In the high-stakes world of trading, where greed and arrogance often lead to ruin, Larry Hite built an empire by embracing the one thing most traders feared: risk. While others chased glory through bold predictions and gut instincts, Hite understood a deeper truth — that markets are inherently chaotic, unpredictable, and dangerous.
Instead of trying to outsmart the market, Hite built a strategy designed to survive it. He didn’t aim to predict the next market move — he aimed to control his losses. Hite became one of the pioneers of systematic trend-following — a strategy built not on complex forecasts or insider knowledge, but on disciplined, data-driven models that followed the market’s momentum.
His approach was radical. His success was unprecedented. And his rise reshaped the landscape of modern trading.
Early Life: From Failure to Fortune
Larry Hite’s path to Wall Street wasn’t straightforward — it was marked by missteps and failures that would have crushed most men.
Hite was born in Brooklyn, New York, in 1941 into a middle-class Jewish family. From a young age, Hite struggled with severe dyslexia. Reading was a challenge; school was even harder. Teachers dismissed him as lazy or unintelligent. But Hite had a sharp mind — one that saw the world differently.
He was fascinated by human behaviour, particularly how people made decisions under pressure. But his early ambitions weren’t financial — they were creative. After barely scraping through high school, Hite enrolled at the University of Bridgeport, where he studied film.
He dreamed of becoming a screenwriter. That dream ended in spectacular failure. After dropping out of university, Hite drifted through a series of jobs — selling encyclopedias door-to-door, working in advertising, and even managing rock bands. He was, by his own admission, broke and aimless.
But Hite had one gift that would eventually save him: he understood human psychology. He saw how fear and greed drove decision-making — and how people’s emotional responses often led them to make terrible financial decisions.
Discovering the Markets
In the early 1970s, Hite’s life took an unexpected turn when a friend introduced him to the stock market. At first, he was fascinated by the idea of making money from the rise and fall of asset prices. But Hite quickly realised that most people who traded lost money — not because they didn’t understand the markets, but because they didn’t understand themselves.
Traders were slaves to their emotions. They chased profits when markets were hot and panicked when markets turned south. Hite saw this behaviour as predictable — and exploitable.
He devoured books on trading and market psychology, studying the few traders who had managed to sustain long-term success. He became convinced that the key to making money wasn’t predicting the market — it was managing risk.
“I don’t trade markets. I trade risk,” Hite would later say.
The Birth of Systematic Trend-Following
In 1981, Hite co-founded Mint Investment Management Company with Michael Marcus — one of the legendary traders mentored by Ed Seykota. Mint was one of the first hedge funds to focus exclusively on systematic trend-following strategies.
The premise was simple but revolutionary:
- Trade based on price, not opinion — Mint’s models focused purely on market momentum. If the price was rising, they would buy. If it was falling, they would sell. No economic forecasts. No gut feelings. Just data.
- Cut losses quickly, let winners run — If a trade moved against them, they would get out fast. If a trade was working, they would hold on until the trend broke.
- Diversify across markets — Mint traded everything — stocks, commodities, bonds, and currencies — to reduce exposure to any single market shock.
- Size trades based on volatility — Mint’s models adjusted position sizes based on market volatility, ensuring that no single trade could blow up the fund.
Mint’s strategy wasn’t about being right — it was about surviving and capturing profits when trends emerged.
And it worked — brilliantly.
The Mint Machine
Mint’s rise was meteoric. In 1981, its first year of operation, the fund returned 30% — at a time when most hedge funds struggled to break even. Over the next decade, Mint would become one of the largest and most successful hedge funds in the world.
By the mid-1980s, Mint was managing over $1 billion — making it the first hedge fund to cross that threshold. Hite’s strategy was working not because he could predict the market — but because his models were designed to survive any market environment.
When the stock market crashed on Black Monday in 1987, most hedge funds were wiped out. Mint made money. Hite’s models had detected the downward momentum early and flipped short. While Wall Street panicked, Mint’s algorithms quietly cashed in.
By the early 1990s, Mint’s annualised returns were averaging around 30% — far outperforming the broader market. The fund was so successful that institutional investors lined up to hand over their capital.
Hite had proven that systematic trend-following wasn’t just viable — it was one of the most powerful trading strategies ever created.
“You Don’t Have to Predict the Future”
Hite’s approach was rooted in simplicity and humility. He knew that markets were too complex and chaotic to predict consistently — but that didn’t matter. His models were designed to profit from momentum — not forecasts.
He once explained his philosophy with brutal clarity:
“If you diversify, control your risk, and go with the trend, it just has to work.”
Hite’s focus on risk management became legendary. He famously said:
“If you don’t bet, you can’t win. If you lose all your chips, you can’t bet.”
For Hite, risk wasn’t something to be feared — it was something to be managed. He embraced uncertainty and built a system that thrived on it.
Stepping Back and Legacy
In the early 1990s, Hite stepped back from day-to-day trading at Mint. The firm continued to thrive, but Hite turned his focus to mentoring other traders and developing his ideas further.
In 2000, Hite retired from active trading — but his legacy was cemented. His systematic approach to risk and momentum became the foundation for an entire industry of quantitative hedge funds.
Hite’s influence can be seen in the rise of trend-following CTAs (Commodity Trading Advisors) and systematic macro funds. The core principles of his strategy — cutting losses, riding trends, diversifying, and managing position sizes — remain cornerstones of modern hedge fund strategy.
In 2019, Hite shared his insights in the book “The Rule: How I Beat the Odds in the Markets and in Life — and How You Can Too.” In it, he distilled his life’s work into a simple message:
“You don’t need to know what the market will do tomorrow — you just need to know how to respond when it moves.”
Larry Hite didn’t outsmart the market — he outlasted it. He built a fortune not by trying to control the chaos, but by accepting it — and turning risk into his greatest weapon.
In a world full of traders searching for certainty, Hite realised the ultimate truth: success isn’t about being right — it’s about surviving long enough to get lucky.
