James Fraleigh

It’s long been my assertion that people who consistently make tens of thousands of dollars a month playing online poker probably have the discipline and instincts to make hundreds of thousands as traders of stocks, commodity, currency—whichever is the best fit for their skills and temperament. This piece in the LA Times bears out my hunch:

Chris Fargis thought his big job interview was over. But when the partners at Wall Street upstart Toro Trading finished with their questions, they broke out a deck of cards and a green-felt card table. Mind playing a few hands of poker?

It was a final test, and Fargis was relieved. The 30-year-old never went to business school or even took a finance class. But he knew poker. He had made a living playing the game online for six years from his Manhattan apartment, betting on up to eight hands at a time.

Within a few days, Fargis—with no Wall Street experience—was offered a position trading stock options, a job that entails making multimillion-dollar gambles. His poker skills sealed the deal.

“If someone’s been successful at poker then there’s a good chance they could be successful in this business,” said Toro partner Danon Robinson. “If you have no interest, that’s almost a red flag.  .  .  .  It’s almost the equivalent of not reading the Wall Street Journal.”

In seeking more analytical, math-oriented candidates with no white-shoe connections to banking clans or previous Street experience, I was reminded of the Turtle trading experiment, as documented in The Way of the Turtle. From the book’s Amazon description:

“We’re going to raise traders just like they raise turtles in Singapore.”

So trading guru Richard Dennis reportedly said to his long-time friend William Eckhardt nearly 25 years ago. What started as a bet about whether great traders were born or made became a legendary trading experiment that, until now, has never been told in its entirety.

Way of the Turtle reveals, for the first time, the reasons for the success of the secretive trading system used by the group known as the “Turtles.” Top-earning Turtle Curtis Faith lays bare the entire experiment, explaining how it was possible for Dennis and Eckhardt to recruit 23 ordinary people from all walks of life and train them to be extraordinary traders in just two weeks.

They managed to recruit a certified geek: Michael Carr, who, before joining the team, made a significant mark in the history of geek culture as rules editor of the earlier Dungeons & Dragons books:

Q. How did you become a Turtle?

A. I started with TSR when there were only a few employees. In the ensuing years, the company went through a spectacular growth phase, which culminated with over three hundred people on the payroll. The company hit hard times and made drastic cutbacks in order to survive. I lost my job along with two hundred other workers. It was around this time that I picked up a copy of the Wall Street Journal. Ironically, that was the same day that Richard Dennis ran his ad seeking trading trainees.

TurtleTrader.com, “Michael Carr: Turtle Trader, from Dennis Camp”

He’s the same Mike Carr who penned the introductions to the classic three 1st-edition AD&D hardbacks. And by coincidence, at the bottom of that interview page, I found a link to an interview with poker pro, chess master, and one of the principals behind online poker site Full Tilt Poker, Howard Lederer. Full circle.

Day trading. Poker. Roleplaying. Chess. All activities that engage the classic geek: the person who becomes absorbed in the minutiae of a hobby or activity, who enters a flow state with its rules and data, merging their creative urges and competitive drive with the zeal of those few who have recognized and embraced their true calling.

They make inspired game masters, successful securities traders  .  .  .  and fuckin’ fearsome card players.

PS. I found this story in the 5/16/10 issue of Mike Allen’s Playbook at POLITICO.

Dotted through the works and letters of Hunter Thompson, careful readers will find references to Max Palevsky:

But by noon the crisis had passed, and somewhere sometime around one he [1972 U.S. Democratic presidential contender George McGovern] arrived with his praetorian guard of eight Secret Service agents at Max Palevsky’s house in Bel Air, where he immediately changed into swimming trunks and dove into the pool.

