Trend Following with Michael Covel
Bestselling author Michael Covel is the host of Trend Following Radio with 9.5+ 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 800+ eps at

Today on the podcast Michael Covel speaks with Tushar Chande. Chande is a trader, author, and the co-founder and head of research at Rho Asset Management in Switzerland. Chande has had a long and distinguished career in technical analysis; he brings a unique perspective on how to look at the markets as a trend following trader. Chande was born in India and began his career intending to become an engineer. He came to America and earned his Ph.D. in metallurgical engineering from the University of Illinois in 1984; however, when he came to the end of his Ph.D. studies he started look outside his chosen career path and found the world of finance. Chande's research skills as an engineer were easily transported to analyzing numbers in finance which gave him a leg up in his early trading days. Covel and Chande discuss Chande's other early influences, and chart the journey from his days as an engineering student to his accomplishments as a systematic trend following trader. Covel and Chande also talk about the analogy between sports and trading, how the best sportsmen rely on having a stable and predictable environment (unlike the markets); evaluating performance within the context of the market; discretionary trading v. systematic trading; learning through "trial and terror"; the Rho Trend Barometer and the ability to quantify the environment; the problem of indexes; the Sharpe ratio; the importance of market movement to trend following trading; "the black box disease"; trusting your system; cognitive biases; the benefit of the "black swan" and outlier events and why these events are so beneficial to a trend following system; and whether "one-hundred Ph.D.'s are better than one". Free trend following DVD:

Direct download: TrendFollowingManifesto122812.mp3
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Michael Covel monologue.

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In his book "Trend Commandments" Michael Covel included a "cheat sheet" for the reader. It opens up with this quote: "Golf is not safe. My grandfather died playing golf. Speaking up is not safe. People might be offended. Innovation is not safe. You'll fail; perhaps badly. Now that we've got that out of the way, what are you going to do about it? Hide? Crouch in a corner and work as hard as you can to fit in? That's not safe either. Might as well do something that matters instead." The cheat sheet focuses on core principles of trend following trading: profit in up and down markets; no more buy & hold, analysts or news; no prediction; the big money of letting profits run; risk management; a scientific approach to trading; strong historical performance during crisis periods; no traditional diversification; ride the horse that's winning; no government reliance; and taking advantage of mass psychology. In his last podcast before Christmas 2012 Covel gives a cheat sheet podcast of sorts too; he presents invaluable audio clips from his collection of great trend following traders. These legendary traders include William Eckhardt; Bill Dunn (talking about risk management from his perspective); and Jerry Parker (talking about the difference between mean reversion and trend following). Why is it hard to accept their principles outlined? They sound rational and reasonable, right? Covel also excerpts a speech from Elizabeth Cheval to explain her view of chronocentricity. Covel continues on with three clips from David Harding of Winton Capital Management and again asks the question, "Why don't we all go his way?" Unfortunately, much of the wisdom illustrated is not accepted or taught in mainstream education. Covel ends with a clip from author Seth Godin to help illustrate why current education models are dead ends. There is a way out, but waking up is a first step to financial freedom. Free DVD:

Direct download: TrendFollowingManifesto122212.mp3
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Today's podcast is about the six inches between the ears: your mind, your ego, and the mental part of the game that is so important to being a successful trader, entrepreneur, or pretty much anything that doesn't involve working for the man. Michael Covel opens up by talking about a book by Brenda Ueland called "If You Want to Write". Specifically, it's a book about writing, how to write, and how to think about writing. However, Covel notes that you can take the word "writing" and insert anything and have it apply: trend following, basket weaving, running--it doesn't make a difference. That's the way the book was written, and that's what Michael Covel gets at in today's episode. Understanding the precepts that Covel talks about in today's episode are relevant to trend following trading, being an entrepreneur, having a good life, having good friends, or having a family. For those of you that might be "quant jocks", and might not think the emotional and psychology are as or more important than the numbers, Covel passes along an anecdote about legendary trend following trader Ed Seykota. It's the internal, the ego, the psychology, the emotions--all these pieces wrapped together are the foundation for all success. Covel goes on to read selections from a new e-book compilation from several different authors, and connects the dots. He covers fascination, gumption, focus, leaping, timeless, confidence, passion, poker, and adventure. It's not time to just count another year. It's time to plan an adventure--whether it's travel, becoming a trend following trader, or anything else that speaks to you. Regardless of whatever success you want to achieve, this is it. If you can get the mental side of the equation down, you're going to win. Free DVD:

Direct download: TrendFollowingManifesto122112.mp3
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Michael Covel talks with trader and author Richard Weissman. Weissman is a professional trader with over 25 years of experience. His most recent book is "Trade Like a Casino: Find Your Edge, Manage Risk, and Win Like the House". Weissman considers himself a "swing trader", and he and Covel compare this approach to that of a trend following trader. Covel and Weissman have some contrasts in their techniques, including Weissman's use of fundamentals in his trading, and they work out their differences along the way. However, regardless of the name they give to their individual trading styles, Covel and Weissman have plenty of commonalities and they discuss some classic precepts that are important to the foundational philosophy of any good trader. The two explore Weissman's path from how he started trading with his father in 1987 to how he made his way to where he is today. Further topics include the background to Weissman naming his book "Trade Like a Casino", and how Casinos and the gaming industry are the models for successful speculative trading; the influence of Jack Schwager's work; risk management; positive expectancy; how Weissman defines trends and signs of strength; the idea of "don't anticipate, just participate"; positive expectancy and the probability skew; the connection between table limits and risk management; how there are no truly "safe investments"; some tools that Weissman has used to influence his own trading psychology and smooth out the emotional highs and lows; not letting a high price stop you from buying, and not letting a low price stop you from selling; Weissman's concept of "the opaque urn"; and the three things you can guarantee. Weissman and Covel also go over some of Weissman's great one-liners: "don't tug at green shoots" and "trade the market, not the money". Free DVD:

Direct download: TrendFollowingManifesto122012.mp3
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Michael Covel talks with Tadas Viskanta. Viskanta is the founder and editor of the Abnormal Returns blog and a private investor with 20-plus years of experience. His first book, "Abnormal Returns: Winning Strategies from the Frontlines of the Investment Blogosphere", is out now. Viskanta calls his blog a "forecast free investment blog", and that sort of outlook certainly appeals to Covel and his trend following philosophy. Covel and Viskanta cover a wide range of topics, from investment philosophies and strategies to the challenges authors and bloggers face in the world today. Specifically, Covel and Viskanta discuss the disadvantage given to those who follow the constant data stream from the media; why Viskanta felt the need to write "Abnormal Returns", and the strategy and style behind it; the phrase "abnormal returns" and trying to measure returns over and above the risk taken; underperforming; preparing for abrupt change in the markets; Viskanta's move from value investing to a more systematic strategy--and Covel's early experiences with value investing material; now that so many global barriers are easy to cross, why so many people have "home bias" and difficulty placing global investments; why people still look at the markets with rose colored lenses and so easily forget the bubbles of the past; the behavior gap; why having a suboptimal strategy that you can follow in a systematic way is better than having no strategy at all; the ramifications of instant feedback in the blogosphere; and why you need a burning desire to be an author today. Yes, some territory is covered! Free DVD:

Direct download: TrendFollowingManifesto121312.mp3
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Michael Covel talks to Jonathan Davis, one of the UK's leading writers on investing. Davis has written 3 books, is a regular writer for the Financial Times, and is the director for three investment companies. Covel and Davis talk about Davis' new book "Professional Investor Rules" which has a bit of a fundamental flavor to it. Hardcore trend followers need not get bent out of shape, however; Davis and Covel's conversation crosses strategy lines and gets to the heart of some important investing and economic topics. Davis has been following the markets for over thirty years, first as a journalist, and has had quite a history. He was fortunate enough to spend some time at MIT studying and writing a thesis about Warren Buffet, whom he met on several occasions. His new book looks into the lists of rules that professional investors had made for themselves over the years, both for education and entertainment purposes. Covel and Davis talk about what's going on in Europe, where the socioeconomics might be headed, how the history of Europe plays into the problem, and how Davis sees it playing out; the importance of performance data; how "the recent past is out to get you"; how volatility is not something the average investor instinctively understands; investing in Asian markets; the efficient market theory; the idea of "the hedgehog" (people who only really know one thing) and "the fox" (people who know many things, and are constantly looking for more) in the context of investing, and how the foxes can allow themselves to be adaptable and flexible to all sorts of market conditions over time. Davis also shares his take on David Harding of Winton Capital, and his view of Marc Faber.

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The debate now is all about the fiscal cliff. You seemingly can't turn on the TV, the radio, or look on the web without it. When it comes down to it, the debate is really about money. It's quite crass and crude, the debate about money in America, because we've lost site about what money is and what it represents. It's become an inanimate object that we all desire, but they way it's discussed in popular culture, politics, and most everywhere you look, it's become a pejorative. Most people don't even want to think about it. Michael Covel discusses money and what it represents: It's the exchange mechanism amongst honest people. We use money to give each other our value. That's the way it works. So, in the spirit of this thought process, Covel reads an excerpt from "Atlas Shrugged". He notes that he was given this book to read as a homework assignment after meeting famed trend following trader Ed Seykota. We all know there are vastly different opinions on Rand. Some people love her and build upon her work as the foundation of their ethos, and others refer to it as a childish teenage dream. Regardless of your views on Rand, the excerpt Covel reads can be appreciated for its intelligence and wisdom about money. Free DVD:

Direct download: TrendFollowingManifesto120612.mp3
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Michael Covel discusses a sketch he recently saw on depicting an office with a poster on the wall that says: "Fanatical: Kiss every hope of leading a normal life goodbye". Covel relates and wishes that he could impart this message upon people. If you listen to the words that Covel says, perhaps the enthusiasm that he brings can also bring you to see your life as fanatical. You've got to be fanatical, whether you're going to be an entrepreneur, or a trend following trader. You have to be focused, you have to be passionate, and you have to understand. You have to *want it*, otherwise you simply won't get there. Covel goes on to discuss a white paper by SEB Asset Management in Sweden. There's always ups and downs in trend following strategy. A strategy that makes a promise to make you money every month is a fraud. There will be periods of time while you follow a trend following strategy where you have drawdowns. It's just the way it works. But if you live to play another day, you can come up on top in the end. However, if you believe that the world has changed forever in such a way that there are no more business cycles, no severe banking crises, real estate crises, government bond crises, and corporate crises; that there will never be any large movements in the currency markets, no longer any social or military crises, and no major recovery from these crises--then trend following investments is unnecessary. Do you really expect there to be no future change? If we accept unpredictability, trend following is the best strategy to follow. Covel goes on to talk about the Fed, and whether we want the Dow to be elevated at the expense of our interest income. Covel continues on with the idea of information overload. How do you make decisions with it all? You can't. It's not a day trading rat-race. The most successful people in the world take a step back and look at the big picture. Simple makes money, simple finds freedom, and simple can be inspiring. The complexity is useless. Knowing every single data point does nothing for you in the long run. It's just a game of trivial pursuit. Also: Covel announces product specials for the month of December--a great long term trend following system.

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Michael Covel talks with Barry Ritholtz, an author ("Bailout Nation"), newspaper columnist, blogger (, equities analyst, television commentator, and CEO of Fusion IQ. Ritholtz is deep down a quant guy, but brings strong views and opinions. However, he won't sit around and "fight the tape". Covel and Ritholtz talk about the price of paying attention and why you should be selective in what you watch, read, and listen to; the onslaught of political information; the insatiable need to consume information and knowing when it's the right time to quarantine yourself from being influenced by someone in particular; Ritholtz's views on gold, why attaching your emotional well-being to it is wrong, and how it won't be quite as valuable as most people think in the event of a crisis; cutting your losses short and letting your winners run; the real value of intuition; how Ritholtz views the world and where we're at right now, societal and economic cycles, and how you can't be a doom and gloomer seeing what's coming down the pipeline in the next generation; and the importance of not being cash rich and time poor, getting "lost in the screens", and leading a good life instead of always chasing money for its own sake. Ritholtz brings a fun and engaging edge to the podcast. He also appeared in Covel's documentary film "Broke". Ignore his wisdom at your financial peril. Free DVD:

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Michael Covel talks about the incessant search for the "new new thing". He quotes author and blogger Seth Godin and his article, "The Decline of Fascination and the Rise in Ennui". Covel notes how the only constant in life and trading is change. Uncertainty is the root of trend following and if you have a philosophy that's grounded in change, you'll have a strategy that responds well to the world of ebbs and flows. You'll have a strategy that won't leave you blindly sitting there and will let you participate when a market either goes up or down. It won't leave you at the mercy of the latest "new new thing". So, which strategy can make you money in unending change? Trend following is a fantastic option. Covel goes on to quote Michael Mauboussin and notes the importance of process vs. outcome and the tricky subject of luck: "If you compete in a field where luck plays a role, you should focus more on the process of how you make the decisions and rely less on the short term outcomes. The reason is that luck breaks the direct link between skill and results. You can be skillful and have a poor outcome, or unskillful and have a good outcome." Covel discusses the criticism of people that expect positive trend following performance every month. Look in the books, look at the charts--trend following is a long term strategy. As Covel has said in the past any strategy that gives you a steady 1% a month is probably Bernie Madoff or Long Term Capital Management (i.e. soon to be exposed or busted). Covel goes on to quote an article by PFP Wealth Management regarding the essence of trend following. Covel also uses the classic Pixies song, "Debaser" and notes that it has about as much to do with your trading as turning on CNBC or Bloomberg. Think about it. Free DVD:

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"Mr. Serenity" Tom Basso, the trend following trader famously featured in Jack Schwager's "New Market Wizards", returns to the show to speak with Michael Covel. This time, the focus is on questions posed by listeners. Basso and Covel go over the questions and talk about subjects such as the video of philosopher Alan Watts that Covel discussed on a recent podcast that asked, "what if money was no object?"; how Basso manages his emotions during both losing and winning periods; what drove Basso to "enjoy the ride" and whether there were periods in his life when it was difficult to do so; exit strategies on winning positions; Basso's use of hedges; the process behind taking a developed system from testing to live trading; what Basso learned from his earliest large drawdown; Basso's use of money management and risk control; Basso's advice to the first time programmer; how to handle skeptics of trend following; whether Basso considered the notion of serenity from the very beginning of his career; the career of John W. Henry; Basso's coin flip entry method, and the importance of exit strategies; percent betting; diversification; what would cause Basso to stop trading a particular system; comfort with uncertainty; Basso's views on initial capital at risk vs. unrealized gains; and fighting against your gut reaction when your system tells you otherwise. Basso brings a wealth of knowledge in answering these listener questions, so hop on and (as Basso says) "enjoy the ride".

