Michael Covel touches on on Motorhead, Hugh Hendry, David Harding, Vermeer, The Pope, acroyoga and Saigon psych rock in today’s monologue. How is it all related? Covel explores. First, Covel opens with a quote from Martin Bergin of Dunn Capital: “Everything we do is 100% systematic. There’s no over-ride, no individual decision-making whatsoever. That is the focus of the firm.” Covel moves into a clip from David Harding on Bloomberg. Harding doesn’t completely obliterate Eurgene Fama’s work, but he says, although his work is academic beauty, it doesn’t beat the performance of trend following. Covel then moves into Hugh Hendry. Although not a trend follower per se, he has often said things that are extremely trend following. The quote the Covel explores today, however, gives a clearer picture of Hendry's strategy (its not TF). Next, Covel discusses a documentary produced by Penn and Teller on the Dutch master, Vermeer, who may have used a tool to complete some of his paintings. The analogy to trading is there. There’s a system; there’s a process; there’s a model. Whether in painting, or whether in trading. Next, Covel talks about the Pope’s recent statement on economic inequality. Covel talks about how anyone who wants the politicians to legislate inequality is extremely naive. They have a vested self-interest. Covel moves on to talk about acroyoga, which he’s been practicing for the last several months. It’s reinforcing the idea of deliberate practice in Covel. That’s how Bergin makes that statement, and how Harding is so confident about trend following: They’ve been down the path of deliberate practice. Want a free trend following DVD? Go to trendfollowing.com/win.
Charles Faulkner returns to the podcast for his fourth interview with Michael Covel. Today, he comes to us from Belgrade. Faulkner is an author, trader, and international expert on modeling the knowledge and performance of exceptional individuals. He was originally featured in "The New Market Wizards" by Jack Schwager. Covel and Faulkner discuss behavior, emotions, decision-making, and intuition in the world of money--and what money does to us on a biological level. Topics include Neurolinguistic Programming; how money in the mind influences money in the world; the schizophrenic-seeming handout to the two recent Nobel Prize winners; “system one” and “system two”; how “one” is running all the time, how “two” takes effort--and where Faulkner hopes to take this research; how experience can teach “system one”; new lightbulb moments in current research; how the “afraid to lose” (or in Singapore, Kiasu) concept could be terribly dangerous when applied to money; why the less you know about something, the clearer the image--and the more certain you are that it’s real and true; the need for certainty; money as a living metaphor; sunk costs; the Myers-Briggs instrument; and rituals and money. Faulkner also tells us the heart of what he’s after in his new upcoming book. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Mikael Stenbom. Stenbom is the CEO and founder of RPM, which is a advisory consulting firm in Sweden. They advise, consult, or manage over 3.5B AUM. Stenbom has had tremendous experience in understanding strategy and the money management side of the CTA/managed futures world. Stenbom and Covel discuss what makes up a “smart money investor”; third party risk monitoring; and the life-cycle of CTA’s, hedge funds, and businesses in general. Nothing is constant in this world, and things change--Stenbom places a time axis on CTA’s to better manage for his clients. He also gives his opinions on why certain CTA’s have found such success. Covel and Stenbom discuss some of Stenbom’s early influences, such as the first time Stenbom had a “lightbulb moment” in the systematic world; Stenbom’s economics background; connections between economics, trading, and sociology; and the Austrian school of economics. Further topics include how Stenbom goes about explaining his style of responsive, systematic trading to new clients; Andrew Lo’s Adaptive Markets Hypothesis (which says that markets are for the most part efficient, but from time to time due to changes in the market ecology, become extremely inefficient); the process of rebranding Stenbom’s firm in 2008; the “politically infected” investor; and the cultural compatibility between Nordic countries and the Japanese. Free trend following DVD: www.trendfollowing.com/win.
Michael Covel speaks with Tom DeMark. DeMark is the founder and CEO of DeMark Analytics and the creator of the DeMark Indicators. DeMark considers himself a market timer and believes that fundamentals are critical; however, he and Covel have a lot in common. His work is price driven and technically driven. DeMark and Covel discuss how all conceivable market factors are in the price movement; obsession, passion and practice; having the “cover story” of fundamentals, but using technical analysis behind the scenes; Elliott wave; the fibonacci sequence; forecasting; DeMark’s thoughts on George Soros, Michael Steinhardt, Paul Jones, Steve Cohen, and others; thoughts on when DeMark first started computerizing his indicators; why you’ll fail if you rely solely on charts; DeMark’s thoughts on the pure price driven, reactive trend following traders; and introducing a new variable into a pure trend following approach. Receive a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel interviews Cal Newport. Newport writes on a really interesting subject: Passion (mission critical to trading). You hear it all the time: chase your passion, find your passion. But Newport comes at it from a different perspective, similar to Covel's experiences--passion does not come first, but rather developing top skill comes first. Newport and Covel also discuss Alan Watts; why following your passion isn’t such a great idea from Newport’s perspective; the notion of deliberate practice and the 10000 hour rule, falling back on simplistic strategies that fail; passion following success as the true gauge; misconceptions about passion; thinking of passion as a side-effect of running your career in the right way; overcoming difficulty as a necessary step in the process; the work and analysis Newport has done looking at top chess players; the systematic aspect of gaining skill and its ties to passion; and anxiety and failure. Cal Newport can be found at calnewport.com. Want a free trend following DVD? Go to trendfollowing.com/win.
Today on the podcast, Michael Covel speaks with Yaron Brook. Brook is the president and executive director of the Ayn Rand Institute. Covel early on was introduced to Ayn Rand's work by famed trend trader Ed Seykota. Over the years Covel has come to appreciate that numerous top traders and entrepreneurs cite Rand's work as inspirations in their careers. Covel and Brook discuss trading; the nature of altruism; the idea and definitions of selfishness in the context of objectivism; the power of ideas; the idea of being a victim; schools, teaching, and political teaching; entitlement leading to victimhood; the rise of state power, the ambitious poor, and the minimum wage; free work and internships; Alan Greenspan; and America compared to Singapore. More on Yaron Brook: http://en.wikipedia.org/wiki/Yaron_Brook. Receive a free trend following DVD: trendfollowing.com/win.
Michael Covel opens up today’s podcast with an excerpt from a book called “Maximize Your Potential”; talking about growing your expertise and taking bold risks. It comes down to making bets. That is the trend following way. You do not know which market is going to take off; you can’t know, you just have to make bets (with risk management). When whatever technical indicator you’re using hits, you’re in. And if it doesn’t go your way, you get out. With that overview, Covel goes over his week and his experiences so far in Cambodia. Covel talks about living large, comparing us to the people who built the temples in Cambodia. Nothing goes up forever, whether it’s the Cambodian grandeur or Twitter, Priceline or Google. Covel moves on to talk about when one market dries up--then what?. Can you trade all those markets the exact same way? Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel talks about fear: what scares us and why. What’s scarier: a deadly snake slithering across your path on a hike, or watching a 1000 point drop in the stock market? Covel discusses how there is no way to quantify fear itself. However, there’s a book out: “The Science of Fear”, and Covel quotes from it. Covel also shares his snake eating story from Asia. So what’s the moral of this? The science of fear, Covel’s snake eating story, etc.? Break it down into its component parts. Break it down, and then go live it; do it. The fears that one might have going through the snake scenario are exactly like those going through the markets. You can’t let that fear of losing grab you so that you can’t progress. Look at the opposite side of fear: fear and opportunity exist on either side of the coin. If you don’t think about breaking down trading and investing into its component parts, and figuring out how it works, you’re going to fail. If you hang out with those who make general feel good statements, that’s not breaking it down. Covel’s simple lesson for today: Walk right into the snake, find out how the snake works, take the snake apart, eat the snake (if you have to). That’s how you learn. That’s how you gain confidence. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel talks with Porter Erisman. His documentary film “Crocodile in the Yangtze” is the story of Chinese entrepreneur Jack Ma. Jack has assembled a net worth of over 3B USD all started from one little e-commerce site called Alibaba. Erisman’s film is a great window in to the cultural differences and similarities that exist across the countries of our planet. Even more specifically, it is an entrepreneurial manifesto for EVERYONE. Covel and Erisman discuss what it was like working with Ma; short-term vs. long-term entrepreneurs; the lack of knowledge/insight America has for China; the perceived threat of China to America; whether nationalism played into Ma’s success; the commonalities between the greatest internet entrepreneurial success stories; government interference with Alibaba; and how eBay was defeated by this small startup in China. More information can be found at www.crocodileintheyangtze.com. Free Covel trend following DVD: www.trendfollowing.com/win.
Michael Covel talks with Tim Price. Price is a partner and director of investment at PFP Wealth Management in the UK. Price makes no bones about it: He comes more from a fundamental value-based perspective. However, what Covel’s eye was the pragmatic, almost investigative look into what’s going on in government and central banks in the past five years. Covel and Price discuss the subordination of freely discovered prices to policy goals; why the recent trading environment seems “wrong and dangerous”; why Price wouldn’t be able to speak freely working for a large bank; why Price and his colleagues aren’t “doom and gloomers”; why the media neglects to report on black swans; why the role of the Fed is to keep “spiking the punch”; the vested financial pushback on having some of these views; risk and “Against The Gods”; why people are hardwired to be loss averse; and an analogy to the US Forest Service. Covel also offers a monologue on the back side of Tim's interview including an update on Bitcoin and an additional insight from Brad Rotter (ep. 177). Tim Price can be found at http://thepriceofeverything.typepad.com. Want a free trend following DVD? Go to trendfollowing.com/win.
