Trading Places Was Real!

What the turtle traders can teach us about the most important question in markets.

Is success in markets a question of innate qualities or can it be taught? Nature or nurture? Anyone wrestling with the Midwit Valley hopes for nurture. Learn, improve, and achieve mastery.

But then you ponder someone like Buffett — a singular obsession with business, a photographic memory, and ice in his veins when it comes to markets. The legendary players are outliers.

In the 1980s, two Chicago traders asked themselves the same question: nature or nurture? They made a bet, like in the classic Wall Street movie Trading Places. Could they teach a group of people their method and would they succeed?

Richard Dennis (profiled in Market Wizards) believed trading could be taught and that traders could be grown “like they grow turtles in Singapore” (hence the name of their students, ‘turtle traders’). His partner Bill Eckhardt thought you either had it in you or you didn’t.

“Trading was more teachable than I ever imagined,” Dennis reminisced. “It was teachable beyond my wildest imagination.” But that’s not the whole story. They were both right: despite approaching the market from the opposite perspective of someone like Buffett, the turtles shared key characteristics with him.

The story reveals a more important question than ‘nature vs. nurture’: the price of success in markets.

“I think it’s far more important to know what Freud thinks about death wishes than what Milton Friedman thinks about deficit spending.” — Richard Dennis

This piece is based on Michael Covel’s The Complete Turtle Trader, which I’d recommend to anyone actively investing because its lessons — the lessons of any good market story — are not about a specific strategy but human nature.