Note: This original #83 episode has to been updated to include all Basso interviews so far. 4 hours plus!

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As America approaches Thanksgiving this week Michael Covel is feeling reflective. He plays a speech by author and philosopher Alan Watts asking, "What would you do with your life if money was no object?" Covel shows you how you can make money, but asks: What will you do with it once you have it? It's about freedom, it's about finding options. It's not just about protecting it once you have it. So once you have the money you need what are you going to do with it? Covel goes on to discuss the importance of making something of yourself; of not sitting there and completing the dry obligations of the day. You need a shake-up in your life. It's time to find something different. Next, Covel plays a talk by author and blogger Seth Godin. Covel riffs off Godin's Q&A session noting the importance of finding something you truly feel passionate about, but knowing that it might not necessarily mean you'll be the next Apple. The important thing is to start now; don't wait until you finally realize the industrial revolution is over. You don't have to have a plan--just put yourself into motion. That's what Covel did: Start with your passion, and figure out how to pay the bills around that. Whether it's investing, building a business, entrepreneurship, or anything else (like trend following). Godin is great at explaining that accepted systems are dead. You have to create and use your own microphone to get your message out. Covel also discusses resistance, being able to survive to play the next hand, the importance of bet size, and diversity in your betting. Don't become emotionally invested in one idea; you might have to adjust within the place that you love. Next, Covel talks about a recent experience he had with government bureaucracy with regard to an international deal and how his experience might hint at future ills. Free DVD offer:

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Michael Covel analyzes a recent interview from famed trader Hugh Hendry of Eclectica Asset Management given at the Buttonwood Gathering held by The Economist. Hendry is not a trend following trader--at least publicly--and Covel gives some insight on how some very important trend following ideas have made their way into Hendry's work. Unlike Covel's comment on David Harding's interview from several weeks ago, this analysis is not about the skewed media perception of trend following, but rather how big name traders like Hendry use trend following philosophies in their trading, even if they would deny the label. Stick with it as Hendry talks about some of his fundamental views, because the trend following principles sneak up on you later in the interview. A narrative and a story is important in trying to sell yourself, and some of Hendry's thoughts belie the fundamental perspective on trading he presents to the public; Covel helps to read between the lines and see the underlying trend following thread inherent in Hendry's work. Covel comments as Hendry gives his thoughts on central bank manipulation and the consequences of those actions; how Hendry doesn't want to hear from the ridiculous analysts that can't help you in buying, selling, allocating to assorted markets in your portfolio, having a bet size strategy, and having a risk management strategy; how he made 50% in October of 2008 (and how this leads Covel to believe some trend following strategies might have been employed); and how Hendry is a student of uncertainty.

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Michael Covel speaks with Robert Greene, the bestselling author of the classic book, "The 48 Laws of Power", in addition to other bestsellers such as "The Art of Seduction", "The 33 Strategies of War", and "The 50th Law" with musician and entrepreneur 50 Cent. His new book, "Mastery" is out. Covel and Greene came together through their mutual friend Ryan Holiday (author of "Trust Me, I'm Lying"), a past guest on Covel's podcast and a former apprentice of Greene. Covel talks to Greene about the influence "The 48 Laws of Power" had on Covel's own writing; using the 48 Laws as a defense strategy rather than as a cutthroat offense; some of Greene's early influences that led him into his writing career; using Zen Buddhism and meditation as a tool to gain perspective and focus; the importance of using your unique life experiences in your career to create an irreplaceable style; and embracing opportunity. When "The 48 Laws of Power" unexpectedly pushed a button in the hip-hop community, Greene and musician 50 Cent began a collaboration that eventually became "The 50th Law". Covel and Greene discuss the stories surrounding their collaboration, why 50 Cent should be taken seriously as an entrepreneur, and how he embodies the paradigm found within Greene's new book, "Mastery". On the subject of "Mastery", Covel and Greene discuss how Greene mined the biographies of both contemporary masters and masters throughout history to discover how these people reached new levels and developed a different kind of intelligence. These people are highly creative, can connect ideas in a way that no one else can, and have become masters in their own respective fields. Greene made the startling discovery that genius, talent, luck, and intelligence did not lead his subjects to this power. Rather, they went through a process: They went through apprenticeships, mentored with the right people, knew how to observe what was happening around them, absorbed all of the rules of their field, developed skills, and had many failures. They aren't superhuman. They went through a process that Greene discusses in extremely clear terms in his new book. Greene makes the case that given the competition in today's world, becoming a master in your field is the only way to achieve true success. Special offer DVD:

Direct download: TrendFollowingManifesto111212.mp3
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Michael Covel starts with "It Was a Very Good Year" by Frank Sinatra because what's more useful as a human being? Is it more useful to get all geared up about elections, or to listen to a Frank Sinatra sing a nice walk through life. A pleasant, easygoing way. Of course, the pleasant easygoing way is better. Covel discusses what the election means for both sides, even if he doesn't seem to care one way or the other: On the conservative side, if you keep running social issue candidates, you'll never win an election again. To the liberals, if you think the government can give you economic freedom, you'll never have economic freedom. So, where is Covel going with this? He goes the Frank Sinatra way, the go-with-the-flow way. Every couple of years, someone says "trend following is dead". Usually it's right at the time trend followers have a drawdown. The idea is to have your wins far outweigh your losses. You'll have volatility in your returns. Life is volatile and you can't predict what's going to happen. You can only make your bets, have stop losses in the market, and say "I'm going to get out if I lose this amount of money". Covel quotes Jason Gerlach of Sunrise Capital (a firm with a 30 year track record of success) as a response to those that say "trend following is dead": "Trend following is no more dead than the sport of sailing or the act of kite flying would be considered dead if, for a period of time, the wind didn't blow. Like a sailboat, or a kite, a trend following trading model is designed to capture the power of environmental forces. When the requisite environmental forces don't occur for stretches of time, activities that depend on those environmental forces are not going to be successful. Once the winds started blowing again, sailboats will sail, and kites will again fly. The same holds true for trend following. Just as the wind will always return to blow in the future, the forces that drive price trends: greed, fear, euphoria, panic, will return at some point, and when they do, trend following trading models will make a great deal of money." Covel again notes AQR's paper discussing trend following's positive returns dating back to 1903 as evidence of this. Yes, there's a chance wind will never return, but do you want to bet everything on that?

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Michael Covel talks about his upcoming trip to Asia (with a special song intro for Korea). His plans include a speech in Tokyo, time spent in Singapore, Bali, Penang, KL Thailand, with various speaking events throughout. Covel's Asian odyssey is sure to be documented in the podcast. Covel also thanks the listeners for the success of the podcast. People feel stuck, and Covel talks about Stephen Cope's "The Great Work of Your Life: The Guide to the Journey of Your True Calling". Most Americans don't want to be on the endless treadmill, and maybe trend following is a way to get the freedom that you need in order to find your calling. Next, Covel discusses a quote from Bob Prechter, of Elliott Wave fame. Covel doesn't think that predictive techniques work, but Prechter had a fantastic piece of writing that Covel shares that analyzes some of the Fed actions in the past compared to what they're doing now. Covel contemplates what this might mean, and how it shows the Fed might be in a panic. But what does this mean to a trend following trader? Very simply, it's just another reason to employ a trend following strategy. If the Fed has dampened speculation in the past by raising interest rates to pop a bubble, and today you've got markets right back at the all-time highs but rates are still at 0%--what might this mean? If this scenario is accurate, what strategy do you employ? You can either trust the system, or you can put in place a strategy that only places trust in price action. Look at what Prechter says to inspire you to become a trend following trader. So how do you adjust? Covel goes on to discuss how to get "unstuck" quoting author Seth Godin: "Starting without seeing the end is difficult, so we often wait until we see the end." Next, a quote from Atul Gawande that talks about knowing your fallibility, and the importance of practice and nurture (in trend following). Covel also discusses an upcoming massive searchable .PDF file that he's putting together featuring 15 years of research containing background documents, systems, and other research materials. Covel's special offer new DVD:

Direct download: TrendFollowingManifesto111012.mp3
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Michael Covel talks with Michael Mauboussin. Mauboussin is an author ("More Than You Know", "Think Twice: Harnessing the Power of Counterintuition"), investment strategist in the financial services industry, professor at the Columbia Graduate School of Business, and serves on the board of trustees at the Santa Fe Institute (an independent, nonprofit theoretical research institute). Mauboussin joins Covel to discuss his new book, "The Success Equation: The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing". Covel and Mauboussin discuss luck and skill, how they cross over and play off each other, and how both of those factors have played a part in both Covel and Mauboussin's careers. Even though their strategies may differ, the foundational elements in Mauboussin's work applies to Covel's trend following world perfectly. Covel and Mauboussin also discuss how Mauboussin came to start working on "The Success Equation"; how losing on purpose can define skill; how sports can provide great examples of what Mauboussin contends regarding skill and luck; the human desire and emotional need to tell stories, and how that plays into peoples' difficulty untangling skill and luck; Stephen Jay Gould's notion of the .400 hitter in baseball and the paradox of skill; physical limits and improvement in skill over time; sample size issues; process vs. outcome; what to do when you're the underdog and how complicating the situation can help when you're in that position; improving your guesswork on where you are in the luck-skill continuum; persistence and predictive value; and building skill. A must read new book! Special offer new DVD:

Direct download: TrendFollowingManifesto110712.mp3
Category:general -- posted at: 4:37pm EDT

Famed writer and trader Jack Schwager returns to the podcast to speak with Michael Covel about his new book, "Market Sense and Nonsense: How the Markets Really Work (and How They Don't)", which is released today. For those that have had a pulse in the investment world in the last twenty or so years, you've surely crossed paths with Schwager's earlier works--especially the "Market Wizards" series. "Market Sense and Nonsense" aims to reveal why so many "tried and true" investment models and ideas might be flat out wrong. Schwager approaches these assumptions and beliefs about the market from the ground up and investigates which ideas hold up and which crumble under the pressure of closer scrutiny. Covel and Schwager discuss how Schwager was able to make "Market Sense and Nonsense" accessible to both professionals and laymen and touch on some of the subjects contained within: market fallacies and misconceptions; the idea of cable news "experts", and what would happen if you actually followed all of the picks made by people like Jim Cramer and other talking heads; comparing performance streams against each other, and why you have to consider more than just the number; volatility vs. risk; if coming to a good risk adjusted return is based more on a scientific approach or personal preference; leveraged ETFs; the fear of hedge funds; the idea of leverage and why much of "Market Sense and Nonsense" was built around trying to understand it; and why fund-to-fund managers putting a large group of trend following traders together in one portfolio might not be a wise move. Covel and Schwager also touch upon the presidential election and discuss why whoever is selected to be the next president might not make much of a difference in the markets. Special free DVD offer:

Direct download: TrendFollowingManifesto110612.mp3
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Michael Covel comments on four CNBC interview clips from legendary trend following trader David Harding of Winton Capital. Covel goes through the interviews with Erin Burnett, then of CNBC, Joe Kernen, and Fast Money. Covel comments as the anchors ask question after question that show they don't yet understand the basic concepts behind Harding's success. They beg for stock tips, ask predictive political questions, idiotically compare Harding's approach to Long Term Capital Management, and otherwise not get the big idea. Covel's analysis shows that reading teleprompters doesn't necessarily imply one has insight. It's an educational analysis to see how David Harding thinks and talks about trend following trading and to watch how the media system doesn't get it. Those lessons alone are worth the price in gold.