Today on the podcast, Michael Covel speaks with Vernon Smith. Smith is a professor of economics at Chapman University in Orange, CA. He also shared the 2002 Nobel Memorial Prize in Economic Sciences with Daniel Kahneman. Covel and Smith discuss bubbles; some of Smith’s early experiments; how “we’re all born traders”; early “ah ha” moments; early science and engineering beginnings; upsetting the conventional economics “apple cart”; the difference between “hamburgers and haircuts” and the other 25% of goods; Smith’s experience bringing Chicago traders in to lab experiments; how we see the dotcom bubble, spring of 2003, and the real estate bubble today; differences between housing bubbles and stock market bubbles; understanding why bubbles happen; liberty; views on Adam Smith; and Smith’s idealogical journey from socialist to his libertarian leanings today. Want a free trend following DVD: trendfollowing.com/win.
Michael Covel interviews Brad Rotter. Rotter is a speculator, venture capitalist, and looks for big trends. He's not a trend follower per se, but he's made money in the trend following world. He was the first investor with Richard Dennis in the early 1980’s. Covel and Rotter have a wide-ranging conversation--Rotter's premise is that America has peaked and he sees Bitcoin as a tremendous opportunity. Covel and Rotter discuss how Rotter became an entrepreneur from early years as a farmer in Iowa; how he came to be Richard Dennis' first client when he started managing money; why the US is at 'peak civilization'; why technology is arbing away the need for people; how the unit of time is changing; why it's harder and harder to make an easy living; whether the US government is the greatest hedge fund in history; and why Bitcoin is a 'perfect' currency. Want a free trend following DVD: trendfollowing.com/win.
Michael Covel opens with a mini-monologue about travel including a discussion of his experiences in 2013. Then Michael talks with his guest Fabian Lim. Lim is an entrepreneur based out of Singapore. Covel and Lim discuss life in Singapore generally, and how Singapore has become "the gleaming city on the hill"; Singapore's success despite its lack of natural resources, and how its airport represents the forward thinking found there; Lim's first entrepreneurial ventures; the varied reasons that cause us to become entrepreneurs, and the difference between online and offline entrepreneurs; experience in the context of entrepreneurship, and how it can be used as an excuse; timeframes and getting out of the "employee" mindset; becoming rich, and why it's a choice; classical conditioning, self-limiting beliefs, and breaking the mold to become an entrepreneur; the idea of "failing faster"; the connection between Lim's flight training and entrepreneurship; risk and uncertainty; using simulations to practice; success traits and failure philosophy; and why choice can be the enemy of a successful entrepreneur. Free trend following DVD: trendfollowing.com/win.
Michael Covel talks with Dylan Evans. Evans is a British academic and author. The one subject that really caught Covel’s eye is the idea of “risk intelligence” (see his TED video which is great): expected value, bet sizing, certainty, and process vs. outcome. Evans does a fantastic job of getting at these issues (critical to traders and just about anyone else), and these are the critical issues not only to trading but to life. Covel and Evans discuss expected value, the definition of risk intelligence; optimism bias; correlations between IQ and risk intelligence; the Brandywine Raceway in Delaware and unconscious statistical modeling; probabilities and the nuclear power risk issue; making decisions on uncertain information; the expected value mindset; bet sizing; how luck is always part of the game; knowing when not to bet; the hidden costs of trying to eliminate risk in a system where risk can never be eliminated; and the “calibration test” for risk intelligence. Dylan Evans can be found at projectionpoint.com. Want a free trend following DVD: trendfollowing.com/win.
Wondering why your money’s all gone? Michael Covel has two fantastic examples why on today’s podcast. First, famed trend follower David Harding appearing on CNBC gives great opportunity to learn. And second, an article from the reformed broker Josh Brown. Covel goes through the Harding appearance point by point. Next, the CNBC anchors ask questions and Covel responds. Covel moves on to Josh Brown’s article about people acting like “silly little bitches” with their money. Are we in the “funny phase” of a bull market? You see the misinformation campaigns, you see people like Brown saying we’ve entered the silly season. So what does it mean for you? You need a system. You have to know what portfolio you are trading and why. You have to know you’re entry and exit strategies. How much are you going to bet? Do you want to be part of the sheeple, or are you somebody different? Free trend following DVD: trendfollowing.com/win.
