Richard Dennis facts for kids

Richard J. Dennis, born in Chicago in January 1949, was a famous speculator who traded in commodities. He was once known as the "Prince of the Pit" because of his success in trading. In the early 1970s, he borrowed a small amount of money, $1,600, and reportedly turned it into a huge fortune of $350 million. After facing big losses in the 1987 stock market crash, he stopped trading for several years. Mr. Dennis has also been involved in politics, supporting the Democratic and Libertarian parties, especially in efforts against drug laws.

Richard Dennis's Career

Starting in Trading

Richard Dennis began working on the trading floor of the Chicago Mercantile Exchange when he was just 17 years old. He was an "order runner," which meant he carried trading orders between brokers. A few years later, he started trading for himself at the MidAmerica Commodity Exchange. This was a place where smaller contracts, sometimes called "mini" contracts, were traded. To get around a rule that said traders had to be at least 21, he hired his own father to trade for him in the pit.

Education and Early Success

Mr. Dennis studied philosophy at DePaul University. He even received a scholarship to continue his studies at Tulane University. However, he decided to return to trading instead. He borrowed $1,600 from his family. After buying a trading spot at the MidAmerica Commodity Exchange for $1,200, he had $400 left to start trading.

In 1970, his $400 grew to $3,000, which he called a "real grubstake" (meaning a good starting amount). By 1973, his trading money was over $100,000. He made a profit of $500,000 trading soybeans in 1974. By the end of that year, he was a millionaire, even before he turned 26.

Trading Strategies

Dennis made a lot of money during the 1970s. This was a time when prices were generally going up, and there were events like the "Great Russian Grain Robbery" in 1972. During this event, the Soviet Union secretly bought a large part of the U.S. wheat crop. These events created strong, steady price trends, which made it easier for traders to make money using simple methods.

Unlike most floor traders who quickly bought and sold throughout the day, Dennis held his positions for longer. He would ride out small ups and downs and keep his trades for a medium amount of time. He also often "pyramided" his positions, which means he would add more to a winning trade. Later, he bought a full membership at the more expensive Chicago Board of Trade and opened an office to trade in more markets.

The Turtle Experiment

Teaching Trading Skills

Richard Dennis believed that successful trading could be taught to anyone. To prove his point, he made a bet with his friend and fellow trader, William Eckhardt. Dennis decided to recruit and train a group of people to see if they could learn to trade successfully.

He chose 21 men and two women, training them in two groups in December 1983 and December 1984. This group became known as the "Turtles." Dennis taught them for only two weeks. They learned a simple system called "trend-following." This system involved trading various commodities, currencies, and bonds. They were taught to buy when prices went above their recent range and sell when they fell below it. They also learned to reduce their trade size during losing periods and to add more to winning trades carefully.

Some of the recruited Turtles:

• Stig Ostgaard
• Elizabeth Cheval
• Lucy Wyatt Mattinen
• Michael Cavallo
• R. Jerry Parker
• Russell J. Sands
• Paul Rabar
• Philip Lu
• Craig Soderquist
• James DiMaria
• Brian Proctor
• Howard Seidler
• Michael Shannon
• Tom Shanks
• Jeff Gordon
• Michael Carr
• Jiri ‘George’ Svoboda
• Curtis Faith

Results of the Experiment

In January 1984, after their two-week training, each "Turtle" received a trading account. They were allowed to trade up to 12 contracts per market for one month. If they successfully used the system, they were given larger accounts to manage, using Dennis's own money. These accounts ranged from $250,000 to $2 million.

When the experiment ended five years later, the Turtles had reportedly made a total profit of $175 million. The exact trading system Dennis taught them has been shared in books. While the system's performance changed over time, many of the original Turtles, like Jerry Parker, Liz Cheval, and Paul Rabar, went on to have very successful careers as commodity trading managers. They used methods similar to, but not exactly the same as, the original Turtle System.

Later Years and Public Service

After the Turtle experiment, Dennis managed money for other people for a while. However, he stopped in 1988 after his clients lost a lot of money. During the Black Monday stock market crash of 1987, he reportedly lost $10 million, with total losses of $50 million in 1987–1988.

He is currently the president of Dennis Trading Group Inc. and the vice-chairman of C&D Commodities. He has also been involved in several important organizations. He was a chairman of the advisory board of the Drug Policy Alliance, a member of the board of directors of the Cato Institute, and on the board of trustees of the Reason Foundation. These roles show his continued interest in public policy and economic freedom.