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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: March, 2017

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.

Mar 30, 2017

My guest today is Vanessa Van Edwards, author of Captivate. Vanessa jokes that she is a recovering awkward person and learned in college that she could apply systems thinking to people skills. Once she started making formulas around communicating with others, she found there was more people like her.

“Treat others how you would want to be treated” is the golden rule. However, that rule should be changed to, “Treat others how they would want to be treated.” We think we know how others feel but we actually have very different ways of viewing the world and how we respond. Most are far better at intuition and snap judgment if they let their bodies do the work. Vanessa gives examples of our bodies sensing intuitively that something is wrong, exciting, etc. Our heart starts to pound, our palms start to sweat, and you may start blushing when your nervous. Your body also sweats differently when you are nervous or fearful rather than sweating from a workout.

What does it mean to “Work a room?” Being a social butterfly at events meant nothing to her because she was not the most outgoing person to begin with. She ended up engaging in countless meaningless conversations that went nowhere. This prompted her to do a study on what it actually meant to work a room and what the best people do to connect and network. She found most make their first impression before they even open their mouth and that we can spark dopamine with good conversation. How do you leave typical social conversation scripts (i.e. “What do you do?” “How are you doing?” “Where are you from?”) and have meaningful talks? This is how she came up with the idea of “conversational sparks.”

In this episode of Trend Following Radio:

  • Bringing the unconscious to the conscious
  • Confidence and lack of confidence
  • Introverts, extroverts and ambiverts
  • First impressions
  • Conversational spark
  • What makes a great presentation
Mar 27, 2017

Michael was recently interviewed by the CFA Society of Switzerland. Michael goes through the Q&A’s of his interview. Here are some of the questions:

  • When did you start trend following?
  • What do you say to trend following skeptics?
  • Do the experts you have talked to in economics, trading and psychology share any characteristics or qualities that may have contributed to their success?
  • Do many of your podcast guests, as well as yourself, have any habits that readers can emulate?
  • What are some of the books that have influenced you the most over the years?
  • What is the best advice you have ever received?

Michael finishes playing an excerpt from another interview he recently did with Bloomberg about the Turtles.

In this episode of Trend Following Radio:

  • Getting what you want out of markets
  • Trend following skeptics
  • The Turtles
  • Turtle Trading 101
Mar 24, 2017

Susan Peirce Thompson is author of “Bright Line Eating.” This is a podcast all about “aha” moments. Most have no understanding of how their bodies take in, and absorb food. Susan’s BHAG (big hairy audacious goal) is to make sure that all those who want to put forth the effort of losing weight and keeping it off have a road map.

Susan had trouble losing weight starting at age 12. She found early on that the only thing that worked for her was using drugs, specifically crystal meth. During her 20’s she was able to get off the hard drugs, but then became addicted to nicotine, sex, flour, and sugar. The turning point for her was when she decided to do a bikini body 12 week challenge with her husband. They were suppose to work out 6 days a week and eat 6 times a day. Her husband did great on the program, Susan did not. She wasn’t able to keep with the eating schedule.

She ended up running into an old friend that told her about a different way of eating. Her friend gave her the cliff notes version of a no flour or sugar diet—combined with weighing your food. Susan ended up quitting the bikini challenge and started down this new path of eating. She began losing weight instantly. This lead to her going back and reverse engineering why the program worked. She started Bright line eating in 2014 and started doing a scientific study on the results of the participants.

80% of food sold in the super market has added sugar. 60% of one year olds are fed sugar every day. Susan explains why it is so hard to have the brain let go of the need for sugar. The dopamine release in sugar is the same type of dopamine release that occurs when using drugs or having sex. Doughnuts and pornography give a dopamine release that is larger than the body is trained for. What happens over time is your need for stimulation rises. There is a need to keep it sustained.

What is the solution? You need to automate your eating just like brushing your teeth is automated. There is no impulse control, just automatic. There needs to be no choosing involved. 80% execution of this program is so much harder than going 100% all in. It’s a system.

In this episode of Trend Following Radio:

  • BHAG
  • Sugar is an addiction
  • How to handle withdrawal from sugar
  • Drinking calories vs. eating calories
  • The radish study
  • Willpower is a finite resource
  • Regulating task performance
Mar 20, 2017

The vast majority of the investing population only know their own country’s stock index inside their portfolio. Top investors know much more than that. They think about gold, palladium, the Swiss franc, the Japanese yen, silver, copper, bonds, wheat, etc. Most would never think of trading these markets, however these markets are part of the trend following world. Any everyone can trade any market through a handful of different financial instruments such as ETF’s, LEAPS, and futures. The fundamentals of these markets are irrelevant for profit. The only information needed to trade any market for profit is price. This type of thinking opens markets up to anyone and everyone willing to play the game and take advantage of the global opportunity trend following provides.

