Way of the Turtle — Faith: COMPLETE

The background is almost implausible. As a young man Richard Dennis had borrowed small sums from his family and turned a few hundred dollars into one of Chicago's greatest fortunes in the commodity futures — a return that has been measured in tens of thousands of percent over a little more than a decade. His partner and childhood friend William Eckhardt was a mathematician. At their recurring breakfast conversations the same question kept turning up: WHY does Dennis succeed? Dennis himself claimed that his success was a method — a set of rules that could be taught to anyone with normal intelligence and the will to apply them.

Eckhardt believed the opposite: that Dennis possessed an innate aptitude, something in the mind that could not be written down and taught away. The discussion recurred so often that it finally became a bet — and the bet became an experiment.

The claim Dennis put on the table was maximal — the course calls it the bagging claim: not »some can be taught« but, in principle, »anyone can be taught«. To test it, control was needed: recruit novices off the street, not from the trading floor; teach a complete rulebook in two weeks; give them real money to trade with — Dennis's money — with a share of the profits as incentive.

The name was born from one of Dennis's whims on a trip: he had seen a turtle farm in Singapore and told Eckhardt something like »we're going to raise traders like they raise turtles in Singapore« — we will grow traders the way they grow turtles. The Turtles became a fact: class one in December 1983, class two in 1984, just over twenty people in all.

The outcome, in rough terms and according to Faith's own figures: the group earned over 150 million dollars in just under five years. Several Turtles became wealthy for life and later money managers in their own right; Faith himself maintains that he made, without deduction, over 30 million dollars for Dennis. But — and this is the book's real subject — not everyone succeeded. Some of them, with exactly the same rules, exactly the same teachers and exactly the same capital, underperformed or dropped out; at least one left the program early.

Dennis's own summation has become one of the most quoted lines in financial history: »You could publish my trading rules in the newspaper and no one would follow them. The key is consistency and discipline.« The course's task is to understand BOTH halves of that sentence: the rules (chapter 3, 4, 7, 8) and the adherence (chapter 5, 9, 10).

AKM1 bridge — V19 Capital Burn & Share Issue Risk is AKM1's built-in 2N stop: the variable asks how quickly a company burns the capital that lets the thesis reach its payoff in time. AK1TS adds the exit: every trade needs a Breakpoint — the level where the thesis is wrong — written before you buy.

The experiment's first lesson is the relationship between them: rules are easy to write, hard to own.

In the autumn of 1983 an ad was published in the Wall Street Journal: Richard Dennis of C&D Commodities was looking for apprentices to train up into traders. No fees — on the contrary: an education, and then real money to trade with. The reaction was enormous: over a thousand applicants. After screening — questionnaires and interviews — about forty people remained for conversations, and just over a dozen were selected for the first class, which began in December 1983.

A second class was recruited in 1984. In all, just over twenty Turtles. Faith was there from the start: 19 years old, the youngest, with no finance background but with programming and game theory in his baggage.

So who was taken? Here is the experiment's most underrated finding — the composition. Those selected were NOT veterans of the trading floor or economics students with top grades: they included future auditors, programmers, engineers and fresh graduates — most without practical experience of futures trading. The interviews and the test did not look for financial knowledge but for something else: the relationship to risk, to losses and to rules.

Dennis and Eckhardt screened psychologically — in practice, they were looking for people who could follow a rulebook under pressure. After two weeks of education the class got its own accounts to trade — accounts on the order of one million dollars each (some smaller in the second class) — and a share of the profits as compensation. No school exercise: real money, real pressure.

But read the composition twice — it is both the experiment's strength and its first crack. The strength: if auditors and programmers without experience can be taught to trade by rules and profitably, then the method is teachable — exactly as Dennis claimed. The crack: those selected were not »just anyone«. They were (a) self-selected — over a thousand people who had answered an ad in the Wall Street Journal were already unusually motivated; and (b) actively screened for precisely the ability to follow rules.

The controversy chapter returns to this: the claim »we can teach anyone« was never fully proven — what was proven was »we can teach those who pass our screening«. That is an important difference, and honesty about it is the difference between a textbook and marketing.