Michael Covel returns from a presentation in Bangkok, Thailand and opens up today's podcast with a motivational speech that caught his attention. It all relates back to the individual and personal responsibility. Today, he presents five issues that ultimately revert back to that main headline. First, he talks about Nobel Prizes, Donald Rumsfeld, and one of the “Moneyball” stars (Paul DePodesta). Secondly, he talks about Dave Ramsey on "God" investing. Next, he discusses an article by Howard Gold that says you can't beat the market and then Alan Greenspan having his behavioral economics moment, and lastly listener mail. If the world is uncertain, where does personal responsibility come in? Covel discusses the pursuit of money through religion by way of Dave Ramsey. What does investing "God's way" say about personal responsibility? Covel also talks about the health care rollout, the government role in our lives, and the persistence of the average, and relates it all back to personal responsibility. Receive a free trend following DVD: trendfollowing.com/win.
It might seem like common sense, but clearly it's not being practiced. We all know that markets are volatile. They go up and down. You can get hurt, and getting hurt is part of the game. Even though you can get hurt in the markets or life, that doesn't stop people from pretending. Covel gives some examples to illustrate, and makes an analogy to the Federal Reserve. How have we gotten to the point where some failure, some losing, has been deemed so inappropriate that we're going to try and protect everyone and everything? This has become the way of the markets; the way of life. However, the markets and life are rough. But if the vast majority of people are just trusting their money to a big monolith of a machine, that gives you a leg up. If you have rules that are opposite to what the vast majority of people are doing, that should give you an edge. Free trend following DVD: www.trendfollowing.com/win.
Michael Covel talks with Nick Atkeson. Atkeson's book is called "Win By Not Losing: A Disciplined Approach to Building and Protecting Your Wealth in the Stock Market by Managing Your Risk". Covel and Atkeson talk about momentum and streaks; some of the stories contained in Atkeson's book, including "Sonny" in Vegas and his ability to disrupt the earnings of the Rio Casino, and the idea of the "theo"; why people should invest at all; uncertainty in the markets, with jobs, and in retirement; market timing; asset allocation decisions; negative tail risk; black swans; what happens when/if the US potentially defaults on its debt; the idea of "systematic", taking your losses, and behavioral finance; loss avoidance; and how Atkeson got started in his career. Atkeson can be found at deltaim.com. Free trend following DVD: trendfollowing.com/win.
Michael Covel launches into the headlines of managed futures and trend following. Many headlines in the past few months have tangentially touched on the trend following world and Covel sets the record straight. Covel talks about the battle in his world over the phrase "managed futures". A phrase that was created for one reason only from his perspective: to produce commissions. Who cares what the instrument is? It's irrelevant. The only relevant issue is: what is the strategy and how can it help the end user? Covel discusses "managed futures", black box trading, Ray Dalio, Bill Dunn, and an article called "How Investors Lose 89% of Gains From Futures Funds". Covel moves onto the confusion with the phrase trend following and brings up a company named FX Concepts and its leader John Taylor. Yet is this doomed 14B hedge fund really trend following? Covel sees prediction, an assortment of other strategies, and efforts to forecast what the next government move is going to be. That's not trend following. This is a real effort to break apart the headlines giving the end user a look behind the scenes at how the system wants you indoctrinated. Want a free trend following DVD: www.trendfollowing.com/win.
Today on the podcast Michael Covel speaks with Lewis Howes. Howes is a lifestyle entrepreneur with a wealth of different experiences, from starting new businesses to pro-athletics. Covel and Howes discuss what a "lifestyle entrepreneur" really is; how his beginnings in athletics and an injury led to where Howes is today; sacrifice in the context of sports and business; Howes' early influences and mentors; some of Howes' early successes; the shift from success to impact; why "I want to make a billion dollars" is not a great goal to set for yourself; the importance of knowing the "why" of your goals; Howes' experience with his podcast; why doing something different every day is important to happiness; advice for those who want to make fitness a part of their lives; and sleep management. Howes can be reached at LewisHowes.com and can also be found on his "School of Greatness" podcast on iTunes. Want a free trend following DVD? Go to www.trendfollowing.com/win.