Direct download: TrendFollowingManifesto110112.mp3
Category:general -- posted at: 8:05pm EDT

How is trend following a bit like the Billy Idol song, "Dancing With Myself"? Michael Covel explains the importance of maintaining an independent spirit, feeling comfortable standing alone and outside the crowd and being your own self. Covel contrasts this to the famous scene in "American Psycho" where a group of executives compare the card stock and fancy presentation of their business cards trying to impress one another. That's the complete opposite of what "Dancing With Myself" gets at. Worry about yourself, not the crowd. Covel then quotes hedge fund manager Hugh Hendry. Hendry holds himself out in public as coming from a fundamental perspective, even though his hero is trend trader Bruce Kovner, who was trained by Michael Marcus, who was trained by Ed Seykota (all trend following traders). You get the picture. Hendry honestly states that he doesn't know what's going to happen, but he puts himself in the position to have probabilistic bets that can profit when the market moves--in whatever direction. Covel moves on to quote David Einhorn, a hedge fund manager. What will the Fed do if the bubble bursts when interest rates are at zero? Is Covel, in quoting Einhorn, trying to predict the future by talking about this subject? He's simply mapping out what he sees: A world that's rigged and manipulated, and a Federal Reserve that's trying to make its buddies at the big banks wealthy. In the midst of this how can you protect yourself and profit? The only way you can truly protect yourself is by looking at the price in the here and now from a trend following perspective. You can make decisions based on the price movement without having any idea what the Fed is doing behind the curtain. There is no certainty. There's only chaos, uncertainty, fractures, and cracks in the sidewalk. You have to have a plan before that fracture breaks. Although traders like Einhorn, Hendry, and John Hussman might not be trend following traders themselves, their observations certainly make the case for employing a trend following strategy. Special Offer? Free trend following DVD:

Direct download: TrendFollowingManifesto103012.mp3
Category:general -- posted at: 5:39pm EDT

Michael Covel talks with Peter Brandt, author of "Diary of a Professional Commodity Trader: Lessons from 21 Weeks of Real Trading", and a trader who has been in the commodity trading space since 1976. He's traded his own proprietary account from the late 1970's until today, and is currently entering the hedge fund world by running a multi-CTA fund-of-funds. Brandt got his start in Chicago trading commodities and working at the Chicago Board of Trade for Continental Grain Company. Along the way he jumped from approach to approach until he found the book "Technical Analysis of Stock Trends" by Edwards and MaGee, and became a classical chartist. However, after leaving Continental Grain in the early 1980's he suffered a traumatic accident falling from seventeen feet onto a concrete slab while sleepwalking. Brandt suffered neurological and physical damage which affects him today, but he calls this tragedy a blessing. Covel and Brandt talk about how the accident influenced his trading and how great lessons can be learned through adversity. Covel and Brandt also discuss the idea of trading a five minute chart pattern vs. a weekly chart pattern; the biggest mistakes you can make as a novice trader; averaging a loser; risk management and the right amount to risk on any trade; upside volatility and the fantasy of a straight line up of profit gwoth; and the importance of reducing the incessant head chatter and living in the moment of now. There are some real commonalities between Brandt's approach and trend following, including the basic foundations of risk management and the importance of price. Brandt and Covel get to the bottom of their respective approaches, and explore how to find the best system for yourself. Special offers including a free DVD go to:

Direct download: TrendFollowingManifesto102512.mp3
Category:general -- posted at: 6:34pm EDT

Michael Covel talks about "The Power of Now" by Eckhart Tolle. Covel defends studying the book as a psychological manifesto for "navigating the trend following waters". Halfway through the book Covel realized how it sounded like all the trend following traders he's studied over the past fifteen years (even if it wasn't the author's intention). Covel isn't out to get you to start singing kumbaya and burning incense; he's just out to get you to look at the world differently so you can profit. Covel discusses Cullen Roche, author of the "Pragmatic Capitalism" blog, who posted some quotes from Warren Buffet recently. Covel acknowledges that Buffett is one of the most successful entrepreneurs in the history of modern man, but has no problem criticizing the myths that surround him. Buffett noted that Berkshire has $40 billion in cash on hand, but "prices are difficult right now". So, what does that even mean? Why is Buffett on CNBC? He's talking his "book", he's creating the aura, and perhaps confusing people into making decisions based off his advice. Or perhaps he simply needs his ego stroked. So, what do you buy based on that advice? How do you make buy and sell decisions? Trend following doesn't rely on vague statements, and the positive performance dates back to 1903. With trend following price is price. That is an under the radar concept though. Most people simply know Buffett's value investing, buy and hold world. However, there are inherent problems in value investing and Covel investigates by quoting David Rosenberg and John Hussman along the way. From their fundamental perspective Rosenberg and Hussman lay the foundation for trend following without thst being their intention. Covel also goes on to discuss "Finding Peace with Uncertainty" from the Zen Habits blog and announces a new $500 gun shooting video contest. Offer--Would you like a free special DVD:

Direct download: TrendFollowingManifesto102412.mp3
Category:general -- posted at: 5:16am EDT

Michael Covel opens up with the classic Pink Floyd song, "Brain Damage" and an interview with Pink Floyd leader Roger Waters explaining the composition of the song. Inspired by watching beautiful tufts of grass that were only to be looked at and not stepped on Waters explains the lunacy needed to step out of bounds in society and step on the grass you aren't supposed to. Trend following is all about standing in the middle of the grass and tearing it up to find enlightenment. On the heels of Waters' interview Covel discusses Seth Godin's new video, "Stop Stealing Dreams". Godin explains the number one purpose of school: obedience. Do as you're told and learn to be a cog in a wheel. Do you want to be an interchangeable part or do you want to create art? Waters sings about the lunatics who would dare to walk on the grass they weren't supposed to, and Godin questions the entire system of education. Why do people have such a hard time breaking out and finding a new way of thinking? Covel's analysis of Godin's work might give you some clues. All of this is a lead up to a fantastic white paper called "A Century of Evidence on Trend Following Investing" that tracks trend following performance back to 1903, which Covel discusses in detail. The data to back up trend following as a successful strategy for 110 years is all right here. Special offer free DVD? Go:

Direct download: TrendFollowingManifesto101812.mp3
Category:general -- posted at: 10:45pm EDT

Michael Covel brings some unexpected trend following messages and inspiration from eclectic and unexpected places. The first comes from Neil Young, his lyrics signifying the ups and downs of life and trading. The important thing is that we're along for the ride: "I've been first and last, look at how the time goes past, but I'm all alone at last, rolling home to you." Covel discusses the unexpected inspiration he's found over the past few weeks leading up to his recent speaking engagement in Las Vegas arranged by Timothy Sykes. As you would expect Covel found some important food for thought on his trip and he shares these eccentric lessons: A pamphlet found in a hotel room from Affliction Clothing; a film called "Jiro Dreams of Sushi" that holds some important messages about passion and practice; a book that Covel received from his Yoga teacher titled "How Yoga Works" that has more to do with trading than you'd ever expect; and the book "Investment Biker: On The Road with Jim Rogers". Covel also discusses a quote from famed trader Larry Hite about how in the big picture nothing really changes. People are people and people are always motivated by greed and fear. A reader questions how high frequency trading and automation work into the equation and Covel answers. Covel also discusses some thoughts from more fundamental thinkers such as Hugh Hendry and John Hussman (and why, whether it is their intention or not, they write great missives about why trend following works). From a strategy perspective how do you follow along and make money in a world where fundamentals don't offer you hope on the timing of things? How can you make money in that world? The answer is trend following. If you don't have trend following in your portfolio what are you missing? Covel also makes a big announcement for a special in-person seminar event in Las Vegas coming up in December. The event includes both of Covel's dinosaur systems (T-Rex and Triceratops), a ton of materials (documents, audio, and video) that are unlikely to ever be released anywhere else, a long Friday night dinner, a full day session on Saturday--everything you need but the airfare. You'll have to make your decision by November 1st for the event on December 7th and 8th. Also a special DVD offer:

Direct download: TrendFollowingManifesto101612.mp3
Category:general -- posted at: 8:18pm EDT

Michael Covel talks with Frank Curzio of Stansberry and Associates. Curzio is a recognized experts in the small cap sector, the voice behind S&A Investor Radio, as well as the editor of the Small Stock Specialist. Curzio has been featured on numerous radio and television programs, and wrote a newsletter for before joining Stansberry. Covel and Curzio come at the game from vastly different perspectives on how to make money, with Curzio's small-cap world playing the yin to Covel's systematic, trend following yang. Even with their differences Covel and Curzio find plenty of common ground in their alternative ways of getting to their ultimate goal: to make money. Covel and Curzio talk about Curzio's background coming up in New York, the influence of his father, and his introduction into the world of trading; Curzio's history with Jim Cramer, the info-tainment industry, and separating Cramer the analyst from Cramer the television personality; Stansberry's wide reach in the financial world and Covel's introduction to them through an event at Jekyll Island; how Curzio is still looking for big moves just like any trend following trader; how the "magic hand" of the Fed can affect strategies in both the fundamental and trend following worlds; Curzio's experiences with Jim Rogers, Jeff Macke, and Porter Stansberry; and the drastically different ways in which trends can be dissected. Special offer free DVD:

Direct download: TrendFollowingManifesto101312.mp3
Category:general -- posted at: 8:09pm EDT

Michael Covel talks with Mark Shore, a trader and educator whose main area of expertise is managed futures. Shore has an MBA from the University of Chicago, was the former head of risk at Octane Research (over a billion AUM), was the former COO of VK Capital (a subsidiary of Morgan Stanley), and now is an adjunct professor at DePaul University teaching the only accredited course on managed futures in the country. Covel talks to Shore about Shore's experience in getting the "a-ha" moments out of his students when teaching managed futures, and how he brings his students into the world of managed futures; how and why those working in the CTA/managed futures/trend following space have a firm grasp on risk management that exceeds the understanding of competitors (i.e. mutual funds); how the term "managed futures" (which refers to the instrument and not the strategy) might be problematic; skewness; drawdowns; why managed futures performance is famous for doing extremely well when chaos unfurls; why the majority of the mutual fund industry hasn't adopted CTA strategies; the issue of survivorship bias; why certain people can't wrap their arms around strategies not based on fundamental analysis; Shore's paper, "Decoding The Myths of Managed Futures"; the emotional elements of trading; and others experiences while working at VK Capital. Would you like a special DVD sent along for free? Go:

Direct download: TrendFollowingManifesto100912.mp3
Category:general -- posted at: 7:46pm EDT

Michael Covel discusses an article titled "21 Ways Rich People Think Differently Than Average People". The word rich may not be the best term here as Covel notes, "being rich or poor doesn't stop you from being a schmuck." Covel makes a more clear distinction between average people and people of high character. He goes through the list and offers commentary on statements such as "average people think money is the root of all evil; rich people believe poverty is the root of all evil." Money, Covel maintains, is just a medium of exchange and that's all it is. It's what you make of it that becomes good or bad. Readers will see that many of the precepts and principles in this article are straight out of Trend Following 101. Further, commentary includes seeing money through the eyes of emotion vs. seeing it logically; following your passion vs. working for the man; setting low expectations vs. challenging yourself; knowing the markets are driven by emotion and greed; being a slave to debt; surviving vs. thriving; education vs. entertainment; finding comfort in uncertainty; and trend follower Larry Hite's concept of asymmetric bets. Next, Covel discusses "An Investor's Guide to Famous Last Words" from The Motley Fool. Covel used to spend time ripping The Motley Fool for pumping buy and hold, and in the end pulls no punches in revealing the author to be a die hard "value" guy (despite agreeing on certain points). Would you like a special offer DVD sent to your home or office? Go:

Direct download: TrendFollowingManifesto100812monologue.mp3
Category:general -- posted at: 9:21pm EDT

