An excerpt from my book The Complete TurtleTrader:

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.

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, Wall 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:

[Jim] Massey…was John Gutfreund’s (the then CEO) hatchet man, an American corporate Odd Job. It didn’t require a triple jump of the imagination to picture him decapitating insolent trainees with a razor-edged bowler hat. He had what some people might consider an image problem: he never smiled…Trainees feared Massey. He seemed to prefer it that way.”

At lunch, Massey did not say a word. After a half hour the conversation was speeding downhill. Astute enough to see my sink or swim predicament, I said [bluntly]: “Have I said anything so far that makes you think I am full of shit?”

That got his attention. “Yes, you said you wanted to be the best. You don’t want to be the best; you just want to win.” Massey, like any good coach, was offering the reminder that winners play harder than anyone else.

As fate would have it, I didn’t get hired at Salomon Brothers, but right after meeting Massey, the word ‘Turtle’ crossed my desk for the first time. Shortly thereafter, in 1996, long before YouTube.com, Google, and millions of blogs, I was there at the start of TurtleTrader.com — a controversial website designed to teach trend following and Turtle trading. It ended up becoming one of the most popular financial websites in the world and was ultimately the start of this book.

One of my goals has always been to make people think twice. That attitude has made me a target, but I was a baseball catcher so I am used to taking the shots. I often face intense reactions because I represent the other side that’s never considered. Ten years of digging and reporting have produced my fair share of critics, some legit, some off the wall. I am a messenger and people love to shoot messengers.

At the end of the day, this was not the career direction I’d originally planned as a freshly minted graduate. However, sitting at the nexus of access and insight from some of the best trading minds on the planet has become my singular passion — for now.

Richard Dennis once said:

“Too many traders - too many people in all walks of life - keep asking, ‘What do you think of this?’ ‘What’s going to happen next?’ They have to get away from that herd mentality.”

Dennis thinks courses on the markets should be taught:

“[R]ight in there with the good stuff about mass psychology.”

Fundamentals? Dennis doesn’t think they are essential to profitable trading:

“I guess I agree with the metaphysics of technical analysis that the fundamentals are discounted. You don’t get any profit from fundamental analysis; you get profit from buying and selling. So why stick with the appearance when you can go right to the reality of price…”

Turtle Liz Cheval:

Clearly, if I could alter my model to reduce volatility without sacrificing high performance, I would. But, volatility is what creates the high returns investors want from the market in the first place. The key is to control volatility and not let it control you. Too often people dismiss a high volatility model because it is volatile. A common misconception is that high volatility trading implies more risk. Investors become so frightened by viewing peaks and drawdowns that they overlook the much larger benefit of the ultimate long-term outcome. They have to realize that with a well-planned, disciplined model, big swings in equity are very much anticipated and do not signal a loss of control. The underlying concept that argues for accepting high volatility is that within a winning framework, aggressive trading will maximize returns. In any game, if you know you’ll win, naturally you’d make your bet on the outcome as large as possible. The same is true in trading when you have reasonable expectations of positive returns. The only difference is that the degree of aggressiveness in trading is limited by two factors: the need to preserve capital during losing periods so you can stay in the game until a winning period and the need to preserve psychological fortitude to keep playing.

Turtle Michael Carr on making it to Richard Dennis’ doorstep so to speak:

I grew up in Saint Paul, Minnesota and attended Macalester College there, earning a degree in history in 1973 with plans to teach high school social studies. Unfortunately, those were bleak economic times and there were virtually no openings for teachers. In order to get started on a career of some sort, I went into the management training program for the Ground Round restaurant chain, parlaying my part-time college job into something full time. My training assignment was in Cedar Rapids, Iowa. Working six nights a week and having Tuesdays off got old in a hurry, so I was looking for something different and more promising to do. Fortunately, two acquaintances of mine, Gary Gygax (of Lake Geneva, Wisconsin) and Dave Arneson (of Saint Paul) had just launched a game company (TSR Hobbies, Inc.) in Lake Geneva, Wisconsin and published a new role playing game called DUNGEONS & DRAGONS. They invited me to come work there and I gladly accepted the offer in the spring of 1976. I had a ringside seat for the whole D & D phenomenon, which was rather incredible, as you can imagine. Over a seven year period I worked as a game designer, editor, general manager, production vice president, and children’s book writer. In 1983, TSR fell upon hard times after a remarkable period of growth. I was the eighth employee, and at its peak the company employed over 300 people and had sales in excess of $30 million. Due to some blunders by senior management and a certain amount of hubris that blinded them to their missteps, the company’s fortunes took a turn for the worse. The staff was cut from 300 to 100, putting 200 of us out of work. The good news was that they did manage to save the company with these draconian measures, but that was small consolation to me personally. After a bit of reflection, I decided to try my hand as a freelance writer. In my latter days at TSR I had written several children’s books. One of those titles, ROBBERS & ROBOTS, had sold over a quarter million copies, so I had some confidence that I might have a chance in the world of children’s literature. That was when Divine Providence intervened. What else could you call it, when a guy who hadn’t picked up the WALL STREET JOURNAL in six months happened to choose a particular day — a Tuesday, when the job ads typically run — to purchase a copy and notice an ad for Commodity Futures Trader? Although there was no way of knowing it at the time, buying the JOURNAL on that particular day in the summer of 1983 was a life-changing moment for me.

More:

Since I was outside the trading business, I had a number of questions about their trading activities, which they fielded quite graciously. Richard Dennis was renowned as a technical trader, but I wasn’t aware of that at the time, so I asked, ‘Do you trade technically or fundamentally?’ With a bemused smile, Rich Dennis replied, ‘We trade technically.’ My follow-up question was, ‘Is fundamental trading dead?,’ to which he responded, ‘We hope not.’ One of the subsequent lessons we learned was that, in the zero sum futures trading world, the money is funneled from the many to the few — the few who are able to develop and implement successful trading strategies. From Rich’s reply it’s obvious that he was banking on the superiority of the technical strategy over a fundamental approach. I asked if my lack of trading experience was considered a positive or a negative. Rich replied that it probably was a slight advantage, since I could be trained in their methodologies without having to unlearn any bad habits. The questions about demeanor included queries like ‘How important to you is it to be right about what the market is doing?’ and ‘How important is money to you?’ Obviously, they were interested in assessing the suitability of each candidate for trading, where the psychological aspects can be every bit as important as the trading strategy being used. I also remember Rich asking me, ‘Why Rommel?’ Out of 1100 respondents, I was the only one who cited Field Marshal Erwin Rommel, the famed ‘Desert Fox,’ as the person from history I most admired. I explained that Rommel was a person worthy of respect and emulation. Despite being a German general during the Second World War, he was not a Nazi. In fact, he opposed Hitler and was implicated in the plot to assassinate the Fuhrer in July of 1944, ultimately paying with his life. As a strategist, he was outstanding and was able to achieve great results with minimal resources. When he suffered setbacks, he was undeterred. Most telling of all, he was highly respected by military men on both sides, as a general and as a man. Rommel was extremely successful and embodied many of the traits of a good trader, in my opinion.

For an assortment of reasons, there was no exact Turtle student number back when Dennis hired his crew. Even among Turtles it is debated today. My paperback version of “The Complete TurtleTrader” comes out in February and the subtitle has been changed to say 23 Turtles on the cover. That is the common number thrown around after all these years, but if I had my way I would have said “20+” instead of “23″. Call me anal or call me picky, but all aspiring writers should know that publishers often take steps that authors are not completely on board with! Oddly, the areas where publishers always get mucked up in are book titles and book cover design. Generally, they steer clear of what’s between the covers. I could definitely write a book on writing and publishing a book.

La Mere Vipere, often called the world’s first punk dance club, opened in Chicago in 1977. It subsequently burned down in 1978. At that bar not yet a Turtle Lucy Wyatt met Richard Dennis’ brother Tom Dennis (also a trader). There is a very good chance the Turtle experiment would never have happened if not for that random chance encounter between Lucy Wyatt and Tom Dennis (more on that to come). And that chance encounter surely included the Sex Pistols’ Johnny Rotten belting out at least once that night “God Save the Queen“.

More for those Sex Pistols fans out there.

I had the opportunity to spend four hours tonight with Turtle Lucy Wyatt Mattinen in Reston, Virginia. While we did not speak for the hard cover edition of my book, Wyatt Mattinen’s interview added great detail for a new Afterword that will appear in the 2009 paperback edition.