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Trend Following with Michael Covel

Bestselling author Michael Covel is the host of Trend Following Radio with 5 million listens. Investments, economics, decision-making, human behavior & entrepreneurship--all passionately explored. Guests include Nobel Prize winners Robert Aumann, Angus Deaton, Daniel Kahneman, Harry Markowitz & Vernon Smith. Also: James Altucher, Dan Ariely, Jean-Philippe Bouchaud, Kathleen Eisenhardt, Marc Faber, Tim Ferriss, Jason Fried, Gerd Gigerenzer, Larry Hite, Sally Hogshead, Ryan Holiday, Jack Horner, Ewan Kirk, Steven Kotler, Michael Mauboussin, Tucker Max, Barry Ritholtz, Jim Rogers, Jack Schwager, Ed Seykota, Philip Tetlock & Walter Williams. All 500+ eps at www.trendfollowingradio.com/rss.
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Now displaying: August, 2016

Bestselling author Michael Covel is the host of Trend Following Radio with 5 million listens. Investments, economics, decision-making, human behavior & entrepreneurship--all passionately explored. Guests include Nobel Prize winners Robert Aumann, Angus Deaton, Daniel Kahneman, Harry Markowitz & Vernon Smith. Also: James Altucher, Dan Ariely, Jean-Philippe Bouchaud, Kathleen Eisenhardt, Marc Faber, Tim Ferriss, Jason Fried, Gerd Gigerenzer, Larry Hite, Sally Hogshead, Ryan Holiday, Jack Horner, Ewan Kirk, Steven Kotler, Michael Mauboussin, Tucker Max, Barry Ritholtz, Jim Rogers, Jack Schwager, Ed Seykota, Philip Tetlock & Walter Williams. All 500+ eps at www.trendfollowingradio.com/rss.

Aug 29, 2016

“What is the goal? What does it take to get to the goal? What is the most efficient path to get to the goal? And is the goal obtainable?” Michael starts the podcast off asking these critical questions and relates them back to the explosion of social media in today’s culture. Social media is constantly being thrown in everyone’s face, and subsequently you need an efficient tool kit under your belt to be able to gain any type of real achievement in today’s world.

There is an epidemic of 20 to 30 year old men who cannot think. There is also a feminization of men that is taking over the younger generation. They seem to only be attached to their feelings. Men have traditionally had a more analytical view on things and women have a greater capacity to think with emotion. The analytical side of men is starting to get edged away.

Michael then poses the question, “How do you end the dominance of the 1%?” Michael says you either take their money, or kill them. If you do not act on one of those two things, then how else do you strip away their dominance? Once you walk through how you are going to “take care of the 1%” then you realize the statement is a sham. It just doesn’t work.

Michael moves on to poverty and unemployment next. 50% of Americans do not have $1 in the bank. 50% of Americans are also on welfare. Looking at the overall health of the American economy, things look a little messy, however the stock market is at all time highs. Although nobody can predict exactly when a black swan will hit, the economy is sure looking like it is ready for one.

In this episode of Trend Following Radio:

  • Donald Trump politics
  • The 1%
  • Generation snowflake
  • Efficiency in your thinking
Aug 26, 2016

Zen DeBrucke is on today’s podcast. She is the author of “Your Inner GPS: Follow your Internal Guidance to Optimal Health, Happiness and Satisfaction.” Her goal is to help clients find a stress free and happy existence by getting in touch with their inner voice.

Michael and Zen start off talking about the inner GPS. Zen believes that everyone is born with this inner voice guiding them, but most lose sight of that influence. Buddhism and Daoism have strong beliefs in the use of meditation to help people use their minds as a tool rather than an operating system. The more people realize there is a flow within their body, the more they can train their mind to get into this energy. Once someone gets into that flow, they are able to understand their thoughts and emotions clearer.

Neuroplasticity is the next. Zen says she has a tool kit to make people’s minds move in different directions. Zen teaches practices that help move their brain into a different domain when they have a block or feel trapped. She uses an example about her and her father’s relationship as well as a coaching session she had with Van Jones.

Zen describes how each person’s internal guidance system is linked in with their destiny. This internal GPS is trying to help use the mind to move towards a persons optimal life. Zen uses an example about the owner of Cliff Bar, as well as a personal example of an experience she had at the Denver airport. Her experience, in short, lead her to catching a plane ride that she would have never been able to catch had she not listened to her internal GPS. Michael also shares a personal example he had about listening to his internal GPS which lead to a great business opportunity. All these examples show the constant battle between what your gut is telling you to do, and what your head is telling you to do.

Michael and Zen wrap the podcast up discussing the meaning of ones “life purpose”. We have thousands of life purposes rather than just one. True fulfillment comes from giving and contributing. You don’t get that feeling when you are too focused on on one item. Michael says that one of his life purposes is doing the splits.

