Market Wizard Richard Dennis


Trading to me is like betting on independent rolls of the dice that you think are loaded a little bit in your favor, because you know some statistical things about the market. Long-term scenarios can prove to be right or wrong, but even if they are right, on balance, I’m not convinced that they make much difference over the term of any individual trade. – Richard Dennis

Despite the fact that I’ve known who Richard Dennis is for years, it occurred to me recently that I know more about his Turtle Traders than I do about him. This interview was kind of a let down in that respect. Perhaps it was only because Schwager pointed it out, but the interview felt rushed. I was hoping for more deep insight.

My main take-away from the interview was this concept that no matter what your long term outlook on a market, any short term move is completely independent of that long term outlook. This has likely played a factor in some of my losing trades, but to what extend I am not sure.

The worst thing you can do is miss a profit opportunity. And if you think about it, rigid long-term views are the kind of thing most likely to lead you to that mistake. For example, if I believe the dollar is going to weaken, and because of this I ignore a sell signal in the foreign currencies, I might risk missing a large profit. – Richard Dennis

I believe this wisdom has two applications to my trading. On the more broad side, I can’t let my opinions of where the market is heading long term affect my judgement on any particular trade. For example, if I believed in February 2012 that the market was headed for a major crash at any second, it could have kept me from buying PCLN, which as we know was my biggest winner of the year. Basically, I need to continue to keep my opinions on the market out of my trading.

On the more specific side, I cannot let my thoughts on where a specific stock is going long term affect my positions. Again, I need to keep my opinions seperate from my trading.

Interestingly, this is a huge focus of the CANSLIM strategy, which is built around focusing only on facts, numbers, and history.