Michael Covel speaks for the second time with managed futures expert, editor/writer for Opalesque, and author Mark Melin. Melin has his fingers on the pulse of the nasty things going behind the scenes; specifically, over-the-counter ("OTC") markets and the MF Global scandal. Covel talks to Melin about his recent piece in Opalesque: "The Untold Story: Brooksley Born, Larry Summers & the Truth About Unlimited Risk Potential". Most understand stock and futures exchanges; you can trade in these exchanges and expect a certain amount of regulation and transparency, and people understand the balancing side of the equation. However, the OTC derivatives that Melin has been digging into are completely off the everyone exposed to a possible mega-implosion in the near future. Melin discusses the history of these unregulated derivatives and notes that if the problems that were initially identified by Brooksley Born in 1998 are not properly addressed, the next market catastrophe could be worse than anything that has preceded it. Covel and Melin discuss the possible solutions; if politicians can actually be held accountable if there are no repercussions beyond not being reelected; and how the average American can digest this information and how it affects them. Covel also brings up the idea of the "four political parties": Democrats, Republicans, Libertarians, and Bankers. If you look at it from that perspective can they be defeated? (Covel: "No.") You can't vote the bankers out. Melin contends that if the debt crisis in Europe unfolds banks are going to expose the US government to unlimited loss potential. Covel and Melin go on to discuss how people simply won't listen if the Dow is rigged to keep them happy; why the average person who sees the Dow at a high level today should care about this, and what they can do to protect themselves beyond sitting around and waiting for the sky to fall. Covel is the skeptic and Melin is the optimist in this fiery conversation about how to handle this situation before it implodes. Melin notes: "The Fed cannot prop up the stock market forever. At some point, gravity takes over." Covel believes the die is cast and offers trend following as an "out". Special offer free DVD:

Direct download: TrendFollowingManifesto100812MarkMelin.mp3
Category:general -- posted at: 6:53pm EDT

Michael Covel sometimes feels like he's floating above and looking down like the protagonist in David Bowie's "Space Oddity". In today's episode Covel closes this alienating gap with his explanation of the "lottery society": The idea that you don't have to work--you simply make a small bet of your time and money and your your entire world can change through one single action (even though the odds say there is no chance). We've pushed aside the notion of purposeful, driven, consistent effort and work. You can see the concept of a "lottery society" beyond the notion of buying a scratch-off: the idea that the Presidential election will change your life, reality shows and American Idol's instant fame fantasy and drugs and alcohol as the quick fix. It all sounds well and good, but the lottery mentality doesn't work. It sucks the life out of you. How did we even get to the point where being "picked" has replaced the notion of good, consistent hard work and creating something from scratch? It's the gap between wishing and doing. We're in a fantastic world of distraction and the lottery mentality is a perfect example of that distraction. Covel goes on to explain the parallels between fundamental analysis and the lottery mindset; perspectives on the lottery mindset from writer Seth Godin; the perils of watering down a clear trend following trading strategy with short term trading strategies, fundamental analysis, and media input; and the illusion that tools such as the iPhone make us more productive. Next, Covel notes how many want a hero these days (instead of viewing themselves as heroes). Currently, the "hero de jour" is Ben Bernanke, chairman of The Federal Reserve--except most don't have a grasp why his current rate policy is so problematic. When you have rates artificially reduced to zero it forces people to invest in the stock market. Covel offers commentary regarding current Fed policy by giving context via an exploration of recent tech and real estate bubble histories. As Charles Hugh Smith ( has noted, "If you prop up an artificial economy long enough, does it become real?". Covel gives his personal view of the current situation: You know it's bad, you know it's eventually going to pop, but what do you do? That's the hard question. So how can you profit in the face of such uncertainty? Trend following is the profit answer when the black swan swims in. Special offer: Receive a free DVD here:

Direct download: TrendFollowingManifesto100412.mp3
Category:general -- posted at: 8:32pm EDT

"The pleasure is to play, it makes no difference what you say. You win some, lose some, it's all the same to me." Michael Covel opens up with one of the greatest heavy metal songs of all time and notes some unexpected lessons that can be taken from the lyrics. Sticking with the theme of taking trend following inspiration from unexpected places, Covel then goes on to discuss several posts from Zen Habits, a blog that contains lessons from the perspective of Zen Buddhism. Covel discusses "Finding Peace With Uncertainty": "Why is not knowing so scary? If you roll a dice and don’t know what it will be, is that scary? No, it’s not the 'not knowing' that’s the problem it’s the possibility that what comes up on that dice will bring us pain, suffering, loss." Covel relates this to a recent experiment he did that illustrates trend following through the roll of dice. If you get a two or a six, you win three pennies. Any other number, you lose a penny. The two and the six only come up a third of the time, and even though you don't win many of the rolls, the wins are big. The winners, because they're bigger, pay for the losers. That's trend following. So, how do you deal with uncertainty? Extricate yourself from harmful ideas and strategies: lose the small things that have no positive impact on your trading, such as buy & hold strategies, watching CNBC, etc. Know the worst case scenario. Become comfortable with waiting, and stop obsessing on uncertainty. Voltaire said, "We never live; we are always in the expectation of living." That's the goal. It's not the expectation of living--it's the "right now" that's important. In the next section, Covel comments on some trading and life commandments--inspirational reminders that you need to hear, including "The Ten Most Foolish Things a Trader Can Do". Special offer with free DVD:

Direct download: TrendFollowingManifesto100212.mp3
Category:general -- posted at: 8:03pm EDT

Michael Covel talks to Darren Kottle. Kottle is the CEO of Caddo Capital Management a trend following firm. He talks about his roots, growing up in Shreveport, Louisiana. Shreveport was an oil town and Kottle talks about the experiences growing up in an entrepreneurial town. Covel and Kottle also discuss Kottle's early experiences in the market, starting off in a discount stock brokerage; his experiences working with a Nobel laureate Kenneth Arrow at Stanford; the sources of trend following profit; George Soros' concept of reflexivity; the importance and believing in your system to the core; thoughts on investment banks; the pivot point for Kottle to fully embrace a trend following system; what the Turtle story did for him when he first heard it; uncertainty vs. being wrong; and the percentage of people that truly understand that "it's all reflected in the price". Special free DVD offer:

Direct download: TrendFollowingManifesto092712DarrenKottle.mp3
Category:general -- posted at: 7:21pm EDT

"It takes two to make things go right, it takes two to make it out of sight". That's a market for you. It takes you over there and me over here and we reach across to make a deal. That's what the market is: it's a bunch of hands shaking, except it's in the form of stocks or futures. Covel talks about "Pawn Stars" and how it's simply price discovery; two people coming together to find a price. Covel takes this and expands on how it's terribly complicated to get to a price. But here's the trick: except for trend followers nobody really wants to talk about how the stuff that gets to the price is waste product. The price is the smartest one out there. Covel also talks about the source of trend following profits in the zero sum game. Trend trader Dave Druz makes the case that it's the risk premium from hedgers. Covel talks about hedgers, the futures market, how it's very much like insurance in a way, and how it relates to the source of trend following profits. Covel also talks about a white paper called "The Winners and Losers of the Zero Sum Game: The Origins of Trading Profits, Price Efficiency, and Market Liquidity" by Lawrence Harris, and how it changed the direction of his own career. Special free DVD offer? Go:

Direct download: TrendFollowingManifesto092712monologue.mp3
Category:general -- posted at: 7:15pm EDT

Michael Covel dives into the topic of cutting your losses, opening with a quote from "The Boxer" by Simon & Garfunkel: "The fighter still remains". It's a personal fight and personal responsibility for all those out there. And if you trade to money the fight to understand the topic of losses should be at the top of your list of concerns. Most people want to hear "instant profits"; they want to run away from discussing losses. However, knowing how to strategically approach losses is one of the most important concepts to understand as a trend following trader. Covel shares a note from a fan who made a connection between Covel's work and some of the ideas found in famed quarterback Joe Montana's book, "The Winning Spirit": "In training for success, we shouldn't hide from failure. Just like football players in the film room, we study failure. We want to see how it happens and which strategies work to keep us from making the same mistakes again." This doesn't just apply to trading: The loss cutting can be a relationship, a business, a family member--it can be anything. How do you know when to cut your losses and get out? Covel goes on to talk about the concepts of opportunity costs and sunk costs. When you've spent the money and it turns out to be "gone" you can't fret about it. It's over--it's a sunk cost. An opportunity cost is equally important: If you are doing A, you can't do B. It's a choice. If you invest your time, energy, or money in one relationship or one business, you can't spend your time, energy, or money with another. There is a cost to choosing one opportunity over another. Covel expands on these concepts relating them to familiar companies like Microsoft and Apple. Covel goes on to discuss how people have difficulty letting bygones be bygones; why people have difficulty with stop-losses in trading; and why having a system that forces you to take losses is the foundation of trend following trading success. A special offer from Michael Covel? Free DVD telling the story of a small town guy who made a trend following fortune. Delivered to your home or office:

Direct download: TrendFollowingManifesto092512.mp3
Category:general -- posted at: 8:00pm EDT

Michael Covel opens his monologue with a clip from the film, 'Patton'. He talks about persistence over time in relation to the film, relating it to some personal examples from his own life. Some people seem to have genetic disposition for certain skills; however, the drive to succeed supersedes any genetic disposition you may have. Dedication, persistence and the drive to achieve are the true keys to success. Covel leads into a clip of Maria Bartiromo talking with Ray Dalio of Bridgewater. Covel notes some things that Dalio goes into that have to do with trend following: having a strategic asset allocation mix that assumes you don't know what the future is going to hold; and the importance of the few big wins. However, Dalio says he isn't a trend following trader in the traditional sense: he's 100% systematic using fundamental information--not technicals. Covel goes on to surmise that there is evidence that some portion of Dalio's business is perhaps in the technical trend following space. Covel also talks managed futures: the origin of the term; how it describes an instrument and not a strategy; and its relation to trend following. Further topics include why you don't need a Ph.D. to be a trend following trader, and process vs. outcome. A special offer from Michael Covel? Free DVD telling the story of a small town guy who made a trend following fortune. Delivered to your home or office:

Direct download: TrendFollowingManifesto092012.mp3
Category:general -- posted at: 6:57pm EDT

It's common knowledge that if you throw a lobster into a pot of boiling water it will scream for its life. However, if you put the lobster in cool water and slowly bring it to a boil the lobster will accept its fate. Michael Covel notes that this is the scene for many investors today: they're like the live lobster in a pot of cold water as it's coming to a boil and they don't know what's coming. Covel presents this idea and several others in the context of gambling, chance, and uncertainty. Gambling can be a pejorative term for many, but Covel relates it to trading. Covel discusses an article entitled, "The Illusion of Control: Dancing With Chance" and relates its ideas to trend following trading. Covel also discusses a TED video from Dylan Evans. Evans talks about three different types of gamblers: problem gamblers, leisure gamblers, and expert gamblers. Covel extends Evans' categorization to traders. These different types of gamblers play for different reasons, handle profit and loss differently, and bet on different games. Are you a problem trader, a leisure trader or an expert trader? Do you trade for fun or for money? While problem gamblers will bet the farm, leisure gamblers know their limits (using a nascent kind of stop strategy), and expert gamblers aim for profit. A problem gambler will bet on anything, but an expert gambler will only bet on games with an element of skill. Covel also analyzes Evans' three ways to make decisions: setting a threshold (how much are you willing to lose?); bet sizing (how much do you bet on each trade?); and the expected value (if you follow your strategy, what is going to be your average winner and average loser?) If you look at the market price of a diversified portfolio of markets, have an entry and exit strategy, and have a bet sizing strategy, then you can make money over the long haul if you have a positive expected value. Please note: Michael Covel quotes Christopher Hitchens in this episode, which contains an f-bomb. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto091812.mp3
Category:general -- posted at: 7:38pm EDT

Michael Covel opens with quotes from both Jay-Z and Malcolm Gladwell ("My goal of the day is to fully listen to my critics, even if they may not know exactly what they're critical of."). Jay-Z recently spoke with Russell Simmons about Occupy Wall Street, noting that he wasn't sure exactly what the message was behind the rally. Covel talks about the Occupy movement, about criticism he's received in support of Jay-Z's stance, trend following in general, and the culture of "trolling" that has popped up on the internet. Next, Covel covers some of the more technical details regarding trend following trading. How can you detect a trend? How can you measure it? For anyone with a pulse, it's really simple. A trend is from point A to point B. There are all kinds of different trend lengths, but you don't know the trend until it's over; you enter, you exit, and then you see where the trend was. The goal is to capture the "meat" in the middle. Covel covers the five basic precepts of trend following: What markets are you going to follow? What will be your signal to enter a trade? What will be your exit signal for getting out with a gain? What will your exit signal be for getting out with a loss? What will your bet size be? Covel also discusses drawdowns, speculation, and entry signals. He notes the connection between wildcatting/speculation and trend following, referencing P.T. Anderson's film about oil speculators, "There Will Be Blood". You can enter randomly, but if you can give yourself an edge on the entry, you should take it. Think about drilling an oil well: You show up and you start drilling holes. You can drill randomly, but if you do a little geological homework, you can find out where to drill to increase your odds. The same logic applies to trend following. You're going to drill a lot of holes: some of them are going to be dry, but you're going to hit a few gushers along the way. No one will care about the dry holes when you hit the gusher that pays for them all. You can either call Fidelity, give them all your money, and wait and hope that you have the timing correct for your own retirement; or you can craft your life around looking for the gushers with a strategy that gives you an edge. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto091312.mp3
Category:general -- posted at: 3:37am EDT

