Michael Covel speaks with Tom Dorsey, of Dorsey Wright & Associates. Dorsey expands on his view of technical analysis, with a specialization in point & figure and relative strength. It’s a little different from Covel’s world, but occupies the same head space. Dorsey Wright & Associates was started in 1987, and Covel asks how Dorsey first came to technical analysis. Covel and Dorsey also discuss dealing with a bear market in Dorsey’s early days; early training in options; how Dorsey learned about point & figure trading; definitions and explanations of point & figure trading; how point & figure works like a tennis match; automating your strategy; the criticism of “black boxes”; a third grade experiment; how Charles Schwab changed the world; and how technology influences the technical analysis world. More information about Tom Dorsey can be found at dorseywright.com. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Marc Faber, Editor and Publisher of "The Gloom, Boom & Doom Report", in person on the podcast (recorded in Chiang Mai, Thailand at Faber's office). Covel and Faber discuss the current state of Russia; changing geopolitics; Faber’s experience living through the Cold War; the difference between Crimea’s value to the west and its value to Russia; why the Russians perceived the uprising in Kiev to be financed by western power; China’s reaction to the situation in Crimea; the construction boom in China; the difficulty of forecasting China’s geopolitical changes; positive and negative valuations of the market, and finding investments to be “cheap” or “expensive”; Faber’s advice to young people following his path today in the face of money printing and bailouts; what can be done about wealth inequality; making a living in the face of instant communication and globalization; central banks’ role in wealth inequality; why money printing leads to bubbles; Warren Buffett’s involvement with the bailouts, and how his government connections have helped his investments; and how governments are assimilating everything; “Capitalism and Freedom” by Milton Friedman; and the cost of large government in the US and elsewhere. Plus, included are Faber's views on relationships, contrasting the West and Asia along with Facebook fame (not related to investing, but wise and entertaining words). Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Martin Bergin, CEO of Dunn Capital Management. Bill Dunn and Dunn Capital were famously profiled in Covel’s book Trend Following and they have a 39 year track record of trend following performance. Covel and Bergin discuss the early stages of Dunn Capital, and how it arrived where it is today; trend following with futures; volatility within Dunn’s system, and why volatility is important to the overall performance; targeting losses; how history informs system creation; adapting to the marketplace and to available technology; what it means to be 100% systematic with no overrides; defining “black box” systems, and the difference between Dunn Capital’s strategy and black box strategies; location in relation to Dunn Capital, and why it isn’t necessary to be in a big city like London or Tokyo; how the core of Dunn Capital has stayed the same while certain aspects of business has evolved; decreasing drawdown without decreasing profitability; behavioral finance and dealing with biases; the adaptive nature of trend following; predictive vs. reactive trend following; and Dunn Capital’s fee structure. More information about Dunn Capital can be found at dunncapital.com. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Howard Lindzon. Lindzon is a Canadian entrepreneur, author, financial analyst, technical analyst and angel investor. Lindzon manages a hedge fund, serves as managing partner of the holding company Social Leverage, limited partner at Knight's Bridge Capital Partners, and is the co-founder of StockTwits. He’s also known for the satirical podcast Wallstrip. Lindzon and Covel discuss the commonalities between the angel investing world and trend following; over-diversification; diversification in private investments vs. stocks; how Lindzon got the entrepreneurial “bug”; Lindzon’s early career as a stockbroker; the beginnings of Wallstrip; Lindzon’s comedy influence; how Wallstrip led to the next four years of Lindzon’s investments; how Lindzon’s mistakes helped him grow as an investor; Lindzon’s experience with fraud committed by a business partner; keeping your business drama-free; the issue of distraction; Lindzon on the birth of StockTwits; the investment that changed Lindzon’s financial life in 2005; the future of StockTwits as Lindzon sees it; social leverage; the art of curation and verticalization; and thinking of the financial web as a social bank account. Howard Lindzon can be found on www.howardlindzon.com. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Victor Sperandeo. Sperandeo was originally featured in The New Market Wizards by Jack Schwager and has a Wall Street career that spans back to 1966. From trader, to historian, to a man with very strong public policy opinions, Sperandeo comes to the podcast to discuss his career and views with Covel. Sperandeo and Covel discuss recent public policy directions; trading against your public policy interests; zero interest rate policy; whether the S&P is a “bribe”; the Fed mandate to keep stocks from falling and to stop volatility; the wealth effect; why the stock market going up is a very poor instrument to fix the economy; the trend towards socialism; Sperandeo’s experience working with George Soros; Sperandeo’s experience with the DTI index; black swans and the effects of large, catastrophic events on the market; why the only way to protect yourself is extreme diversification; volatility balancing; and Sperandeo’s experience as a young man and how he came into the trading world. Want a free trend following DVD? Go to trendfollowing.com/win.
