Erle Keefer: A TurtleTrader Trained by Richard Dennis

Excerpts taken from The Complete TurtleTrader by Michael Covel:

Erle Keefer was the oldest Turtle hired. He was about the same age as Dennis, thirty-seven years old, when he started out as a Turtle. Describing himself physically he chuckled, “I’m a miniature Rich.” He also may have had the most diverse work experience prior to his Turtle time. He was a founding member of the London International Financial Futures Exchange, serving on the original membership and rules board. He received his undergraduate degree from the U.S. Air Force Academy and flew Air Rescue “Jolly Greens” in Vietnam. Military service was instrumental in his development. He said, “Combat forces you to be 100 percent ‘in the now.’ It changes your DNA forever.”

What Led Keefer to the Turtle Experiment

Keefer’s path to Dennis and the trading experiment was pure coincidence. He was sitting in a New York City sauna when he picked up a newspaper and spotted the Dennis ad. At that moment the female star of the movie Trading Places, Jamie Lee Curtis, was sitting in the same sauna with her boyfriend. Keefer was sitting there reading Barron’s. “I am looking at this ad and I knew who Rich was. I said, ‘Wow! This guy did it.’ ” Keefer thought there was little chance he would get accepted.

Keefer’s Desire for Proof

Erle Keefer, hired in the second Turtle class, was in the minority with his desire for a “proof of concept.” Like his mentor, Keefer remained skeptical: “You said I learned about the golden goose, but I didn’t have a computer program, hadn’t seen printouts, hadn’t seen proof of concept. You know what I mean?”

While Dennis and Eckhardt always knew what the Turtles were doing, it turned out that the two mentors didn’t always know what they were doing. During all that downtime of waiting for the markets to trend, four Turtles from the second class (Tom Shanks, Paul Rabar, Erle Keefer, and Jiri “George” Svoboda) formed a small group to do trading research. They wanted to validate their rules instead of just playing by them. While the rest of the Turtles may have been reading the sports pages and playing Ping-Pong, this group spent their time building a systems testing platform. Doing that took them a year. The results of their research project shook the program. They determined that Dennis had everyone taking far too much risk. The Turtles had all been trading according to rules taught by Dennis and Eckhardt and were making millions, but the research team, using original Apple computers, blended the S1 and S2 trading systems together and found that instead of a– worst-case 50 percent drawdown, they were consistently getting a worst-case–80 percent drawdown.

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