Futures Magazine Article on David Druz:
Dr David Druz has been hooked on the futures markets since the moment he saw a fellow medical student turn $2000 into $500,000 in the great bean move of 1970. For the next 20 years Druz pursued a dual career, studying medicine in term time and carrying out research work for a brokerage company during vacations, and then, in 1981, setting up his first futures fund while practicing as an emergency doctor in Fairbanks, Alaska. Two years ago Druz retired from medicine and moved from Alaska to the Hawaiian island of Oahu, in order to devote more time to his twin passions of windsurfing and futures trading. The goal of his company, Tactical Investment Management (TIM), is, he says: To be good not big. We optimise for robustness, says Druz, because we want to be around for ever.
David Druz was a student of Ed Seykota:
Q. You have worked with legendary trader Ed Seykota [of Market Wizards fame]. What was it like trading alongside a master?
A. It was one of the most incredible experiences of my life. He is the smartest trader I have ever seen. I don’t think anybody comes close. He has the greatest insights into how markets work and how people operate. It’s almost scary being in his presence. I worked with him as an apprentice for about five or six months in 1991/92. It was tough surviving working with him because of the mental gymnastics involved. If you have a personality weakness, he finds it–fast. But it’s a positive thing because successful traders must understand themselves and their psychological weaknesses.
The Soybean Move That Changed a Career
The opening detail in the Futures Magazine profile is precise and instructive. Druz did not get interested in markets through a book or a class. He watched a fellow medical student turn $2,000 into $500,000 in a single commodity move in 1970. That is a 250-fold return. Witnessed in person, at close range, by someone with a mathematics and science orientation, it raised an obvious question: how does that happen, and can it be replicated?
The great bean move of 1973 was a similar event. Soybean prices tripled in less than a year as a combination of weather, Soviet grain purchases, and a US export embargo drove one of the most dramatic commodity trends of the twentieth century. Richard Dennis made $500,000 on that move. Druz saw an earlier version of the same phenomenon and spent the next decade studying how to position for it systematically. That is what the twenty years of dual career research were building toward. He was not dabbling in futures while practicing medicine. He was developing a systematic approach to a problem that had fascinated him since his medical school years.
Fairbanks, Alaska: The Unlikely Base for a Futures Fund
Setting up a futures fund while working as an emergency doctor in Fairbanks, Alaska in 1981 is not a conventional career path. It requires the ability to compartmentalise: to be fully present in a high-stakes medical environment and then shift attention to markets outside working hours. It also requires the kind of systematic approach that does not depend on constant monitoring. A discretionary trader who needs to watch screens all day cannot run that operation from the emergency department of an Alaskan hospital. A systematic trend follower can, because the system handles the analysis and generates signals at defined intervals. Druz’s choice of method was not incidental to his geography. It was required by it.
The same logic applies to his move to Oahu. When he retired from medicine and relocated to Hawaii to focus on windsurfing and futures trading, the system had to function in a life built around other passions. Systematic trend following scales to that kind of life. It does not demand constant presence. It demands discipline at the moments when the system generates signals. Between those moments, it runs.
To Be Good, Not Big: The Robustness Philosophy
Druz’s stated goal for Tactical Investment Management is one of the clearest statements of trading philosophy in the TurtleTrader library. “To be good not big” runs counter to most fund manager incentives. The management fee structure of the industry rewards assets under management. The bigger the fund, the larger the fee base, regardless of performance. Druz rejected that logic in favour of optimising for robustness, which he defined as wanting to be around forever.
Robustness in a trading system means it continues to work across a wide range of market conditions, not just the conditions it was designed for. A system that produces extraordinary returns in trending markets but collapses in choppy ones is not robust. A system that generates moderate but consistent returns across all conditions, with controlled drawdowns and a process that survives regime changes, is what Druz was building. The TurtleTrader rules were designed with the same priority. Dennis and Eckhardt were not trying to maximise returns in any given year. They were building a system that would work across decades of varied market conditions.
The Ed Seykota Apprenticeship
Ed Seykota is one of the foundational figures in the history of systematic trend following. He developed one of the first computerised trading systems in the early 1970s and produced returns that remain among the highest ever documented for a managed account. His approach is built on the same core principles that define the trend following world: follow price signals, cut losses, let winners run, and understand your own psychology well enough to follow the system without interference.
Druz’s account of the apprenticeship deserves attention. Seykota finds personality weaknesses fast. He uses that to positive effect because traders who do not understand their own psychological vulnerabilities cannot follow a system through the periods when it is most difficult to do so. A trader who panics at drawdowns, who holds losers hoping for recovery, or who cuts winners early because the profit feels sufficient is not following a trend following system. He is overriding it. Seykota’s apprenticeship model was designed to surface those override tendencies and address them before they destroyed a trader’s edge in live markets.
Performance
Click for Correlation Chart on Druz. Correlation coefficients gauge how closely a CTA’s performance resembles another CTA. Values exceeding 0.66 may be viewed as having significant positive performance correlation. And consequently, values exceeding -0.66 may be viewed as having significant negative performance correlation.
Frequently Asked Questions About David Druz
Who is David Druz?
David Druz is the principal of Tactical Investment Management (TIM), a systematic trend following CTA. He began his career as a physician, running his first futures fund while working as an emergency doctor in Fairbanks, Alaska in 1981. After twenty years of running a dual career, he retired from medicine and relocated to Oahu to focus on trading and windsurfing. He served as an apprentice to Ed Seykota in 1991/92.
What is Tactical Investment Management?
Tactical Investment Management is Druz’s systematic futures trading firm, founded on the philosophy of being good rather than big. The firm optimises for robustness over maximum return, aiming to build a system that works across a wide range of market conditions and survives over very long periods. Its goal is described by Druz as wanting to be around forever.
What did Druz learn from Ed Seykota?
Druz describes the apprenticeship as one of the most incredible experiences of his life. Seykota’s approach focused as much on the trader’s psychology as on the trading system itself. He finds personality weaknesses fast because he understands that those weaknesses are what cause traders to override their systems at the worst moments. The lesson Druz took from the experience was that successful trading requires as much self-knowledge as market knowledge.
Why did Druz choose to stay small rather than grow his fund?
Druz’s stated goal is to be good, not big. He optimises for robustness because he wants the firm to survive over very long periods. A fund that grows beyond what its system can trade efficiently loses edge. Druz chose to preserve performance over assets under management, which is the opposite of what most institutional fund managers are incentivised to do.
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