In this episode of Trend Following Radio:

  • Your inner GPS
  • Your inner flow
  • Emotional experiences
  • Neuroplasticity
  • The breadcrumb approach
  • The relationship between stress and disease
Aug 22, 2016

“We all avoid reality non-stop. We don’t know where it starts and where it ends. We don’t like to look at facts. We don’t like new information. We have biases that are non-stop.” Michael goes down a reality tour of market prices today. He talks about past prices in the market and the present all time highs we are experiencing right now. He makes listeners think about prices and how they move rather than voices at Bloomberg and CNBC. Michael says, “Just focus on price action and look at markets from a ‘desert island approach’.” Trading price is the only information you can trust. He gives examples from the past including the dot-com bubble, housing crisis, 1989 NIKKEI crash, Gold in the 1970’s, and possible current bubbles.

Michael emphasizes to put away all the noise and just look at the numbers. He is not saying when there will be the next market crash, just that there will be another one. Historically we are due for a significant decline. What are the odds that the S&P losses 50%? If you are going to retire soon, or are in retirement and the S&P drops, how will your life be? Will you be able to ride it out? Do you have an alternative strategy? Big questions.

In this episode of Trend Following Radio:

  • Black Swans
  • Anti-fragile
  • Market Crashes
  • Price action analysis
  • Shutting out the noise
  • Island trading
  • Price distribution
  • No free lunch
Aug 19, 2016

Morgan Wright is an internationally recognized expert on cyber security strategy, cyber terrorism, identity theft and privacy. He brings vast knowledge and insight into the space of cyber activity.

Michael and Morgan start the podcast off talking about cyber footprints. People don’t realize that there are countless ways to steal personal identities. You don’t even need to be present anymore to become a criminal. The Chinese hacking US government databases is just one of a few examples used by Morgan to illustrate the point. Morgan says that there is no accountability in the government, which is a major contributor to why some of these hacks are able to take place.

Email is the next topic. How safe is it? Email is one of the best ways to attack someone. Companies are being hacked and having money stolen in the millions of dollars through email. Scams can come in all forms, from flat out asking for money to relationship scams. Glitches in security and technology are sometimes even known, it just comes down to if the cost to repair is worth the reward.

Michael brings the conversation back to security and asks Morgan to elaborate on healthcare.gov. Morgan was tasked with confronting Congress and explaining the lack of security within that particular government website. He went before congress to prove how ill secure the website system was. When talking about the hearings and committee for setting up the new healthcare system Morgan said, “There was nobody really in charge, there was lack of control, and oversight… It was built for failure from the very beginning.”

In this episode of Trend Following Radio:

  • Snowden effect
  • Milton Friedman and Michael Moore
  • Teaching at the NSA
  • Manipulating human behavior
  • Combining the legal system and mental health system
  • Lack of accountability in government
  • Government using yesterday’s technology
Aug 15, 2016

Michael starts the podcast off with excerpts from an interview with Clint Eastwood. Clint answers the question, “What is the pussy generation?” He also goes on to give his take on what is wrong with the US presidential election, unemployment and free education. Michael sums up the interview saying, “I do love that this 86 year old tough guy is telling us…”

Michael uses Eastwood to lay the foundation for the rest of the podcast as he talks about “Trend Following Commandments.” Michael goes in depth about some of these fundamental trend following principles.

In this episode of Trend Following Radio:

  • Political correctness
  • Pussy generation
  • Absolute returns
  • Inefficient markets
  • Market bubbles
  • Fundamentals are religion
  • The market is never wrong
  • Cutting your losses
  • Learn to love your losses
  • Price action
  • Betting the markets properly
  • Failure is the secret to success
Aug 12, 2016

Chase Jarvis is an award winning photographer, director, artist and entrepreneur. He is co-founder of Creative Live, a live educational platform. There is much to learn from his entrepreneurial ventures and how he made it in the photography world.

Michael and Chase start the podcast talking about basketball, and Golden State in particular. Chase goes to a lot of games and has had the opportunity to sit up close and personal with the players. He says the best part about going is seeing the infectious energy and passion among the players. Steph Curry is his favorite to watch and compares his confidence, energy, and talent to Michael Jordan.

Next, Michael asks about how Chase got involved with photography, and how his career has evolved into what it is today. Sports were a huge factor in his success as a photographer as well as becoming an entrepreneur. Teamwork, hardship, success, disappointment all gave relevance to his professional career development. His first photography shots were of skateboarding, snowboarding, etc. things that he knew well. He also had some professional friends in those sports that he could take pictures of which consequently helped jump start his career.

Chase moves into talking about his most recent venture, Creative Live. Creative Live is the world’s largest live educational platform. It is focused specifically on creative education and the ability to make a life out of that creative field. A few years ago Chase started to shift from just taking photos, to sharing his experiences with others as a photographer. He turned his photo studio into a bit of an incubator and launched the first app that could upload photo’s directly into social media outlets.