[Fear and Loathing on the Campaign Trail ‘72]

Until some kind soul annotates Thompson’s works, such passing references wait for contemporary mentions to be explained. The most recent was Palevsky’s obituary:

Max Palevsky, a pioneer in the computer industry and a founder of the computer-chip giant Intel who used his fortune to back Democratic presidential candidates and to amass an important collection of American Arts and Crafts furniture, died on Wednesday at his home in Beverly Hills, Calif. He was 85. [NYT]

After cashing out his share of Scientific Data Systems to Xerox for $100 million, and sinking some of the funds into the nascent Intel, in 1971 he invested in the then-young, and financially struggling, Rolling Stone magazine. Already an RS contributor by this point, Thompson crossed Palevsky’s path, and was on good enough terms with to swap mescaline and pot seeds with him. Another link developed when Palevsky became a pezzonovante in the McGovern campaign:

He jumped on the McGovern bandwagon before the South Dakota senator’s stunning upset in the Wisconsin primary. “Max was his most important early contributor,” said Frank Mankiewicz, McGovern’s campaign director.

According to “The Power and the Glitter,” a 1990 book about the interplay between Hollywood and Washington by former Los Angeles Times political writer Ronald Brownstein, Palevsky donated more than $319,000, which financed McGovern’s successful direct-mail operation. He also raised money from others, represented McGovern at a meeting with Vietcong negotiators in Paris, and advised him on issues.

He abruptly left McGovern’s side during the 1972 Democratic convention in Miami when he realized that his advice, particularly about the organization of the campaign, was being ignored.

“My role in the campaign wasn’t that significant,” he told The Times in 1973. “At a certain point I just found it all very boring and I just got up one day and said … ‘Son, I don’t see much point in staying around.’ ” [LA Times]

Palevsky could be just as hard-nosed on smaller scale, as Thompson found out after letting a loan Palevsky floated him linger a bit longer than the perceived repayment schedule afforded. Wrote HST:

I suspect you understand this—just as I hope you understand that I appreciate your loan of $10K & have every intention of repaying it. But you should also understand that I can’t just freak out & disregard all the professional advice I pay for, the essence of which is that I’m being ripped to the tits for no reason. [ … ]

The only question, right now, is how it should be repaid. And that involves what I regard as an essentially ethical question vis-à-vis the Vegas film rights [which were being snarled at that moment by Oscar Acosta’s antics] … just as I regard the $10K loan as an ethical question, with the onus on me.

For that reason, the repayment of the $10K loan should be the least of your worries. The question I have to deal with now is how—and to understand that I have to get tstraight on the facts of that goddamn film deal, which at the moment are not within my grasp, but which in the final analysis will have a drastic effect on my personal finance.

So don’t take it personally, Max, if I seem to be a trifle less than eager to abandon all hope on this matter—which has suddenly assumed a complexity far beyond the simple matter of a $10K personal loan. But, whatever happens, I’d like to keep it on a friendly human basis. If not … well … I’ve never been averse to a good fuckaround, especially in the face of the odds we’re looking at here … but, even then, I’d rather not get personal.

[Fear and Loathing in America: The Brutal Odyssey of an Outlaw Journalist.]

As eager for a tussle as Thompson might have been, the repetition in the letter of the “$10K loan” shows how wounded and thrown off balance he was by Palevsky’s calling in the debt. Regardless, it also reinforces how willing Palevsky—who cut his involvement with both the McGovern campaign and Rolling Stone when both exceeded his frustration threshold—was to drop the hammer on a deal leaving his control.

He exhibited this trait later in life when he withdrew a million-dollar pledge to the Los Angeles Museum of Contemporary Art:

Claiming that the then-fledgling museum reneged on a promise to give him architectural control of its new complex on Bunker Hill, he filed a lawsuit in 1984 to recoup $500,000 he had already given the museum and excuse himself from paying the other half million… .

He could be unpleasantly controlling and admitted as much during an interview with The Times a few years ago.

When a reporter observed how he could not set down a book without carefully aligning its edges with the sides of a table, or how he meticulously arrayed six pairs of eyeglasses in a row next to six different decorative cases, Palevsky, who married and divorced five times, acknowledged, “I know it’s all a little obsessive. I should have been an architect.” [LA Times]

Palevsky would’ve been far poorer and less influential as an architect, but George Costanza would’ve been pleased.