Michael Covel speaks with trader and author Larry Williams. Williams has been in the trading game for over four decades. Covel and Williams discuss the IRS and Congress; targeting of individuals and groups by the government; facing the government in a court case and negotiating with the IRS; how Williams approached trading at the beginning, and his motivations to do so; how growing up in Montana affected Williams personally; how Williams came to run for Senate and his reasoning for doing so; the importance of speculation, and the difference between speculation and gambling; how Williams made the migration from stocks to thinking about futures; how Williams approached the emotional and money management sides of the equation; risk control; understanding what kind of system "fits" you best; the changing condition of markets; keeping it simple; the importance of learning from injury; and how Williams came to his Libertarian mindset. Larry Williams has a legendary name within trading circles. His grounded & calm reasoning will provide new traders confidence, and experienced traders those needed reminders. Free trend following DVD: trendfollowing.com/win.
Author and strategist Ryan Holiday returns to the podcast. Holiday's new book, "Growth Hacker Marketing" struck Covel as codifying many of the most important entrepreneurial precepts for success today. Covel and Holiday discuss the definition of "growth hacking"; the different forms of growth hacking; why many other marketing books pertain to big business rather than startups; the startup mentality; how Holiday turned to Bittorrent to launch Tim Ferriss' "The 4-Hour Chef"; platforms in the growth hacking mindset; letting others be lucky; growth hacking in the context of startups; the idea of a product market fit, changing your product, and assessing its strengths and weaknesses; the marketing implications of knowing the "the product is never done"; standing by your convictions but being open minded to change; the anachronism of press releases; Facebook, Twitter, and Instagram; the concept of other peoples' money, the lack of flexibility that goes along with that, and the importance of being able to change. Whether you are an entrepreneur with your unique idea, or even a trader, Holiday's engineering way of approaching the world should not be ignored. It's all about hard work and resourcefullness. Ryan Holiday can be reached at RyanHoliday.net and "Growth Hacker Marketing" is available wherever e-books are sold. Free Covel trend following DVD: trendfollowing.com/win.
Michael Covel speaks with Harry Binswanger on today's podcast. Binswanger is an American philosopher, writer, and Objectivist as a long-time associate of Ayn Rand. Binswanger was recently interviewed by Henry Blodget regarding Binswanger's article on the value of the 1%, and Binswanger expands on this in today's interview with Covel. Covel and Binswanger also discuss being inspired by the 1%, and why his article caused such an uproar; the nature of trade; envy and jealousy; understanding where entrepreneurs start and how wealth is created; the bailouts of 2008; Wal-Mart and its many innovations; why money isn't the root of all evil; seeing Ayn Rand's work woven into the cultural fabric; statism; Navigators and the new health care laws; why the wealthiest counties in America all surround Washington, DC; why we're at the "tipping point" in society today; thoughts on Ron Paul vs. the principles of Ayn Rand. Binswanger can be found on HBlist.com and writes a column for Forbes. Free trend following DVD: trendfollowing.com/win.
Today on the podcast Michael Covel speaks with Tom O'Connell of O'Connell Sports Management. Since 1997 O'Connell has represented over 70 professional baseball players and is a certified agent with the Major League Baseball Players Association. O'Connell has a fantastic entrepreneurial story about starting from scratch, grinding it out and having massive passion. Covel and O'Connell discuss how O'Connell became the entrepreneur he is today, starting off in the club business; his plans for the baseball offseason; "Moneyball" and the use of statistics; salary arbitration; projecting results into the following year; the importance of risk; what O'Connell learned from working with baseball scouts; competition amongst other agents; comparisons to the hedge fund world; some of the more interesting baseball characters that O'Connell has sat down with; and the importance of getting out of your comfort zone. Even if you have no interest in baseball, this conversation is more directly about making something big happen in life and taking responsibility. A great inspirational story. For more information on Tom O'Connell go to www.toconnellsports.com. Free trend following DVD: trendfollowing.com/win.
Today on the podcast Michael Covel speaks with Richard Noble. Noble likes to go very fast. In fact, the Scottish entrepreneur held the land-speed record between 1983 and 1997. His current team is aiming to go over 1000 MPH on the ground in a car. Covel and Noble discuss what 600 MPH feels like to someone who has never been there before; the mental processes when you're going at high speeds; process vs. outcome; the danger of emotional highs; Noble's entrepreneurial spirit; how Noble got the desire for the land-speed record at the age of six; whether Noble views his endeavors as "life threatening"; the idea of "higher risk" in life and society today; the importance of taking risks; the idea of developing a "risk culture"; motivating people to come over to your own perspective; the difficulties Noble experienced with British culture, the media, and with big companies; the parallel experiences Covel and Noble have had on the web; and where Noble stands on breaking the 1000 MPH barrier right now. For more information on Richard Noble, go to www.bloodhoundssc.com. Free trend following DVD: trendfollowing.com/win.