Michael Covel speaks with Donald MacKenzie on today’s podcast. MacKenzie is a Professor of Sociology at the University of Edinburgh, Scotland. He works on the sociology of markets, focusing on automated trading, the use of mathematical models, and the evaluation and trading of bonds. MacKenzie has worked in the past on topics ranging from the sociology of nuclear weapons to the meaning of proof in the context of computer systems critical to safety or security. Covel and MacKenzie discuss economic models; self-fulfilling prophecies and economics; our beliefs and the social world; the definition of performativity; Mackenzie’s analysis and study of the Black-Scholes model; Long Term Capital Management; reflexivity; the intellectual gap between purveyors of the efficient market hypothesis vs. behavioral economists as reflected in the 2014 Nobel Prize winners; and the arms race in high frequency trading. Donald MacKenzie’s book mentioned is called An Engine, Not A Camera: How Financial Models Shape Markets. Want a free trend following DVD? Go to trendfollowing.com/win.
Today on the podcast, Michael Covel opens up with a monologue and closes with an interview of him covering trend following 'fundamentals'. Covel opens up by discussing how the phrase “black box” is used to marginalize those who practice trend following trading. Next, Covel plays an interview clip from James Simons, the chairman of Renaissance Technologies, who generated for himself over 14B USD all through models. The second part of today’s episode are highlights of Andrew Horowitz’s interview with Covel--an interview *of* Covel this time. Covel and Horowitz discuss the TurtleTrader story; black boxes, emotions, and computers; what trend following is from the most basic level; the question of “why”, and why it might not be as important as many people think; finding which markets to enter; finding the optimal bet size; and how Fed intervention plays into the market. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Kathryn Kaminski on her second visit to the podcast. Kaminski is Director of Investment Strategies at Campbell and Co--the famed CTA started by Keith Campbell. Today, Kaminski outlines her new whitepaper, specifically diving into correlation among traders (CTAs). Covel and Kaminski discuss correlation between fund managers and strategies; the media’s misrepresentation of systematic strategies; diversification in the CTA and equity world; and why one trend following strategy is similar to just one stock. To view the paper see: www.campbell.com. Want a free trend following DVD, go to: www.trendfollowing.com/win.
Michael Covel speaks with Gavin Serkin on today’s podcast. Serkin has been writing about developing economies for the better part of two decades as the Editor of Portfolio International magazine and more recently as the head of the emerging markets international desk at Bloomberg News in London. Serkin led Bloomberg’s coverage of the credit and derivatives markets from 2004 to 2008, winning the Society of American Business Editors & Writers’ Best in Business Award and the Society of Professional Journalists’ Deadline Club Award. Frontier, his new book, is a vivid travelogue of ten countries with the potential to lead economic growth in the coming decade. Covel and Serkin talk about safety issues in frontier lands; men and women in frontier countries; global brands and the direction we’re headed; going through Vietnam with Mark Mobius; Myanmar and violence; relations between the US, China, Vietnam, and Myanmar; Nigeria’s economy and where it’s headed. For more information on Gavin Serkin, visit frontierfunds.org. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Spyros Makridakis on the show today. Makridakis is the Rector of the Neapolis University of Pafos NUP and an Emeritus Professor of Decision Sciences at INSEAD as well as the University of Piraeus and one of the world's leading experts on forecasting, with many journal articles and books on the subject. He is famous as the organizer of the Makridakis Competitions, known in the forecasting literature as the M-Competitions. His calling is to poke holes in the notion that we can forecast with accuracy. Covel and Makridakis discuss known knowns, known unknowns, and unknown unknowns; the two main types of uncertainty--“subway” and “coconut”; Jim Collins, one of the best-selling business book authors of all time, and why it might not have any use to us; medicine and chance; the placebo effect; acceptance of an uncertain world; and the illusion of control. Whitepapers mentioned in episode: http://www.michaelcovel.com/2015/04/23/spyros-makridakis-interview-followup. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Martin Lueck on today’s podcast. Lueck holds an M.A. in Physics from Oxford University and currently is the Research Director and President of Aspect Capital. Lueck was originally with Adam, Harding and Lueck Limited (AHL), which he co-founded with Michael Adam and David Harding. At AHL, Martin initially focused on trading system research before taking on responsibility for the further development of the proprietary software language which provided the platform for all of AHL’s product engineering and implementation. Covel and Lueck discuss when he first saw quantitative, systematic styles in action; the beginnings of AHL; early coding experiences; early decisions that lead to a completely systematic strategy; diversification; what percentage of the educated financial audience grasps the strategies that are used at Aspect; behavioral economics; and bringing new potential opportunities into Aspect. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Ryan Holiday on his third visit to the podcast. Holiday is an American author, writer, and marketer. He is the media strategist behind authors Tucker Max and Robert Greene, the former Director of Marketing for American Apparel and an editor-at-large for the New York Observer. Today, Covel and Holiday discuss the process of writing a book. Whether or not you want to write a book yourself, the timeless topics Covel and Holiday cover apply not just to writing, but to life. Covel and Holiday discuss the idea of always being in a research mindset; why some people don’t take advantage of standing on the shoulders of the giants that came before them; to know where you’re going and to have a plan when it comes to writing; why it’s “all material”; the idea of listening to the same song over and over again; the “flow” state and its importance in writing; the importance of having a purpose in your writing; discipline and commitments; outsourcing and hiring experts for your writing project. For more information on Ryan Holiday, visit ryanholiday.net. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Victor Ricciardi on today’s episode of the podcast. Victor Ricciardi is an Assistant Professor of Financial Management at Goucher College. Professor Ricciardi is a leading expert on the academic literature and emerging research issues in behavioral finance. He is the editor of several eJournals distributed by the Social Science Research Network (SSRN), including behavioral finance, financial history, behavioral economics, and behavioral accounting. Ricciardi is also the co-editor of the book Investor Behavior: The Psychology of Financial Planning and Investing. Covel and Ricciardi discuss how Ricciardi found his way into behavioral finance; risk perception vs. risk tolerance; the affect and the anchoring heuristic; behavioral finance vs. behavioral economics; looking at behavioral finance in the context of specific strategies; behavioral economics in the context of asset bubbles and the popping of asset bubbles; why economic growth does not increase happiness; mindfulness as an assist in the notion of good decision-making; the notion of animal spirits; and the behavioral school vs. the classical school in academia. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Michael Dever on his third appearance to the podcast. Dever is an American businessman, futures trader, entrepreneur, and author. Dever is the founder and CEO of Brandywine Asset Management, Inc., an investment management firm founded in 1982, and the author of the best-selling investment book Jackass Investing: Don't Do It. Profit From It. Covel and Dever discuss Dever’s approach which uses multiple fundamentally based strategies in a systematic diversified portfolio that trades across more than one hundred global markets; strategy diversification; the word “predictable” from Dever’s perspective; lack of correlation to other strategies; what Dever means by a “not purely quantitative” strategy; how and why this particular suite of strategies came to exist; the five strategy types; crisis events and black swans; the weakness in the multiple strategy return driver set; the importance of speculators; the fixation on low volatility strategies; and true portfolio diversification. For more information on Michael Dever, visit Brandywine.com. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Tim Ferriss on today’s podcast. Tim Ferriss is an author, blogger and motivational speaker known for his bestselling books The 4-Hour Workweek, The 4-Hour Body and The 4-Hour Chef. To Covel Ferriss is otherwise known as the guy who has revolutionized the idea of writing a book; he has engineered the process of a bestseller. If you want to write a book, there is no one else better to learn from. Also a big influence on Covel: the idea of location independence. This is the idea that if you have your laptop and an internet connection, you can work from anywhere. Now, after all these bestselling books, Ferriss has a new TV show, The Tim Ferriss Experiment, all about the process of "learning". Covel and Ferriss discuss why the wrestler Dan Gable is part of Ferriss’ drive; the “grinding” aspect of wrestling, and how that has played into Ferriss’ career; the early lessons learned about making a TV show; the 80/20 rule; comparisons to the Turtle experiment; the idea of getting older, recovery, and athletics. Trailer: https://youtu.be/V4IuXZOIf7E. For more information on Tim Ferriss, visit fourhourworkweek.com/tv. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Tim Price on his second appearance on the podcast. Price is the London-based Director of Investment at PFP Wealth Management. Price has over 20 years of experience in both private client and institutional investment management. Price regularly shares his views on his blog, The Price of Everything. What can we see in the central banks? What actinos have taken place in the last few years? Covel and Price discuss why the fundamentals are so 'shocking'; FDR and the Great Depression; why government taking its hands out of the equation can be the solution in a recession or depression; why savers suffer in silence; the three scenarios that occur when you accept that much debt simply cannot be paid back (growth, default, or inflation); the standoff between Germany and Greece, and how the average German might feel today about common currency; and the lack of outrage of zero interest rate policy. For more information on Tim Price, visit thepriceofeverything.typepad.com. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with K.D. Angle on today’s podcast. Angle began trading the futures markets in 1979 and developed his first rules-based trading strategy in 1984. In 1985 he created a newsletter called “The Timing Device” that specialized in making specific trade recommendations in the futures markets. After 1995, Angle retired the newsletter and went into asset management on a full time basis while investing the majority of his time and resources into researching and developing rules-based strategies. Covel and Angle discuss Angle’s father’s history, who turned a two million dollar gold investment into a hundred million in just six months, and the lessons learned; whether there was an early trend trading influence beyond looking at Angle’s father’s career; Angle’s experience with Dunn Capital; freedom of location; 100% rule-based and systematic trading vs. adding discretionary elements to your system; and why the client part of the business is so important. For more information on K.D. Angle, visit anglecm.com. Trend following DVD? Go: www.trendfollowing.com/win.
Michael Covel offers a double episode today. First, a recent speech of Covel’s all about trend following. Topics include track records; predictive vs. reactive strategies; quality of life in trading; how Covel got into the world of Trend Following; trading and coding; sophistication vs. automation; trend following performance in 2014; drawdowns in trend following; and trading as a game. Next, an interview with William Ury. William Ury, cofounder of Harvard’s Program on Negotiation, is one of the world’s best-known and most influential experts on negotiation. He has served as a mediator in conflicts ranging from boardroom battles to labor strikes, and from family feuds to civil wars. Covel and Ury’s subject today is negotiation. We’re all negotiating for something: money, love, sex, real estate. In his speech, Covel discusses reactive technical analysis; prediction; why trend following performance in 2014 was so excellent; and the reality of drawdowns. With William Ury, Covel discusses the negotiation with self; Ury’s history with high-stakes negotiations; some of the base human emotions that can be important in negotiations; getting to “yes” with yourself; how Ury became immersed in the world of negotiation; the importance of staying in the present moment. For more information on William Ury, visit williamury.com. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Colin Camerer on today’s podcast. Camerer is an American behavioral economist and a Robert Kirby Professor of Behavioral Finance and Economics at the California Institute of Technology (Caltech). Camerer's research is on the interface between cognitive psychology and economics. This work seeks a better understanding of the psychological and neurobiological basis of decision-making in order to determine the validity of models of human economic behavior. His research uses mostly economics experiments—and occasionally field studies—to understand how people behave when making decisions (e.g., risky gambles for money), in games, and in markets (e.g., speculative price bubbles). Covel and Camerer discuss why Camerer was called a child prodigy, and how he looks at that term in the context of nurture vs. nature; synthesizing behavioral economics and neuroscience; understanding Camerer’s studies when traders aren’t looking at the market on a day-to-day basis; how we can stimulate the brain to create a bubble; the ethical issues surrounding Camerer’s work; machine learning and data mining; neuroscience and game theory; comparing humans and chimps in the study of neuroscience; how trust correlates with economic growth; and how emotion functions in the modern world. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Andreas Antonopoulos and Harry Yeh on today’s two-part Bitcoin episode. Andreas Antonopoulos is a technologist and serial entrepreneur who has become one of the most well-known and well-respected figures in Bitcoin. With Antonopoulos, Covel discusses acceptance of Bitcoin, and if the State could outlaw it; Third World and Second World acceptance of Bitcoin; the infrastructural needs for Bitcoin; Bitcoin fees and the cost of securing the network; currency issuance; why Bitcoin doesn’t rely on trust; why financial transactions are the most surveilled part of your life in America; the privacy aspect of Bitcoin; currency volatility and the difference between volatility and stability; and where you can get started with Bitcoin. Harry Yeh is Managing Partner at Binary Financial. Binary Financial LLC is an Investment management company focused on the crypto currency space, trading and facilitating large block trades for high net worth individuals and institutions. With Yeh, Covel discusses why Bitcoin is the most volatile alternative asset class, but why it still might be worth it to trade; how Bitcoin is a split between a commodity and a currency right now; being a speculator in Bitcoin and trading Bitcoin like futures contracts; Bitcoin adoption in China; why Bitcoin is tough as a store of value, but as great a trading opportunity; and finally, recommendations on Bitcoin wallets. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel opens up by discussing a piece about Benoit Mandelbrot and fractals. Covel notes the importance of taking a look at the complexity we see and taking a step back--an inspiration from Mandelbrot. Next, how are trend following returns produced? It’s important to be inspired by them, but it’s also important to understand other aspects of trend following like correlation. Today, Covel discusses the combination of a trend following investment (in this case Bernard Drury) and Warren Buffett into one portfolio. Covel discusses the two strategies and what happens specifically when you combine the two. Covel concludes by sharing a clip from David Harding regarding the importance of strategy. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Gary Dayton on today’s podcast. Dayton stands apart as a trading psychologist in his use of the Mindfulness-Acceptance-Commitment (MAC) approach to peak performance, a model of human behavior based on mindfulness. Dayton is a psychologist and holds a doctorate in clinical psychology and a certificate in human performance/sport psychology from Rutgers University. He is President of Peak Psychology, Inc., a consulting firm that specializes in developing “peak” performance in traders. Covel and Dayton discuss mindfulness, yoga, and a turnaround in a particularly depressed patient; defining mindfulness; how Dayton went from a clinical psychologist to integrating money, markets, trading, and investing into his work; the importance of a trading process; looking at the lessons and research of Daniel Kahneman; the endowment effect; price action as a heuristic; the importance of an exit strategy; why mindfulness is the most important skill a trader can develop. Dayton’s book, Trade Mindfully, is available on Amazon. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Brian Proctor on today’s podcast. Proctor is an original TurtleTrader trained by Richard Dennis and Bill Eckhardt and today is a Managing Director at EMC Capital. He began his futures career in 1982, with experience at both the Chicago Mercantile Exchange and Chicago Board of Trade. Proctor was a participant in the renowned Turtle Program, and managed all trading operations at C&D Commodities through 2000. Covel and Proctor discuss Proctor’s first trading moments and the Turtle program; Proctor’s view on Liz Cheval, what she brought to his firm, and why she’s still an integral part of EMC today; how trend following strategies have continued to excel over the years; diversification and the Swiss franc; black swans and how the impossible can and does happen; and Bill Eckhardt’s influence. For more information on Brian Proctor, visit emccta.com. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Douglas Emlen on today’s podcast. Emlen is a professor at the University of Montana. He is the recipient of the Presidential Early Career Award in Science and Engineering from the Office of Science and Technology Policy at the White House. He has also earned multiple research awards from the National Science Foundation, including their five-year CAREER award. Covel and Emlen discuss taking our lessons from animals; the connection with human and animal arms races; international hacking; comparing the fiddler crap to US and USSR bombers during the cold war; defining evolutionary biology; how an arms race can run its course via the example of the sabertooth tiger; the arms race in the trading world; how the cuttlefish has found its way around the “alpha” system; finding “workarounds” when the deck is stacked against you; war games and detente; why predictability in weapons is important; one-on-one showdowns; and the importance of being nimble. Emlen’s book, Animal Weapons: The Evolution of Battle, is available on Amazon. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Nigol Koulajian on today’s podcast. Koulajian is the Founder and Chief Investment Officer of Quest Partners LLC. He has been designing and trading short-term and long-term technical systems for over 22 years. Covel starts the episode with some comments on Ray Dalio's recent comments drawing a parallel to 1937. Then Koulajian and Covel talk all things trend following in the CTA space. Covel and Koulajian discuss trend following performance in 2014; volatility vs. skew; why having a good Sharpe Ratio is not the be-all-end-all; the notion that alpha in the CTA world is not a result of skill; correlation between tail risk and the Sharpe Ratio; central bank action and the Swiss Franc; why trend following may not be as good in equity market corrections now as it has been in the past; why trend following is not about the super-complicated mathematics; getting outsiders to understand drawdowns; emotional intelligence vs. intellectual intelligence; media bias against trend following. For more information on Nigol Koulajian, visit questpartnersllc.com. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Terrance Odean on today’s podcast. Odean is the Rudd Family Foundation Professor and Chair of the Finance Group at the Haas School of Business, University of California, Berkeley. Odean has extensively researched into the empirical data on active trading. He is very well-known for his work in behavioral finance and is once of the early pioneers. Covel and Odean discuss how Odean describes his work; how Odean started his work looking at individual broker statements; the disposition effect; how Odean was able to get individual investor data when he was starting out; looking at early thinkers in the arena of behavioral finance; why people buy low and sell high; why statistics are one of the best ways to understand what’s going on in the market; the difference between male and female investors; why overconfidence hurts investors; attention and how we make decisions; why a simple heuristic from Seinfeld could be the best way for most investors. For more information on Terrance Odean, visit odean.org. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Robert Seawright on today’s podcast. Seawright is the Chief Investment & Information Officer for Madison Avenue Securities, a boutique broker-dealer and investment advisory firm headquartered in San Diego, California. Seawright is also a columnist for Research magazine, a Contributing Editor at Portfolioist as well as a contributor to the Financial Times, The Big Picture, The Wall Street Journal’s MarketWatch, Pragmatic Capitalism, and ThinkAdvisor. Covel opens up by talking about “A New Kind Of Investment Outlook”, a blog post by Seawright. Covel explains that this episode is all about the right type of thinking when it comes to proper investing. Covel and Seawright discuss topics such as how Seawright was able to put together this blog piece; perfection and prediction; bias blindness; volatility vs. risk; separating your politics from your investing; financial media as entertainment; whether Seawright encountered any pushback after putting out his article; letting go of the high leverage idea; why the more we trade, the worse we do; Nobel laureate David Baltimore; and adversarial collaboration. For more information on Bob Seawright visit rpseawright.com. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Susan Polgar and Douglas Goldstein, co-authors of Rich As A King: How the Wisdom of Chess Can Make You a Grandmaster of Investing. Susan Polgar, American chess grandmaster, and Douglas Goldstein, Certified Financial Planner, had the unique idea of looking at chess and applying the wisdom to investing. You don’t need to be a chess player to get insights from Polgar and Goldstein. Covel and Polgar discuss Polgar’s early history as a four-year-old chess playing prodigy, and the trouble some older males had in accepting her; nurture vs. nature; the connection between the Turtle story and chess; the skills that chess provides outside of just playing the game; the importance of keeping your emotions in check; process vs. outcome; and thinking through the possibilities from a chess perspective. With Douglas Goldstein, Covel discusses how the idea came about to combine finance with chess in a book; tactics vs. strategy; and pattern recognition. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Kabir Sehgal on today’s episode of Trend Following Radio. Sehgal is a New York Times bestselling author and Grammy Award-winning producer. He is currently a vice president at JPMorgan Chase. Sehgal’s new book, Coined: The Rich Life of Money and How Its History Has Shaped Us, caught Covel’s eye. This is a subject layered in complexity and depth. Just about everything that goes on in our lives is decided by money and Sehgal digs into its story on a micro level. Covel and Sehgal discuss Sehgal’s history; Sehgal’s experience winning a Grammy for production and the idea of “no boxes”; why Sehgal sees his life like a jazz composition; defining money as a symbol of value; the neurological effects and artistic aspects of money; the currency of the natural world; whether Sehgal sees “money as the root of all evil”; the idea of charity; the politics of money; the internationalization of currency; hyperinflation; gold, and Sehgal’s experience going to the basement of the New York Fed; digital money and bitcoin. Coined: The Rich Life of Money and How Its History Has Shaped Us is available now. For more information on Sehgal visit coinedbook.com. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel starts today’s podcast by talking about “robot traders” and major misconceptions. Covel discusses machine learning v. automation and moves into a series of clips that outline trend following philosophy. First, Covel plays a clip from Benoit Mandelbrot to illustrate problems with the Efficient Market Hypothesis. Next, Covel plays two clips from Jim Simons, CEO of Renaissance Technologies, about his experiences as a new trader and on 'luck' (Simons is not a fan of fundamental trading). Building on Jim Simons comes a clip from David Harding of Winton Capital, a multi-billion dollar fund with trend following models at the core. Harding talks about his start, models, math, probabilities, and betting. Next, Covel plays a clip from Salem Abraham. Abraham talks about the markets he trades, and why it doesn’t really make a difference where the money comes from. Covel adds clips from Jean-Philippe Bouchaud, the Co-Founder, Chairman & Chief Scientist of CFM. Covel also plays clips from Svante Bergstrom, Ewan Kirk and trend trading legends William Eckhardt and Ed Seykota. These all tie together to attempt to give a trend trading/quant philosophical stance--the attitude and benefits. Want a free trend following DVD? Go to trendfollowing.com/win.