Michael Covel talks to trader, educator and author Dr. Alexander Elder. Besides his numerous other books, just about everybody involved in the trading space in the past 15+ years has Dr. Elder's international best-seller "Trading For A Living" on their shelves. Dr. Elder's unique and inspiring story starts with his dissatisfaction with the communist system in his home country of Estonia. At 23, while working as a ship's doctor, he jumped a Soviet Union ship in Africa and received political asylum in the United States; he also ended up on the KGB's wanted list. Dr. Elder worked as a psychiatrist in New York City and taught at Columbia University, and he shares with Covel how his experience as a psychiatrist provided him with a unique insight into trading. Dr. Elder's work has established him as one of today's leading experts on trading psychology and in the use of technical analysis with money management. Elder and Covel talk about the psychology of trading; how a high degree of education can sometimes be a hindrance; the most dangerous personality traits to have as a trader; the stages of trader development; the importance of money management; the importance of keeping records and diaries of your trades; the notion of exiting long positins and shorting weakness; the similarities and differences between traders in different geographic locations; and how financial markets can be like manic depressive patients. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto091212.mp3
Category:general -- posted at: 6:39pm EDT

Michael Covel talks with trader Steve Brechtel. Over the past 20 years Brechtel has worked as a trader for three of the top 100 hedge funds in the world: Trout Trading (now Tewksbury Capital) in Chicago and Bermuda, Crabel Capital in Milwaukee, and now Two Sigma in NYC (a $10 billion fund) -- all short-term systematic funds. Considering the often secretive nature of hedge funds Brechtel's candid talk about Two Sigma required internal clearance from his company and is a rarity in the hedge fund world. Covel and Brechtel cover Brechtel's history, from his beginnings roughing it as a Pizza Hut manager while working an insurance job, to finding his way to Monroe Trout, to working at Crabel, to his career at Two Sigma today. They also discuss their mutual history in Virginia; why he was hired at Monroe Trout in the first place as a new trader and the advantages of having a beginner's mind; the difference between the short term/systematic traders that Brechtel worked for and the longer term trend following Covel talks about; the six strategies Brechtel learned trading the pits; what's changed and what's the same now that technology has evolved; Ayn Rand, objectivism, and Trout; Brechtel's transition from Trout to Crabel, and the differences between these two firms; and his work at Two Sigma today. Brechtel also has written a screenplay ("Unhedged") using hedge funds and high finance as its backdrop. He shares his experience in writing the script, how his movie differs from other Wall Street movies, and Covel talks with him about his experience in making his own documentary, "Broke: The New American Dream". Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto090712.mp3
Category:general -- posted at: 6:14pm EDT

"You have to understand, most of these people are not ready to be unplugged. And many of them are so inured, so hopelessly dependent on the system, that they will fight to protect it." That quotation inpsired Michael Covel to analyze the two political conventions in America over the past few weeks offering a trend following perspective as an alternative. Within politics people seem to be marionettes attached to strings with invisible hands moving them all around. On either side of the aisle you have people blindly following "their guy" thinking their political win is the answer to their problems. Yet if you want the dollars in your account to go up clapping like a "happy seal" at one of this conventions ain't going to cut it. Covel compares today's landscape to the famous Twilight Zone episode where Roddy McDowall finds himself crash landed on Mars only to realize the comfortable home that has been made for him is a prison where he is exhibited like he's in a zoo--an "earthling in his natural habitat". Covel also notes how technology is arbitraging away the need for human capital and how no politician in America is honest enough to admit it. If so, how do you succeed in this environment? You have to pick an option that's not simply a political belief in "your guy". So what's a way out? Covel lines up some of the basic trend following concepts and applies the eight key features of the scientific method. However, if everyone adopts trend following how can it still be successful? The vast majority of invested assets are in buy and hold mutual funds and unless people stop gambling, stop watching CNBC, and stop drawing false parallels, trend following will never be adopted by the masses. However, the fact that most people are unable to adopt trend following gives you the leg up and a fantastic opportunity to mint cash. Get out of the human zoo. Stop being a marionette. Stop being manipulated. And do something big for yourself. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto090612.mp3
Category:general -- posted at: 8:25pm EDT

Michael Covel speaks with trader, author and blogger Steve Burns. Burns has written two books (his most recent book "New Trader, Rich Trader: How to Make Money in the Stock Market" is available on Amazon) and operates an educational website. Burns is an up-and-comer, and Covel talks to him about his early start, his Nashville location and lessons learned along the way. Burns' start came during the tech bubble of the late 1990's, and he discusses how the bubble bursting helped to shift his perspective from a fundamental, buy and hold approach to the trend trading perspective he's adopted today. Covel expands on some of the chapter titles in Burns' book, such as "New traders try to prove they are right, rich traders admit when they're wrong," and "New traders bet the farm, rich traders carefully control position size." They also discuss the problems with buy and hold; how "rich" can be a mindset rather than a number; the role of luck and circumstance in trading; staying away from the need for constant action and waiting for the "fat pitch"; developing a robust system; staying away from predictive trading approaches; and viewing the markets as a video game as a means to help with trend trading understandings. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto090412.mp3
Category:general -- posted at: 9:37pm EDT

Michael Covel discusses reducing decisions in our lives. He lays the foundation by exploring typical Yahoo Finance articles and a recent John Bogle piece titled 'Ten Rules of Investing', which basically pumps a buy & hold strategy. These articles are the digital stress and information overload of our lives. They don't help us make decisions; instead, they distract. Covel relates this to a white paper from the Bank of England called "The Dog and the Frisbee". Thousands of decisions and factors go into the simple act of a dog catching a frisbee, but does the dog ever think of all those factors? Does the dog crunch the higher math? No! This makes for an easy connection to trading. The objective is to reduce trading decisions down to a simple factors, and to make good buy and sell decisions with some sort of risk-management constraint. So, how do you reduce the buy/sell decision-making process down to something manageable? A trend following strategy and trade based on price. All of the Yahoo Finance, CNBC, and Bloomberg articles in the world won't help make better trading decisions--its all overload. Focusing on the thousands of factors that can go into any market decision will leave your head spinning; if you adopt a trend following approach, you can reduce all decision-making down to the price action up or down of the instrument you're trading. Simplicity in life and the markets--the key. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto090312.mp3
Category:general -- posted at: 8:12pm EDT

Michael Covel talks to Courtney Smith, a trader, author, money manager, educator, and speaker. Smith has been trading for forty-plus years; he's written seven books and is a frequent commentator on television. Smith has had a long and varied career, and Michael Covel talks with him about his start, and his experiences with trend trading and Richard Donchian's systems (and the experience of testing these systems on computers in the mid-70s). Smith and Covel also discuss today's climate for trading, and how it compares to what times felt like in the 1970's; the psychological components to trading systems; the importance of speculators (and why they're often unfairly put in the position as a political whipping-boy); "hope" in the marketplace; drawdowns; how "markets are markets"; high frequency trading; the informational value of studying track records; the idea of being "flat" in the market; the importance of ignoring television; and trading methods that should be avoided. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto083012.mp3
Category:general -- posted at: 8:25pm EDT

Michael Covel talks to Charles Faulkner, a trader, mentor and author who has been featured in Jack Schwager's "Market Wizards" series. Faulkner is an international expert on modeling the knowledge and performance of exceptional individuals, teams and organizations, and applying the latest research in cognitive neuroscience and linguistics. Faulkner discusses his upcoming book, "Higher Level Trading: The Five Stages to Trader and Investor Mastery". Covel and Faulkner talk in detail about Faulkner's idea of "system one" and "system two" - a dual-process theory of how the brain works - and how it relates to trading. They connect trading with topics as neuroscience and behavioral finance. Further topics include herding, bubbles, and panics and how they relate to "mirror neurons", group think, and sheep behavior; the idea of making sense of the world through our bodies (and how this might be relevant to trading); neurolinguistics (the relationship between the neurology of the brain and the language we use); how our brains crave stories (and how we have to be careful how we use them); and the importance of using money to buy experiences over objects. Note: This is Faulkner's 2nd appearance on the podcast. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto082812.mp3
Category:general -- posted at: 8:09pm EDT

Michael Covel talks to James Altucher. From hedge fund manager, to author, to blogger to angel investor, Altucher has a wide and varied career bringing a very honest perspective to life, the cerebral side of the equation, health, and happiness. You can have all the systems in the world, but if you don't have the six inches between your ears figured out, it's all for nothing. Covel and Altucher talk about transparency; the connection between yoga and trading; greed; happiness; expectations; some of Altucher's early influences; physical, emotional, and mental health; and honesty. For those of you constantly searching (in vain) for the moneymaking secret, the free ride, the lunch someone else buys, Altucher's life work at 'Altucher Confidential' is daily must reading ( Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto082512.mp3
Category:general -- posted at: 5:01pm EDT

Michael Covel talks to David Cheval. Cheval was an inside witness to Richard Dennis and Bill Eckhardt's famed Turtle experiment. Through the involvement of his former wife, famed original TurtleTrader Liz Cheval (, David Cheval's history and background for the Turtle story comes from a unique vantage point. Cheval talks with Covel about the events surrounding the Turtle experiment, including his own interesting part in alerting his former wife to the opportunity (he is still an investor in her firm). They also discuss Cheval's progression from a runner on the Chicago pits, to the formation of his CPO (Dearborn Capital Management), to his career in law today; the presence of Richard Dennis on the Chicago Board of Trade in the years prior to the Turtle experiment; some of the lessons that can be gleaned from some of the most successful Turtles; the difference between volatility and risk; and why basic trend following philosophies are timeless. Cheval's oral history is a nice addition to Michael Covel's classic TurtleTrader book "The Complete TurtleTrader" ( Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto082212.mp3
Category:general -- posted at: 6:25pm EDT

Michael Covel talks to Michael Gibbons. Gibbons is a market timer (otherwise known as a trend following trader) who runs a firm called Gibbons Trading ( Gibbons started as an economics major and quickly realized that much of what he was taught in academia didn't add up. He has been trading since 1971, and was one of the first to discover what is now known as stock index arbitrage. He was one of the first to use computerized trading and currently provides his proprietary research primarily to large traders and hedge funds. Gibbons talks to Covel about how he got started in the markets; the fallacies of buy & hold and fundamental analysis; trading prices apart from everything else (and how this is close to playing the market like a video game, i.e. pong); the problem of when the media is simply "making things up"; how trading can be primarily psychological; the problems of the efficient market hypothesis (EMH) and academia; the benefits of having a trend following strategy during chaotic times; the danger of gurus; and separating your ego from your trading. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto082112.mp3
Category:general -- posted at: 6:11pm EDT

Michael Covel picks up the thread from last week's episode on the global chatroom that is Twitter, StockTwits, and other social networking services. Covel received some feedback from a listener that took exception with Covel's characterization of Twitter and StockTwits, noting that the service isn't limited to one style of trading. Covel doesn't disagree, but notes that it's entirely irrelevant. If you're in the market to make money using a price-based trend following system, any other information is extraneous. The non-stop continuous flow of information never ends; it's simply a distraction. Covel also discusses the importance of consistency: If you don't have consistency in your thought process, how can you have consistency in your process of trading? Be consistent with your use of price as the basis of your system. Covel also discusses a great passage by Milton Friedman. Friedman discusses the impossibility of a single man manufacturing a pencil by himself. There are thousands of people who cooperate together to make a pencil, all motivated by the presence of a market. It's a marvelous example of how you can get a complex structure of cooperation and coordination which no individual planned; rather, it is coordinated by the market. It was not directed under the hand of state centralized authority. While the connections to trend following and Friedman's point may not be obvious, there is a connection on the psychological side. To the person who wants to get ahead on their own, the answer is there. Either you want the state to do/fix things for you, or you go out and try and get things done on your own. Everyone has to choose their path.