Chase shares with listeners how he flushes out his creative blocks with adventure. Adventure has always been an ignition to be propel him into a new head space. He gives a couple examples such as traveling to Europe for 6 months and traveling across New Zealand. Chase also shares simpler ways to travel and get your feet on the ground. Chase quotes a friend by saying there are two things you have to ask yourself if you think you are ready to make a change in your life: 1. Is this working? 2. Do I still believe in it? If the answer is no to both, then it is time to get out of what you are doing.

If you are interested in pursuing classes via Creative Live, Chase has provided a special discount for Trend Following listeners. Go here: https://www.creativelive.com/trend.

In this episode of Trend Following Radio:

  • Gaining freedom in your life
  • Entrepreneurship
  • There is no overnight success story
Aug 8, 2016

Michael takes the podcast back to the 1960’s with a talk from Milton Friedman. Throughout the presentation Friedman outlines the role of government in a free society. He emphasizes the different variations of “free”. The first is freedom with the absence of coercion. The second is free in the sense of a “free lunch”. They have two very different very different meanings and Friedman goes in depth on the two.

Michael wraps the podcast up summarizing Friedman’s talk with a slightly more pessimistic view. Michael thinks that politics and government will never be straightened out. He loves Friedman’s thinking but has a hard time thinking that human nature will ever change. “I have a hard time imagining, with the irrationality of human nature, that anything will ever change. As long as we keep dying and keep replenishing with a whole new group of useful idiots and sheep…we can have our fantastic view of change, but…” Michael stresses that the key thing that’s important is building capital and the only person you can count on is yourself.

In this episode of Trend Following Radio:

  • Unanimity in government vs. Majority rule
  • Principles vs. Expedients
  • Government conformity
  • Government autonomy
  • The meaning of property
  • Responsible individuals vs. Irresponsible individuals
  • Human rights
  • Freedom of speech
  • Government failure on a large scale
  • Market failures
  • 3rd party benefits for society
  • Government failure vs. Market failure
Aug 5, 2016

Michael talks with Christopher Lochhead. Christopher is co-author of “Play Bigger: How Pirates, Dreamers, and Innovators Create and Dominate Markets”.

Michael and Christopher start the podcast talking about the commonalities between most innovators and entrepreneurs. The legendary innovators that make their companies into a success focus on three main points: product design, company design, and category design. Category design is about inventing a whole new space in the world for their product. Legendary innovators are just as thoughtful about their category design as they are of product and company design.

Christopher and his co-authors went back and looked at every start up company founded in the United States dating back to 2000. They asked, “What percentage of the market cap in the category goes to the category king or leader?” On average the category king captured 76% of the markets profits. Category design is a secret “black art” in Silicon Valley. Only about 10% of companies are thinking about teaching the world to accept their new innovation. If you do not teach your consumers, then you are leaving your company up to chance, waiting to see if people will figure your company out on their own. Christopher stresses that when you create a product that fits into an existing category, you are by definition playing someone else’s game. And you are fighting for essentially only 25% of the market. He uses Microsoft as an example.

Michael asks Christopher to go into the idea of “disrupting the marketplace” with new ideas. Christopher says that “disrupting” is actually the wrong way to go about looking at things. Elvis did not disrupt Jazz, he just created a new genre that we now know as rock and roll. And in the same way, Les Paul created the electric guitar. He did not ruin the acoustic guitar; they just sit side by side now.

“When someone comes up with a new category, how do you determine pricing?” Christopher says that the category king has pricing power. You get to decide what the pricing is if you create the category. And in order to become a category king, the CEO needs to spend at least half of his/her time articulating the problem that has been solved with their product to the customer. Christopher goes into detail and uses Pixar as an example of this concept.

The category king dynamic is not geographically bound. There tends to be different kinds of technology that breaks through in different parts of the world, but that is really the only difference. In many parts of the developing world there is even more of a focus on getting the “product, company and design” right.

In this episode of Trend Following Radio:

  • Disrupting the marketplace
  • Product marketing
  • Teaching consumers about your product
  • Creating new market categories
  • The anchoring effect
  • Thunder lizards
  • Category kings
  • The Innovator’s Dilemma
  • Category design
Aug 1, 2016

Today, Michael dives into silence. An excerpt from Daniel Gross: “In the mid 20th century, epidemiologists discovered correlations between high blood pressure and chronic noise sources like highways and airports. Later research seemed to link noise to increased rates of sleep loss, heart disease, and tinnitus. (It’s this line of research that hatched the 1960s-era notion of “noise pollution,” a name that implicitly refashions transitory noises as toxic and long-lasting.)”

“Silence” science is leading the way with awesome new insights: “The growth of new cells in the brain doesn’t always have health benefits. But in this case, cells [generated from silence] seemed to become functioning neurons. “We saw that silence is really helping the new generated cells to differentiate into neurons, and integrate into the system.”

Michael weaves this narrative right back into his wheelhouse: day trading v. trend following. Lessons for traders, lessons for life. Enjoy the silence!

In this episode of Trend Following Radio:

  • Peace and quiet is all about the noise in your head.
  • Correlations between high blood pressure and chronic noise sources.
  • Possible therapeutic uses for silence.
  • Trend following.
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