In this episode of Trend Following Radio:

  • Price action
  • Momentum
  • Macro hedge fund
  • Trade everything
  • Ignoring the fundamentals
Mar 17, 2017

Isaac Lidsky graduated from Harvard with a degree in mathematics and computer science, was a successful practicing attorney and became the only blind person to have clerked at the U.S. Supreme Court. His story is one of overcoming a rough obstacle. Isaac’s book, “Eyes Wide Open,” is about making the choice to take control of the reality you create for yourself. To choose in every moment who you want to be and how you want to live your life. Holding yourself accountable is the starting point.

Sight is a great case study for showing how we create the lives we live. What you physically see isn’t necessarily an accurate depiction of reality. Isaac had been living in fear of his blindness until he went to see a low vision rehabilitation specialist and had an “aha” moment. She asked about his using a cane to get around even though he could still see slightly. It made him realize that even though he was rapidly losing his sight, all he had was right now. He was subjecting himself to succumbing to a fear that was down the road. He was able to choose to live a different way.

We misunderstand luck as humans. People have a tendency to believe that we can isolate one moment and perceive what our lives would look like if we made that one change. It is a waste of energy to get caught up in thinking of the “what ifs.” So many fixate on a static decision that is unchangeable. You can move on from a decision. Looking at other situations and feeling envy of what they have is another swift way to get nowhere. Nothing is simple, even though another persons story may seem simple or that they got where they are based on one decision. Things are usually much more complicated than that.

In this episode of Trend Following Radio:

    Living in the “now”
    Heightened senses
    Luck and skill
    Fear we create
    Entrepreneurship

Mar 13, 2017

Howard Marks is a billionaire value investor with four decades of success. Although a value investor, his thought process mirrors trend following in many aspects. Michael plays an excerpt from Howard covering his thoughts on price, the lack of value in forecasting, efficient markets, surviving market randomness, and high yield bonds. Trend following and value investing may be two different worlds, however, there is a lot of overlap in how Howard trades and how trend followers trade.

In this episode of Trend Following Radio:

  • Price action
  • Forecasting
  • Value investing
  • How to think about investing
  • Black swans
Mar 10, 2017

This is Brad Rotter’s 3rd appearance on the show. He is well known in financial circles as being the first investor with Richard Dennis. As a venture capitalist, Brad has helped launch numerous new enterprises. Our conversation today takes you in the mind of how a venture capitalist thinks and describes how he views new opportunity, particularly his newest investment: desalinization of water.

What is your process? How do you explain venture capitalism? Brad grew up on a farm in Iowa and became interested in futures contracts. This made him interested in investing in the future and he quickly began to see things a little differently than the “normal” world. Brad made his first hedge fund investment in 1982. At that time hedge funds were a very inefficient market. He would look at managers that had a special niche, grasp what they were doing, and invest.

Brad looks for long term trends when he invests in ideas and companies. Technology brought him to California. His current venture is providing fresh water across the world. The one crisis facing humanity that has a solution is fresh water and it is now an invisible water emergency. Brad says, “We don’t really have a water problem, we have a salt problem.” Brad goes in depth describing the processes of desalination and the infrastructure, or rather the mobile infrastructure involved.

In this episode of Trend Following Radio:

  • Venture capitalism
  • Turtles
  • Efficient market theory
  • Mobile infrastructure
  • Desalination
Mar 6, 2017

Black swans arrive as a surprise. Rare stuff happens. Surprises walk up and punch you in the gut. They smack you upside the head. There is no exact preparation for the timing of a black swan, but you can position yourself. Michael plays an excerpt from Nassim Taleb explaining black swans. Taleb is of course responsible for popularizing the term.

In this episode of Trend Following Radio:

  • Knowledge is therapy
  • Black swans
  • Uncertainty
  • Probability
  • Global warning
Mar 3, 2017

Donald Hoffman is a cognitive scientist at UC Irvine. He studies how our visual perception, guided by millions of years of natural selection, authors every aspect of our everyday reality. His research is about uncovering the underlying secrets of human perception. Donald has discovered clues that point to our subjective nature of reality. According to Donald, we actively create everything we see. Donald started to learn how to program at a very early age. This is what got him thinking: Are we just machines, or actual humans?

Donald began to be bothered by the reality that we might not be seeing what our eyes are seeing. Do we see reality as it really is? Almost all of us have a belief that we see the world as it is. Michael and Donald go in depth about certain illusions and truths that may be hidden from the main public. Illusions are everywhere when you start looking. Evolution shaped us with certain perceptions and interfaces that we, as humans, evolved to keep us alive. Whether or not those perceptions are real or fake is irrelevant. As long as they keep us feeling happy and alive, that is all that matters. Natural selection has also led us to the reality we see. The only thing that matters in natural selection is fitness. Fitness according to natural selection is not based on physical fitness but rather if you are able to reproduce. That is the only criteria.

Michael and Donald end the podcast posing the question: Do humans have the capacity to even understand what the true reality is?

In this episode of Trend Following Radio:

  • Are we robot or human?
  • Evolution
  • Reality vs. Perception of reality
  • Natural selection
  • Pushing theories to their limits
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