Direct download: TrendFollowingManifesto081812.mp3
Category:general -- posted at: 6:55pm EDT

Michael Covel speaks with Ralph Vince. If you've done your homework on trading systems, specifically about optimal bet sizes, you have run across Vince's work before. Vince is self-taught and has crafted some extremely detailed, comprehensive looks at optimal betting strategy for traders over the last 20-plus years. Covel discusses whether coming up outside of the typical educational institutions affected Vince's outlook - and how learning outside of institutions can work better for some than others. Covel and Vince also discuss optimal bet sizes; whether Ed Thorp's work and the Kelly criteria had any effect on Vince's work; the importance of knowing the optimal spot depending on your criteria; why maximizing profits can result in a large drawdown - and why you should be happy about that; if diversification really does give you a free lunch; and the importance of learning the wrong approach. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto081612.mp3
Category:general -- posted at: 6:39pm EDT

"More Ways to Win." Michael Covel talks to Howard Getson, an entrepreneur and president & CEO of Capitalogix. For those that recall Covel's Dave Stendahl's interview, Getson is an associate of Stendahl. Getson has a degree in psychology and philosophy from Duke University, an MBA and law degree from Northwestern, and has practiced corporate law. Getson is running a hedge fund today as well as a quant research shop, and he's in the business of systematically finding edges through all sorts of different approaches - not only trend following. Getson started his first business in the sixth grade, and he has always had the mind of an entrepreneur. He talks about his legal background and how being a practicing corporate attorney influenced his trading and other business practices - as well as how a diverse background can help. Covel and Getson also discuss the "E-gene", and how entrepreneurism is at the core of what both Getson and Covel practice. In 1991, Getson left his law practice, became the CEO of a fast-growing technology company, and started trading. Covel and Getson pick up Getson's progress from there, and discuss how hunches can be dangerous; turning your hobby into your business; recognizing patterns; the "three levels of mastery" - cognitive, emotional, and physical; how minimum standards can define your life; how systematic trading can define your minimum standards; and controlling emotions through automation. They also discuss the importance of travel with a focus on Southeast Asia in particular and why this area of the world is so important to keep an eye on. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto081412.mp3
Category:general -- posted at: 7:42pm EDT

Let's face it you don't stand an outside chance if you don't have a good strategy. Covel plays the Turtles' pop classic, "Outside Chance", and notes that for many people, the fantasy is quick, easy money that pays off like the lottery. However, you don't stand much of a chance if you play the game like this. But how do you go about a strategy that gives you more than an outside chance of winning? The first step is to train the space in between your ears and develop a better philosophy. Covel plays a clip from "Choke", a documentary on UFC fighting champion and jiu jitsu practitioner Rickson Gracie. In jiu jitsu, everything is based on leverage. Gracie talks about momentum, putting yourself in the right position, and reacting to what your opponent gives you in the "moment of now". Your strategy must not be to anticipate what is going to happen, but to react. It's all about getting leverage on your opponent, getting in the right position, and adapting to the situation. Markets are the same way: they're going up and down constantly like a "bucking bronco", as trader Bill Dunn famously said. It's difficult to accept. Most people want to have control of their environment, but we're all in a great wave, and the only choice is to ride it with a strategy in place. Rickson Gracie teaches the philosophy, but once you move beyond that, you must know how to execute this "moment of now" strategy. Covel discusses a clip from author Malcolm Gladwell (Blink, The Tipping Point, Outliers) to illustrate this point. Gladwell's example focuses on emergency room doctors, and how diagnosing chest pain can be enhanced by simply limiting the number of factors to be considered. If you reduce the number of data points for a doctor to consider, and limit it to the four most important factors, his ability to become a better diagnostician increases exponentially. It's the same in trading, except there is only one factor worth consideration: price action. How many different data points can you actually digest? How are you going to take an action to buy or sell with millions of data points? It's simple: you must reduce the variables to something more manageable by focusing on price. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto081212.mp3
Category:general -- posted at: 10:36pm EDT

Michael Covel interviews Van Tharp. Van Tharp runs the Van Tharp Institute and is the author of four acclaimed books published by McGraw Hill: Super Trader, Trade Your Way to Financial Freedom, Safe Strategies for Financial Freedom, and Financial Freedom Through Electronic Day Trading. He was also featured in Jack Schwager's Market Wizard's: Interviews with Great Traders. Van Tharp received his Ph.D. in psychology, is a certified Master Practitioner of Neuro Linguistic Programming (NLP), a Certified Master Time Line Therapist, a certified Modeler of NLP, and an Assistant Trainer of NLP. He has used his expertise in NLP to create the successful models of trading and investing upon which so much of his work is based. Tharp also was also considered for the original Turtle program with Richard Dennis and Bill Eckhardt. Covel uses Tharp's psychological expertise to explain why trading psychology is so important to being a successful trader. Many people attribute the phrase "trading psychology" to Tharp, and he's also done a lot of work in the area of position sizing. Covel and Tharp discuss these topics in addition to the importance of happiness in relation to trading psychology; the influence of Tom Basso, Bill Eckhardt, and Ed Seykota (and his concept of "market's money"); and the notion of self-sabotage. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto080912.mp3
Category:general -- posted at: 7:30pm EDT

When shouldn't you take a bet? Michael Covel talks about the importance of waiting, and of not doing anything if there's no move. It's not smart to have a trading strategy that says, "I must make a certain amount each day". You must wait, be patient, and have a plan, but not act if there's nothing to do. Trend following puts you in the position to benefit when something big or unexpected happens, and teaches you that when you're put in the right position, you jump on it. Covel talks about the importance of waiting, and how the best strategy to employ is to follow price movement. Covel excerpts a TED talk from Baba Shiv regarding when it's the right move to take the figurative "passenger seat" instead of the "driver's seat". Shiv's example is based on medical decisions, but this extends to every facet of life--especially trading. Baba Shiv reduced it to the simplest factors, and with trading it's a good idea to do the same. In this case, it's price. Reducing yourself to the passenger seat in following price movement is the best move you can make, and Covel explains why. Don't follow the news, don't follow the tweets; follow the price. Covel also discusses an article in the Wall Street Journal from Robert Shiller, talking about a home price rebound. Shiller discusses house prices, whether we're at the bottom, and momentum. Momentum (the tendency for prices to keep moving in the same direction) is caused by "feedback loops" according to Shiller. Covel contends that the article states that we need to make another fake bubble to make everyone happy again. In the article, Shiller also contends that momentum doesn't apply to the stock market, but is exclusive to the housing market. Covel notes that, of course, the same feedback loops and the same momentum does happen in the stock market. While it's great that Shiller makes these observations about momentum, bubbles, and feedback loops, you can't predict these things. You have to have a strategy to take advantage of them when they do happen. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto080712.mp3
Category:general -- posted at: 10:36pm EDT

Ep. 41: Ignoring The Global Chatroom with Michael Covel on Trend Following Radio

Michael Covel discusses the constant onslaught of information on the news, particularly through Twitter and other social media services such as StockTwits. If following the global chatter about market information is so important, how come the world's greatest traders don't do it? Covel refers to an interview on CNBC with the CEO of StockTwits. This day-to-day, mob-rule idea of following "trends" is sheep behavior, and following the news so tightly all day long is akin to sitting at the craps table in Vegas. Are you in the market to make money, or to talk about the market? Do you want to make a profit, or do you want to sit around talking about your trades at cocktail parties or on Twitter? Trading is not a group activity. If you have to constantly bounce your ideas off of others, it isn't good technique. Your basic system should tell you when to pull the trigger or take a loss. True trend following is the total antithesis of looking at day-to-day, minute-to-minute Twitter talk. The important principles include following a diversified group of markets, having a good entry strategy, knowing how much to bet of your limited capital, and knowing when to get out of the market. Taking an action based on random Twitter or StockTwits chat is not the way to be a great trader. Accepting the fact that you don't know which way the market is headed is really the ticket to success. The news and information never stop, and building your strategy around "I don't know" is one of the most important things you can do. It opens up a world of opportunity. Wait for the movement. Wait for the trending price. And put yourself in the position to make big money when the big moves happen. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto080312.mp3
Category:general -- posted at: 9:42pm EDT

Ep. 40: Price Is The Only Issue That Matters with Michael Covel on Trend Following Radio

Covel relates this to a recent speech he gave in Vancouver. One of the slides he used in his presentation, a quote from trader Paul Tudor Jones, states that fundamentals are religion: "The illusion has been created that there is an explanation for everything, with the primary task to find that explanation". This is precisely what news reporters do: they want an explanation, a story, a narrative. Trend following drives a stake through the primary tenet of modern financial theory: the efficient market hypothesis. How do you reduce your decision-making to something that's easily digestible? You reduce it to price. There is an illusion that we can control the market; trend following dispenses with this illusion so you can follow the waves and concentrate on what really matters - the price. It's ok to say "I don't know what's going to happen", but you have no choice but to build a strategy around not knowing the outcome.

Direct download: TrendFollowingManifesto080112.mp3
Category:general -- posted at: 11:28pm EDT

Michael Covel talks to Dr. Eric Prentis, a graduate professor at the University of Southern California, and author of "The Astute Investor" and "The Astute Speculator". Covel talks to Prentis about his Zero Hedge article, "Everything You Know About Markets Is Wrong", which strikes down the efficient market hypothesis. Prentis lays the foundation for the credit crisis and everything that started to unfold in the summer of 2007; he lays the foundation, tells us how we got there, and the approaches we're taking to getting out. Covel and Prentis discuss "financial psychopaths" - and whether the public might be complicit in Wall Street's behavior; why the "wealth effect" isn't working today; how zero interest rate policy (ZIRP) is effecting us us, and why there isn't an uproar against it; why four years into the credit crisis, we still aren't seeing improvements; and using more debt to keep the debt cycle going (and why it's a dead end). Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto072512.mp3
Category:general -- posted at: 2:00am EDT

Michael Covel talks to trader and programmer Brad Rathe. Rathe allocates funds to other traders, as well as operatoring his own global macro fund. Rathe has worked at such firms as EMC (original Turtle), Northbourne, and Rotella. Rathe moved to Chicago the day he graduated college and immersed himself in the pits of the Chicago Board of Trade, initially working in the "meats" pit (pork bellies, live cattle, live hogs, and feeder cattle). Covel and Rathe talk about some of the practical/physical factors involved in the futures pit in the late 80's/early 90's. In the off-season, some of Chicago's athletes would work in the pits, and Rathe was surrounded by ex-Bulls, Blackhawks, and Bears. It was a very physical game back then, and Rathe saw broken ribs in the pits. Rathe shares some great anecdotes about someone who sold his spot in the pit for $1 million dollars - even though there were no assigned spots to begin with. Covel and Rathe discuss the move to screen-based exchanges (computer trading) replacing floor trading; Rathe states that when you get off the floor, it takes on more and more importance to have a systematic, non-emotion based trading strategy. Rathe fell into working at Globex, which was just starting, and saw some of the beginnings of electronic trading. By 1991, Rathe moved to EMC, where he worked under Liz Cheval (original Turtle). Rathe relates some of the lessons he learned from Cheval, and sheds a little light on the Turtle story from the perspective of having worked for Cheval. Covel and Rathe also discuss how the CTA business grew under the Turtles; the importance of programming; tweaking and changing your trend following system; MF Global, Madoff, Wasendorf and other cheaters; and the importance of being unemotional during a big blowup. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto072312.mp3
Category:general -- posted at: 4:38pm EDT

Michael Covel talks to Ryan Holiday, director of marketing for American Apparel; media strategist for Tucker Max, Dov Charney, and others; and author of the new book "Trust Me, I'm Lying: Confessions of a Media Manipulator". If you're in business, if you're an entrepreneur, if you're someone that needs to communicate with the public, or if you're anybody that has a message - Holiday's book has some important lessons for you. Holiday discusses the hard truths behind the media today: the blog-online media cycle not only drives the offline cycle, but determines and directs culture itself. As Holiday notes, a famous journalist once said in the early 1900's: "America is a country governed by public opinion, and public opinion is governed by newspapers. Isn't it critical that we understand what governs newspapers?" Today, newspapers have been replaced by the internet, blogs, and online media - and the internet rules over us all. It's integral that we understand what governs us in a world where page views drive everything. Holiday shares several stories that illuminate the truth behind the media today: the presidential candidacy of Tim Pawlenty, how Andrew Breitbart was able to exploit the system; and how Holiday was able to manufacture a fake controversy and jumpstart an ad-campaign he was working on - only to create real controversy along the way. Covel and Holiday also discuss the media food chain; what goes into media manipulation; the lie of "if you're doing something great, it will be heard"; gatekeepers in the media; how blogs are our digital bloodsport; why being inaccurate and inflammatory gets more page views; and how we don't seek honesty or reality. Cicero used to say, "Who benefits?". Ask yourself and examine who is writing what, and what they gain from it. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto071912.mp3
Category:general -- posted at: 9:19pm EDT

Michael Covel talks about the dwindling lack of individual responsibility in America today, and the emphasis on the group rather than the single individual. In a recent speech, President Obama said, "If you've got a business, you didn't build that. Somebody else made that happen". While his speech noted some great communal national achievements, it negated the importance of the individual to a great degree. It's not a political issue; whether you're on the right or the left, you are responsible for your own work. The state can't fix your problems. It's up to you. America may have built the infrastructure and the roads, but an individual made the car. There are some great things that have come about as communal, national achievements; however, mitigating the individual achievements of entrepreneurs gets us nowhere. A few years ago President Bush stated that he needed to suspend the free market system to save the free market system. Do we want the State equalizing everything? If you want to get ahead today, it's got to be purposeful, hard work on your own part. The State can't do it for you. Successful entrepreneurs aren't just lucky; it requires hard work and dedication. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto071712.mp3
Category:general -- posted at: 1:00am EDT

