futures market so much, because you can generally get liquid and be in cash in literally the space of a few minutes. So that always appealed to me because I could always be liquid very quickly if I wanted to. I'd say that my investment philosophy is that I don't take a lot of risk, I look for opportunities with tremendously skewed reward-risk opportunities. Don't ever let them get into your pocket - that means there's no reason to leverage substantially. There's no reason to take substantial amounts of financial risk ever, because you should always be able to find something where you can skew the reward risk relationship so greatly in your favor that you can take a variety of small investments with great reward risk opportunities that should give you minimum draw down pain and maximum upside opportunities.

The Singapore Straits Times - Bestsellers List for December 2, 2007

December 02, 2007

Non-fiction:

1. (1) English As It Is Broken by The Straits Times
2. (3) The Secret by Rhonda Byrne
3. (2) The Age Of Turbulence by Alan Greenspan
4. (4) Marley And Me: Life And Love With The World's Worst Dog
5. (5) The Complete TurtleTrader by Michael W. Covel
6. (6) Think Big And Kick Ass by Donald Trump and Bill Zanker
7. (7) I Can Make You Rich by Paul McKenna
8. (8) Mother Teresa: Come Be My Light by Mother Teresa
9. (9) Feng Shui For Apartment Buyers by Joey Yap
10. (10) The Secret Revealed by James L. Garlow and Rick Marschall

Bob Pardo Full Review in Futures Magazine

I posted an excerpt to Pardo's review earlier, but here is his final review from the December 2007 Futures Magazine:

"This is an excellent book for those interested in systematic trading, Richard Dennis, the Turtle “experiment,” the Turtle trading method and the history of trading, but it should not be considered complete from the vantage of a professional algorithmic trader. However, it is the best account of the Turtles so far. It is a quick, easy, fun and interesting read. Covel provides a thorough and accurate historical account of the Turtles from the start to the finish of this experiment. For those unfamiliar with the story, Richard Dennis was widely considered one of, if not the, most successful trader of his era, the 1980s. He and partner William Eckhardt disagreed whether trading is an inborn talent or something that can be learned. They proposed an experiment to discover which was true: the Turtle Project. Covel begins with a description of the thinking behind the Turtle project and recaps the story of recruiting and training the first Turtles, including some of their thinking and experiences during and through the conclusion of the project, which Dennis ended without warning. Covel continues the story with a brief rendition of life for the Turtles after the project. A handful continued as professional traders. The most successful Turtle has been Jerry Parker of Chesapeake Capital. Covel spends a bit too much time on Parker, as interesting and successful as he has been. It would have been interesting if there had been more about the other Turtles post-project lives, but the lack thereof is not entirely Covel’s fault. Anyone who has had much contact with Dennis and the Turtles can attest to their almost paranoid secrecy about the project, and that clearly hindered Covel’s project. Covel suggests that Dennis and the Turtles achieved a milestone in trading and not only established systematic trading as respectable, but also set the bar high. They ventured into new territory and encountered great success. Read the book. There are some interesting trading pearls to be had. They are not identified as such, but they are there nonetheless. Enjoy it. I did."

Robert Pardo is the president of Pardo Capital Ltd., Group Ltd. and Analytics Ltd. He has worked as a trader, money manager, educator, analyst and software designer. Reach him at www.pardocapital.com.

One Great Bet? Or Repeatable Skill?

December 01, 2007

"In that giant casino known as the U.S. economy, there is always someone who can count the cards, work the odds and beat the house." Read full article.

One great bet? Or repeatable skill?

Does it matter?!

Jim Simons Keeps Pushing

Perhaps the greatest example for viewing the markets as numbers is Jim Simons.