Back in 6th grade, when I danced at a formal, I was pretty terrible. I was honestly surprised that no one asked me when I had developed epilepsy. Of course, as time went on, I adapted, got better, and stopped dancing like I was being repeatedly shot in the back.
Every year, some dance sensation comes along and starts to make or break the swagger of so many teens across the nation. Yet no one could have predicted that ‘the Stanky leg’ would actually amount to something. Or that ‘grinding’ wasn’t just a guidance counselor’s recurring nightmare, but an actual thing that happened in a sweaty gymnasium 2 halls down from her office. I’m not an investor or a trader, but it seems like if people can’t predict the state of dancing, it’s hard to believe that people can predict the markets either.
When I thought Wall Street, I used to see a score of bald guys with Bentleys. This all changed when I read about the 1980’s Turtle Traders – an answer to the question “Was trading a skill you were born with?” Richard J. Dennis (amounted 200 million in trading) – a Chicago legend – didn’t think so. Instead, in a bet with his friend William Eckhardt, he proposed a real life experiment that would prove whether great trading could be taught.
23 regular people (‘the Turtles’) with no experience in the game were afforded the opportunity to trade for the “Prince of the Pit” on his dime and on his time. In 2 weeks, they learned everything they could about trading (almost like Dev Bootcamp for coding). Then…
They became millionaires. They were ballin’ out of control. In the truest sense, THEY STARTED FROM THE BOTTOM.
Everything you think about Wall Street, they threw out. They didn’t spend hours calculating fundamental analysis. They weren’t choking on doughnuts in a Bentley. In fact, after the first year or so in Chicago, some of them moved far away to quiet homes. They didn’t wear ties or suits – they frequented the office with caps and shorts. Anything you’ve heard about value investing and Warren Buffet, it wasn’t even in the conversation. Saying ‘let’s buy and hold’ was pretty much like saying ‘please kick my ass’.
Whether it’s educational deviants, startup growth incubators, the Oakland Athletics, or new publishing models, I’ve seen a thread that life is best played differently. It isn’t secrets. Namely, it’s shortcuts rooted in data. Michael Lewis on baseball strategy: “People…operate with beliefs and biases. To the extent you can eliminate both and replace them with data, you gain a clear advantage.”
Practitioners of Trend Following (the Turtles’ method) have actual numbers to back them up: they have collectively logged a 17.56% average annual return from 1984 through 2010 compared with 7.37% return for the Standard & Poor’s 500. The numbers are there, but the practice is far from mainstream namely because tradition is cockblocking the better way.
Like the markets, the future is hard to predict. But, it’s the future that is also ours to game. Repeatedly, through books, research, travel, and just doing stuff, I’ve realized that doing things differently (with an entrepreneurial spirit) means that shit. gets. done. For the 23 novice investors, doing things differently meant millions in the bank. Whether in the form of books, people, or apprenticeships, there’s a less beaten path ready to be beaten.
I wasn’t born with amazing dance skills (despite my obvious demonstration of an almost supernatural sex appeal, I know). But, I started doing it differently and I think that’s why I got better.