Michael Covel talks to Patrick De Villiers, a co-founder of systematic trend following fund Neural Capital. Originally from South Africa and now based in Cyprus, De Villers talks about his early background and the philosophy behind Neural Capital. De Villiers had no background in finance until he left university. Instead, he studied experimental physics in superconductivity, which helped give him the background in analyzing and looking for patterns in data (that he later used in his financial career). Staying in South Africa, he found it difficult to find work, but met a woman at an investment bank--and that opened a door. He was assigned to a graduate development program and found his way into the trading room. The idea of hiring individuals with scientific backgrounds was just taking off at that time in South Africa, and De Villiers got in on the ground floor. De Villiers eventually teamed up with Brett Venter and founded Neural Capital in 2004. They started by looking at predictive investment models using neural networks; however, this didn't pan out, and they eventually found the trend following strategy that they employ today. Covel and De Villiers discuss that when you're at a big bank the performance can be based on the franchise you're working at; the connection of ego to performance; how to explain a trend following approach to clients; capturing the "fat" of the trend; outliers and black swans; putting the unexpected moves in your favor; the relation of trend following to behavioral finance; and insuring that you're in the game for when the big winners come. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto071612.mp3
Category:general -- posted at: 7:15pm EDT

Michael Covel talks to trader and author Gil Morales. Morales got started in the early 90s, became a broker with Merrill Lynch in Beverly Hills, and moved on to work as a portfolio manager and ultimately chief market strategist at William O'Neil's firm (of IBD and CANSLIM fame). Morales eventually moved onto his own investment advisory firm with with Chris Kacher. His book with Kacher is called "Trade Like an O'Neil Disciple: How We Made 18,000% in the Stock Market". Covel compares Morales' trend trading style to his via a comparison of going to Tokyo the first couple of times: It's a parallel world - everything is different, but they're ultimately trying to achieve the same thing. Covel also gets into some of Morales' unexpected beginnings. Morales actually started as a cartoonist, and discusses his early influences during this phase of his career. He also relates some interesting stories working at the Beverly Hills branch of Merrill Lynch. Covel and Morales go into a broad overview of William O'Neil's strategies, which ultimately provide the stepping stone for Morales' strategies today. Covel and Morales discuss how "you can't kiss all the babies", and how you have to keep from getting distracted with too many potential investments. Further topics include how O'Neil's system is trend following at its core; fibonacci sequences, the moment of "now"; getting away from the rationale and the narrative of the trend; and why losers average losers. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto071412.mp3
Category:general -- posted at: 2:00am EDT

Michael Covel talks to Dave Stendahl of Capitalogix. Stendahl's world is 100% systematic, and he has been involved in conceptualizing and thinking up systematic approaches to trading the market for decades. But what is a system? Stendahl's explanation appeals both to the average person and to the seasoned trader. Stendahl's approach is that a system should have as few moving parts as possible; it should be simple enough to be explained on the back of a cocktail napkin. Covel and Stendahl make an analogy to cars, and how you can easily fix a simpler car in your garage as opposed to a complex Lexus. Stendahl explains that everyone is using a system in one way or another: every time you make a decision to buy or liquidate, whether it's based on a real system or based on advice from someone on the television, it's systematic in some regard. If you can talk it, you should be able to quantify it. If you can't quantify it, it might not really be there. Stendahl also talks about his beginnings, collaborating with his father in the mid 1970's. This was his exposure to the investment arena. It wasn't until college that he started taking "technical" things more seriously. When he was introduced to technical analysis, and had the lightbulb moment, he realized he could make money based off of something other than fundamentals. Interestingly, this was rooted in Stendahl's dyslexia. He turned this disadvantage into an advantage, and was forced to find his own solutions: to learn specifically how to automate everything from start to finish. This allowed him to look at numbers and trading from another light, and this approach ended up being very profitable for him. Covel also asks Stendahl about Ray Dalio of Bridgewater, who says that he is 100% systematic, but doesn't use any technical information. Stendahl explains that Dalio says he's looking at fundamentals from all these different markets, and this requires a huge amount of work. For Stendahl, he simply has one major input. Making price action systematic vs. taking in a massive number of fundamentals systematically. In the early 90's, Stendahl tried to work with fundamentals, but he found that the numbers were always changing, the data was slow, and given the amount of inputs, it would be much more complex and slow to put a good systematic program together. Stendahl chose to take the easier and more robust route, but he was very sophisticated in the way his systems were designed. Your system doesn't have to be complex to work. Sometimes the best system can be only four lines of code. Covel and Stendahl also discuss position sizing and money management, and how you can approach this systematically. Free Dvd?

Direct download: TrendFollowingManifesto071112.mp3
Category:general -- posted at: 11:02pm EDT

Michael Covel talks about "Zen Habits", a website that offers general wisdom from the Zen school of Buddhism. What you might not realize is that this philosophy is incredibly relevant to trend following traders. Michael discuses one post in particular called "The Wisdom of Allowing Things to Happen". In our Western society, we're doers and creators; we don't just wait for things to happen. Michael doesn't discount the amount of effort needed to start a successful business or to be a trend following trader, but there is immense value in simply allowing things to happen, observing, and responding to the change. Covel discusses Zen, Yoga, and the aforementioned article from a trend following perspective. We think we're in control, but we're really not. We don't control the overwhelming power of nature or the market, yet we have the illusion of control in our lives. "You learn how things work. Instead of trying to make things work the way you want them to work, just watch them work. You'll learn more about human nature, about the nature of the world, as you see things work without you controlling it. It might change you. The best you can do is take what is presented to you in the moment of now and respond to it. Covel relates several anecdotes that link the Zen mindset and trading. "To control your cow, give it a bigger pasture". By allowing things to happen, giving them more room to grow and prosper, your needs will also be met - and you've done no work." Ultimately, trend following is about allowing something to happen. With trend following, you can't control the cow, you can't control the market. However, you can react and respond to it. The trend follower's job is not to predict, but to observe and respond. You don't control the markets. You don't control how much you're going to make tomorrow. If you accept the fact that you don't know what will happen, you open yourself up to better ways to minimize risk, better strategies that embrace the unknown, and outcomes that you couldn't conceive of on your own. The wisdom of allowing things to happen is rock central to life success, entrepreneurial success, and trend following success. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto071012.mp3
Category:general -- posted at: 10:20pm EDT

Michael Covel monologue.

Direct download: TrendFollowingManifesto070512.mp3
Category:general -- posted at: 7:42pm EDT

Michael Covel discusses two philosophical approaches that are the key to being a success in any field: being awake to the outside world and thinking outside the box. Being part of the system is not going to reward you, and if you're awake to the outside world, you can see things you wouldn't otherwise notice that you can use to your advantage. From his childhood to early experiences doing opposition research in a political campaign, Covel offers several anecdotes regarding "lightbulb" moments that have come about as a result of thinking outside the box. Covel has used the same principles and outside-the-box thinking to get at the insights of how trend following really works. Trying to figure out how people like Bill Dunn, John W. Henry, and Jerry Parker all pieced together was revealed to Covel at a conference in London. He relates the story that was the foundational thread for much of his later work. Covel also connects outside-the-box thinking to trend following in general: If there's anything hard about being a trend following trader, it's that you have to be comfortable being by yourself. You can't take solace in the crowd, and thinking differently is the key.

Direct download: TrendFollowingManifesto070212_monologueEdit.mp3
Category:general -- posted at: 3:00am EDT

Michael Covel talks to Mike Dever, founder of Brandywine Asset Management and author of "Jackass Investing: Don't Do It. Profit From It." Covel talks to Dever about being an entrepreneur from an early age and making his first investments in his early 20s. Starting with $5,000 in 1979, Dever quickly ran it up to $60,000 and learned some of his first trading lessons along the way. After deciding to set up some systematic trading models to help protect his investments, he put together his first fund in 1981. Dever had some interesting experiences at a fairly young age with some people who became big names on Wall Street: Paul Tudor Jones and John W. Henry. Deciding to get outside brokers to manage a fund to diversify his own business, he ended up starting funds with both of these legendary traders. Covel and Dever discuss some of the myths discussed in "Jackass Investing"; how everybody is a market timer; the stigma against investing in futures; return drivers; the risks you take by being risk averse; and the shift in attitudes towards volatility in America. In 2011, Dever relaunched Brandywine; he discusses why strategies based on sound return drivers are so important to his firm and where he's at today. Dever was on the show many months ago, but this episode goes much more in depth with some really fantastic color regarding the early stages of the managed money world. Note: This is Dever's 2nd appearance on the podcast. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto070212.mp3
Category:general -- posted at: 7:24pm EDT

Michael Covel talks about the importance of entrepreneurism today. We're not in a world that rewards doing what you're told anymore. Covel discusses Fairfax County, VA (where he grew up), home to one of the highest median incomes in the United States of America. Covel discusses why this area you might never have heard of has this status, and why this simply isn't a sustainable way of life for the rest of us. People seem to think that there's a job out there waiting to fall into their laps that will give them easy access to the American Dream. In today's world, you need the vision of an entrepreneur to successfully get to where you want to go. With all of the technology at our disposal, the road to this success is more open than ever before. Even going down the path of being a trend following trader requires the skills of an entrepreneur. Covel relates the story of Boone Pickens, one of the entrepreneurs he's had the good fortune of learning from. Pickens has the attitude that today's entrepreneurs need; when he got started, it was about taking a risk and making something happen, i.e. a "wildcatter". Covel invites you to take a look at your own motivations. When you get up in the morning, are you going in a direction that you control, or are you following someone else's plan? Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto062612.mp3
Category:general -- posted at: 4:50pm EDT

Michael Covel interviews author and reporter Scott Patterson. Patterson has made a career of reporting the subterranean inner-workings of the markets, writing for the Wall Street Journal, Rolling Stone, and Mother Earth News. His first book, The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It, was released in 2010. Patterson talks to Covel about his newest book, Dark Pools: High-Speed Traders, A.I. Bandits, and the Threat to the Global Financial System. Covel and Patterson trace the history of high speed trading and electronic communication networks (ECNs) back to Josh Levine, who founded Island, the computer system that led to the high frequency trading we see today. Patterson discusses the technological revolution behind Island, and how its transparency led to dark pools - opaque markets where bids and offers are not made public. Dark pools have the benefit of operating in the shadows, helping institutions do what they do without anyone checking in on them. Today, Patterson goes on to propose that the entire market has gone dark. Covel and Patterson discuss the relation of dark pools to the flash crash; the regulation of dark pools; and how the real New York Stock Exchange is in a data center in the countryside of New Jersey. Not a trend following podcast, but an episode every investor should absorb. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto062112.mp3
Category:general -- posted at: 5:30pm EDT

Michael Covel speaks with Mebane Faber. Faber is a a noted author (The Ivy Portfolio), blogger, and portfolio manager with Cambria Investment Management. If you're into quantitative style investing, trend following, and systematic strategies, Mebane is right there with you. Faber grew up in a family full of engineers, and he started off studying biomedical engineering in college. Despite his scientific background, he's always had a strong interest in finance. Faber discusses how coming into finance with his unique background helped to give him the ability to look at the data without getting distracted by investment dogma. He spent the majority of his youth in a raging bull market during the internet bubble; however, when he realized his mother's style of buy and hold investing didn't cut it anymore, he was forced to find new methods. Covel talks to Faber about his white paper, "A Quantitative Approach to Tactical Asset Allocation"; his book, The Ivy Portfolio; the differences between "market timing" and "quant"; behavioral finance; the benefits of trend following systems in reducing volatility and drawdowns over enhancing returns; and the idea of macropessimism/microoptimism. Professor Faber! Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto061912.mp3
Category:general -- posted at: 6:22pm EDT

Michael Covel lays out 25 selected Trend Commandments. While these principles aren't all-inclusive, they're guidelines to help get you to understand the trend following mindset. Covel also brings up a recent review of "The Little Book of Trading" in the Financial Times and offers a response. This critic has a hard time wrapping her arms around the benefits of trend following; however, if you don't "get" trend following, you can't be beaten over the head with it. Covel disputes the criticism that, if you teach something, the sheer act of being compensated to provide information to people disqualifies you from having a valid opinion. If Nobel prize winner Daniel Kahneman gets paid to teach at Princeton, does that invalidate his work? The company Covel keeps with other traders might give a clue that he's speaking the truth. Covel also plays a clip from Nigel Farage on the genius of mutual indebtedness, the bailout of Spain, and the failure of the Euro. In a clearly volatile market, what are you going to do to prepare? How do you prepare for uncertainty when you can't trust just about anything? Trend following is the only trading strategy that has rational basis to it; it allows you to participate in the profits and protect yourself on the downside. Isn't that the goal? Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto061412.mp3
Category:general -- posted at: 7:23pm EDT

