The Rule: How I Beat the Odds in the Markets and in Life―and How You Can Too

In The Rule, legendary trader and hedge fund pioneer Larry Hite recounts his working-class upbringing in Brooklyn as a dyslexic, partially blind kid who was anything but a model student―and how he went on to found and run Mint Investment Management Company, one of the most profitable and largest quantitative hedge funds in the world. Hite’s wild success is based on his deep understanding that markets are flawed―just like people. Through his early-life struggles and failures, Hite came to know himself well―his fears, his frustrations, his self-doubt, and his tolerance for all of the above. This motivational book reveals that by accepting the facts of his life and of himself, he was able to accept markets as they are. And that was the key to his success.

Introduction:

Part I tells the story of my childhood and teen years and how as a dyslexic blind kid who did poorly in school, I eventually found my way into a calling. I share my four foundational principles and how to apply them to the game of money and the game of life: (1) Get in the game, (2) don’t lose all your chips, because then you can’t bet, (3) know the odds, and (4) cut your losers and run with your winners. First, you need to understand who I am, why I chose the life I did, how I think, and how these principles can help you.

In Part II, I tell the story of these principles applied to the larger world. This includes the story of how my partners and I founded Mint, which became the largest hedge fund company in the world and the first to trade a billion dollars. The trading I did was based on sophisticated research and computing, but I have tried to demystify our process and show how you can use it to build wealth even if you go a different direction than me. I also share specific mechanics for the novice and principles for the advanced trader to consider as well. What’s most important to me, however, are not the exact mechanics but the overall philosophy I have developed, which I believe is valuable for everyone from young to old, regardless of your country.

As I share my experiences, you will see how my early failures forced me to adjust to failure. More important, all major fortunes are built on a lot of small losses, which pave the way to big wins and success. When I deliver talks to university students, I often discuss the seven questions they should ask themselves:

• Who are you?
• What is your goal?
• What game do you want to play?
• Where are you playing the game?
• What is your time and opportunity horizon?
• What’s the worst possible thing that can happen?
• What will happen if you get what you want?

This book is called The Rule because one of my chief goals is to share how the same trading philosophy I used to achieve success with money can also be effective in other aspects of life—from love and marriage to career decisions to how you cross the street. I hope my words inspire you to consider the odds that underlie all of those major decisions in your life—the ones you might not be thinking critically enough about right now. Because I am a trend follower, I ask you to look carefully at the trends and numbers you are following in your life. No one can know the future, but what are those trends and numbers telling you?

Contents:

• Know Who You Are: How I Learned from Failure
• Find the Game You Love: My Education as a Trader
• Working the Odds: Your Time and Opportunity Horizon
• Trend Following: Cut Your Losses and Let Your Winners Run
• How to Lose Money, Including How I Lost Millions
• Making Mint: Know Where You Are Playing the Game
• How My Philosophy Can Work for You: Applications of the Rule
• And the Philosophy Continues to Work: The Next Generation
• Conversations with a Young Trader—with Kolade Oluwole
• You Have Choices: Persistence Pays Dividends

The Rule: How I Beat the Odds in the Markets and in Life―and How You Can Too By Larry Hite pdf