Today on the podcast, Michael Covel talks with Carl Richards of Behavior Gap fame. Richards is also a Certified Financial Planner. Behavior Gap, featured in the New York Times and often posted by Covel, features sketches filled with insights into finance and into life. The Behavior Gap brings good investing and behavioral economics together in an understandable, digestible format. Covel and Richards discuss Richards’ new radio venture; how Richards came to start The Behavior Gap; outliers, and living your own bell curve; risk on a daily, weekly, and monthly basis; the definition of radical self-awareness; mindfulness and awareness as applied to our financial decisions; habit, action, feeling, and thought; simplicity and effectiveness; government intervention in the markets; quantitative easing; buy and hold in Japan; loss aversion and the pain of loss; and feeling loss more than the joy of gain. More information on Carl Richards is available at behaviorgap.com. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Sam Polk on today’s podcast. A friend of Covel’s that has previously been on the podcast, Peter Borish, recommended that Covel speak with Polk. Polk wrote an interesting op-ed in the New York Times called “For The Love of Money”. Polk is a former wall street banker who walked away after making millions. Today, Polk runs a non-profit to help the poor understand nutrition. However, his op-ed is definitely controversial. Covel and Polk discuss the intensity surrounding the reaction to Polk’s op-ed piece; reactions from friends and colleagues about the article; envy and jealousy in the Wall Street world; Polk’s background and life growing up; filtering cultural messages; the line between individual responsibility and being part of a system; crony capitalism; power dynamics; the mythology of risk-taking in America; the solution for the investment banks out there; and Polk’s non-profit which he runs today. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel received an email from Jonathan Garner about a blog post from Derek Hernquist titled “I Have No Idea What Tesla Is Worth, Do You?”. It linked to a CNBC interview with an analyst named Brian Shannon. Covel plays the CNBC clip and gives commentary at specific points. Covel shares the technical analysis viewpoint with Shannon, but disagrees when it comes to price targets. Covel also points out some terms that aren’t part of the vocabulary of a trend following trader. A pure, predictive technical analyst could go that direction, but that’s not trend following. Covel isn’t trying to slam Shannon, who is trying to fight the good fight from a price action perspective. Rather, Covel focuses on CNBC’s coverage and one particular talking head who has no idea about technical analysis. Covel points out that even if you’re a purely fundamental trader, you have to know what trend following is, what it does, and how it behaves. Covel focuses on price action and momentum, not Tesla’s latest announcement. Shannon concludes by talking about risk management, which Covel then discusses. Covel ruminates on why trend following and technical analysis are so confused, and talks about the difference between predictive and reactive technical analysis. Continuing on with another example, Covel tells a story about a young man he met who invested in $10,000 worth of Facebook stock, and why it’s important to have an exit plan. Covel was forwarded the young man’s blog post, which stated the decision to invest in Facebook was based off a wealthy friend’s advice. If you’re going to follow advice, make sure it isn’t made up out of thin air. If you’re going to follow a thought process about how money is made, you have to scientifically dig in and look at the process. If not, it’s just gambling. To close out, Covel talks about a piece he re-read from Malcolm Gladwell about how Nassim Taleb first met Victor Niederhoffer. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel talks with writer and trader Jack Schwager, author of the Market Wizards series, in his third visit to the podcast. Today, Covel and Schwager discuss his newest book, The Little Book of Market Wizards. Schwager also has a new program out called Fund Seeder. Covel and Schwager discuss how Fund Seeder acts as a liaison for traders and investors; the difficulty of starting out as a new trader; how Fund Seeder is a global opportunity; Schwager’s last book, Hedge Fund Market Wizards; the timeless quality of the Market Wizards books; Jesse Livermore’s Reminiscences of a Stock Operator; how human nature is the only thing that will never change; looking for a “secret recipe” in the Market Wizards book; “The Upside of Down: Why Failing Well Is The Key To Success” by Megan McArdle; why failure is smart and an essential part of success; the importance of failure in the context of education; behavioral economics; Jack Horner and thinking outside of the box; the importance of loving what you do for a living; and the importance of travel. More information about Fund Seeder can be found at fundseeder.com. The Little Book of Market Wizards is also available now from all major retailers. Free trend following DVD? Go to trendfollowing.com/win.