Chapter 3

Larry Benedict

Beyond Three Strikes

The road to success is often paved with failure. Larry Benedict did two things consistently during his early career: lose money in trading and get fired—the two often, but not always, related. Despite a complete lack of evidence that he possessed any trading skill, Benedict persisted in his quest to become a successful trader, somehow managing to find another trading job after each failure. Luckily for Benedict, there is no three-strikes-and-you’re-out rule in pursuing a career.

Ultimately, Benedict proved to be as consistent in success as he was in failure. Benedict’s transition point came in 1989 when he was hired by Spear, Leeds & Kellogg (SLK) to be an option specialist in the XMI index on the American Stock Exchange. As a specialist, Benedict gained some much needed experience and developed a feel for the markets. When volume in the XMI started to dry up three years later, Benedict became an off-the-floor index derivatives trader for SLK. In 1993, Benedict’s success as a trader led to his being named the Special Limited Partner for SLK’s newly created proprietary trading department. After Goldman Sachs purchased SLK in 2000, Benedict left to start his own trading firm, Banyan Equity Management.

A trading friend describes Benedict’s skill in the market as follows: “He has ‘it.’ It’s hard to describe it. Why does Ichiro Suzuki repeatedly hit 350? I don’t know. Benedict is like Rain Man in that office, but get him out of the office, ...

Get Hedge Fund Market Wizards now with O’Reilly online learning.

O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers.