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Richard Dennis, Prince Of The Pit
Richard Dennis, a onetime follower of Richard Donchian’s trend following technique, used to shoot from the hip when it came from buying and trading stocks and commodities. After taking a huge hit during the 1987 stock market crash, he stopped trading. At least, for a few years.
Born in 1949 in Chicago, Dennis started his trading and investing career on the floor of the Chicago Mercantile Exchange when he was 17 years old. He graduated from DePaul University with a bachelor’s in philosophy and was going to continue at Tulane University but changed his mind, deciding he wanted to return to trading after having a taste of it. He started to trade for his own accounts before he left the Chicago Mercantile Exchange to go to school and on the entry-level floor he made a nice profit. Because he was still a minor at the time and legally he could not trade, he got his father to stand in the pit in his place, working as his own runner.
Dennis learned early on that it was better to hold positions for longer timeframes and riding the trend. He traded mostly in institutional mutual funds and securities, riding out the fluctuations and holding onto the fund to capture the profit. He was known to pyramid his positions and did well in the business, especially during the 1970s when the Soviet Union was going through a period of crop failure.
He won a bet between himself and William Eckhardt that people could be taught how to trade successfully by recruiting and training 23 people in trading and investing. He supplied each of them of $1 million and set them off to trade on the market. The 23 people he trained for two weeks ultimately earned an aggregate profit of $175 million in five years with many of them going to successful careers as commodity trading professionals.
When Dennis lost over $60 million in the late 1980s, he stepped away from money management for investors, settling a lawsuit in 1990 over the money loss for just over $2.5 million. He is now the president of the Dennis Trading Group and the vice chairman of C&D Commodities.
Claim to Fame
Dennis’ major claim to fame was the money he lost during the 1987 stock market crash.
Why was he successful?
Dennis was successful because he closely followed the stock market trends and acted on his own instincts. For years this attitude and method worked well for him until the 1987 stock market crash. Some of his instinct based investments turned out to be way off the mark and he lost millions of dollars, leaving him broke and debt ridden.
Dennis returned to trading after a few years and has managed to recoup quite a bit of the money he lost. However instead of using his instincts he now uses a special computer program to help him decide on whether or not he should make a trade. By 1996, Dennis had netted a 111% gain and he has continued to use the program to help him.
Richard Dennis has published one book, ‘Toward a Moral Drug Policy’ which is part of his drug free advocacy.
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