Tony Bazile of Intrinsic Capital Management is a trend following trader specializing in stocks. Michael Covel talks to Bazile about his background, which is unlike anybody profiled on the podcast so far: He was a professional water skier into his 20s. After observing another water skier trading on the sidelines and making a ton of money, Bazile decided to look into trading for himself. He made quite a bit before the tech bubble burst; when it popped, he was left with the feeling that there was still plenty of opportunity, and he forged forward. He moved to New York with his then-girlfriend and wound up living directly behind the American Stock Exchange, where he spent six or seven months handing out his resume (litetrally on the streets to Wall Street warriors). Eventually, he found himself working for John Mulheren. Bazile relates a story where Mulheren went on vacation after taking a large position. When Mulheren's team sold 80% on the second day of what would become a three week rally, Mulheren returned from his vacation furious, and Bazile learned one of his most valuable trend following lessons. This sent him down a path where he visited Bill Dunn in Stewart, Florida, and eventually ended up working for Ken Tropin at Graham Capital. Tropin told Bazile: "I'm good because I know that I don't know which way the markets are headed." After managing money for Graham Capital, Bazile left and partnered up with David Frakes, and formed Intrinsic Capital Management. ICM uses a trend following strategy to trade stocks, and Bazile and Covel discuss dealing with the sheer volume of information on individual stocks; and how trend following is the strategy, not the instrument. Covel also traces the lineage from Richard Dennis to Jerry Parker to Salem Abraham, and from John W. Henry to Ken Tropin to Tony Bazile. Only time will tell! Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto061212.mp3
Category:general -- posted at: 6:44pm EDT

The Fed has said they will keep rates at 0 for years. That means bubbles, pops, bubbles, pops, etc. So, if that is the case how can you generate a return? Covel offers a down to earth perspective for dealing with this chaos to make money. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto060912.mp3
Category:general -- posted at: 4:22pm EDT

Michael Covel talks to Mike Aponte, professional blackjack player and a former member of the MIT Blackjack Team. Aponte was featured in the bestselling book "Bringing Down The House" as the player Jason Fisher, which was adapted into the movie "21". Covel makes this point about Aponte: Due to his systematic approach, he's definitely not a gambler; he's an investor. The similarities between successfully playing blackjack and trend trading are off the charts, including two of the key linchpins between them: Ed Thorp and the Kelly criteria. Aponte never really played blackjack before the MIT team, but when he learned to approach card counting as a science, he was hooked. Covel and Aponte go in depth about Aponte's beginnings; the similarities between systematic card counting and trend trading; the psychology behind the two; and how even some of the more advanced mathematicians at MIT didn't have the risk-taking constitution it took to make the cut. Aponte tells some revealing anecdotes along the way, including a run in with casino security that ended with them actually asking for his autograph. A must listen for any investor--blackjack player or not.

Direct download: TrendFollowingManifesto060712.mp3
Category:general -- posted at: 8:54pm EDT

Michael Covel plays a musical clip to illustrate where we are today - something you might not expect, but particularly relevant to our current climate. Covel also talks about an article called "Spotting Bulls*** in Financial News in a Few Easy Steps". He profiles one young writer in particular, and how anybody right out of college with a journalism degree can reach millions of people in the financial markets, yet still not have any idea what they're talking about. Not to pick on this young writer, Covel discusses how dangerous articles like this can be for an inexperienced trader. Staying in the world of media, he discusses two videos on CNBC in the last week. One interview with Jason Gerlach of Sunrise Capital had CNBC, in typical style, asking for specific picks; Gerlach explained that this is not in line with a trend following approach, to complete confusion from CNBC on air types. Another CNBC piece with Jeff Applegate from Morgan Stanley had him explaining managed futures as a relative safe haven. Of course, CNBC's reply left Covel shaking his head. Covel also discusses the Facebook IPO craze, puts it in context of the last tech bubble, and takes a look at how you can't trade it from a trend following perspective - yet. He also previews an upcoming podcast with a member of the MIT Blackjack Card Counting team, as discussed in the book Bringing Down The House. As shown in the chapter on Ed Thorpe in Jack Schwager's new book, blackjack has particular relevance to the trading world. In fact, two of the original turtles were on competing blackjack teams. Covel waxes that wisdom can be gained from people from other walks of life, especially those closely related to the trading world. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto053112.mp3
Category:general -- posted at: 1:00am EDT

Covel talks to entrepreneur/trader Timothy Sykes. While their views differ on trading approaches, they agree on certain base principles--especially their skeptical nature and not trusting the system. Sykes is not a trend following trader, but Covel discusses certain systematic approaches that Sykes has used. Other topics include Sykes's early career entry into trading, studying the market his way and how tennis for him relates to trading. Love him or hate him, Sykes is compelling! Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto052912.mp3
Category:general -- posted at: 11:07pm EDT

Michael Covel talks to Todd Miller, a trader who runs a systematic trend following firm, Availeth Capital, with partner Jim Byers. Availeth is a small fund which was started in February 2011, and Covel relates Miller's start to his chapter in 'The Little Book of Trading' on trader David Druz. Covel and Miller discuss how Miller got his start working at Fidelity, and how observing the annual returns of one of Fidelity's biggest mutual funds after the tech bubble burst led him to adopting a trend following mindset. Miller put in some serious studying during his next few day jobs at National City Bank and PNC, and he discusses the path he took that eventually led him to starting Availeth Capital. Miller and Covel also speak about the importance of in-person interaction; the issue of survivorship bias; how trend following is the only strategy that can take advantage of the uncertainty that is coming; and how some trend following traders have followed other passions once they've made their billions. Covel also discusses his upcoming 10,000 (!) page book, Trend Following Analytics. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto052412.mp3
Category:general -- posted at: 1:00am EDT

Michael Covel talks to writer and trader Jack Schwager, author of the Market Wizards series. Schwager's new book, Hedge Fund Market Wizards, is now out. Covel and Schwager discuss some of the commonalities between the many traders Schwager has interviewed, and the lessons that can be gleaned from their diverse approaches. Schwagger's new book opens with a quote regarding the importance of even-mindedness from rock climber Alex Honnold, and Covel and Schwager discuss how topics seemingly unrelated to trading can contain relevant lessons. Many of the other traders profiled in Hedge Fund Market Wizards are discussed, including Ed Thorp, Steve Clark, Jaffray Woodriff, and Ray Dalio. Covel asks Schwager what his big takeaways from his interviews have been, and the lessons he's learned from talking to some of the most successful traders in the game. Further topics include how markets behave differently in different environments; the importance of asymmetric positive skew trades; how diversification is the "only free lunch on wall street"; how Schwager defines risk; and the "gain to pain" ratio. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto052212.mp3
Category:general -- posted at: 7:02pm EDT

Michael Covel talks to trader and educator James Rohrbach. Rohrbach has been trading for 40 years, created his RIX index, and runs an educational service at While he calls himself a "market timer", he's a trend follower. Rohrbach and Covel talk about why buy and hold is dead, and the psychology behind people desperately clinging onto it. Rohrbach and Covel discuss why - even when buy and hold supplies a winning outcome - it still might not be a good strategy. Further topics include using a 15/30 day crossover as a quick and simple system; why Rohrbach doesn't short; and making sure your feelings don't overrule your process. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto051712rohrbach.mp3
Category:general -- posted at: 1:00am EDT

Michael Covel talks to Francisco Vaca of Vaca Capital Management. A math whiz from an early age, Vaca first pursued a career as a particle physicist. Always intrigued by the financial markets, Vaca started an investment club with his family while pursuing his Ph.D., and his scientific background led him to a "stats" approach to investing. When institutional funding stood in the way of working on a particle accelerator, a unique opportunity to work in the financial markets beckoned. After answering a mysterious newspaper advertisement in 1996, Vaca ended up working at the legendary C&D Commodities (see book: 'The Complete TurtleTrader'); he was handed a copy of Jack Schwager's 'Market Wizards', and quickly realized the achievements of his new employers. Vaca and Covel also get to the bottom of the source of profits in the futures markets; why people who are on the losing side of trades still play the game; the importance of diversification; and why you should take every signal you can. Pay attention, Vaca brings wisdom (see: Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto051712Vaca.mp3
Category:general -- posted at: 9:16pm EDT

Trend following wisdom with the most inspiring Market Wizard Ed Seykota.

Direct download: TrendFollowingManifesto051512.mp3
Category:general -- posted at: 6:48pm EDT

Michael Covel speaks to Douglas Stewart of Sherwood Forest Capital Management. An education major in college, Stewart was introduced to the financial services world before ever entering the classroom as a teacher. Stewart started his career in finance around 1995, and he shares some of his experiences coming of age during the dotcom bubble. Once the bubble burst, he immersed himself for ten hours a day for several years studying books such as Jack Schwager's "Market Wizards", which led him to his lightbulb moment; he explains how this led him into the trend following space. Stewart also relates an interesting experience he had at a panel in November of 2008 where he explained, in song, how he wasn't able to predict the markets. Afterwards, an esteemed guest brought up Nassim Taleb's "The Black Swan" - and somehow missed the point that Stewart was following the markets rather than following luck. This leads to conversation about how ego can hurt you in the trend following world, why a majority will never really want to adopt a trend following perspective, and the zen of accepting that you'll never be able to accurately predict where the markets might go. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto051012.mp3
Category:general -- posted at: 6:43pm EDT

Michael speaks to Mark Melin, a managed futures expert, editor/writer for Opalesque, and author. Melin has become a defacto investigative reporter for the MF Global scandal. Covel and Melin consider the MF Global story from the very beginning, back to the very basics, and discuss the political context, why the story isn't front page news, and how it might effect you in the long run. A sobering conversation. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto050312.mp3
Category:general -- posted at: 9:10pm EDT

Michael covers several disparate topics and brings them together into a basic trend following message about thinking clearly. First, Michael discusses former Lehmen Brothers veterans starting a "systematic innovative volatility fund". Michael cuts through the jargon and gets down to the core issue: at the end of the day, a trend following strategy has to be clear, and this one sounds confusing. Michael also discusses a newsletter from Hugh Hendry, although technically a fundamental trader, Michael brings up how Hendry might indeed be a "closet" trend following trader. Hendry's core ideas are important to trend following philosophy, such as taking control of your own destiny, and the belief that the unexpected will happen. "You're on your own, you must take ownership of your own destiny". Next, Michael talks about pain and how the latest Jack White single might give some insight into the pain you can find yourself in if you don't have clear thinking (a plan). Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto050112.mp3
Category:general -- posted at: 4:27pm EDT

Michael Covel talks to Tim Pickering, founder/president and lead portfolio manager of Auspice Capital. Pickering has over 15 years of commodity and financial trading experience. Prior to forming Auspice, Pickering was Vice President of Options Trading at Shell Trading Gas and Power in the Houston and Calgary offices. He began his career at TD Securities in Toronto in their elite trading development program and gained experience in a wide expanse of capital market products including foreign exchange, bonds, money markets and derivatives. Ultimately, Pickering held the Senior Trader position for the energy derivatives portfolio. He has extensive experience trading OTC and exchange traded options, futures, swaps and quantitative trend following systems. Covel and Pickering discuss some of his beginnings, "black boxes", indexing, and classical vs. "next generation" trend following.

Direct download: TrendFollowingManifesto042712.mp3
Category:general -- posted at: 7:10pm EDT

Michael Covel interviews Thomas H. Basso, a trader who was called "Mr. Serenity" when he was profiled in Jack Schwager's "New Market Wizards". Basso was a stock and commodities trader who was president and founder of Trendstat Capital Management. He is the author of two books, "Panic-Proof Investing" and "The Frustrated Investor". Basso became a registered investment advisor in 1980, a registered commodities advisor in 1984, and was elected to the board of the National Futures Association in 1998. Although he is now retired, there's no half-life for experience in the trend trading world, and Basso has a wealth of knowledge that is relevant to today's trader. Covel talks to Basso about the psychology behind his trading; how he kept his - and his clients' - emotions in check; and how being an entrepreneur can make you think differently. Basso also discusses his beginnings - buying his first mutual funds at age 12 - and how he moved from a chemical engineering position to his career as a trader and money manager. Further topics include how trading for clients can be different than trading for yourself, and the importance of concentrating on process vs. outcome.

Note: This original #10 episode has to been updated to include all Basso interviews so far. 4 hours plus!

Direct download: TrendFollowingManifesto042412.mp3
Category:general -- posted at: 10:41pm EDT

Michael Covel monologue.

Direct download: TrendFollowingManifesto041012.mp3
Category:general -- posted at: 2:30am EDT

What does golfer Bobby Jones have to do with trend following? Michael discusses a new IBM commercial featuring Jones which has a number of ideas relevant to trend following - why the process is much more important than the outcome, and how you can't engineer predefined performance results. Consistency in your system, not trying to predict exactly how something might unfold, and sticking to the process are key concepts in trend following. Also: will the huge amount of data that you now have access to change how you approach the markets? Probably not - if you're a trend following trader. Michael discusses the difference between data and knowledge. A healthy dose of attitude throughout - no apologies. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto041112.mp3
Category:general -- posted at: 8:18pm EDT

Michael Covel interviews original Turtle trader Michael Shannon. In a timeless archival interview given while doing research for his book, The Complete TurtleTrader, Covel talks with Shannon regarding Shannon's experience in the Turtle program with Richard Dennis and William Eckhardt. Shannon offers historical insights and anecdotes regarding the legendary Turtle story. Topics include Shannon's unlikely background; the personalities of Dennis and Eckhardt; why Turtles with outsider backgrounds were generally more successful; and whether or not Dennis and Eckhardt were inspired by the film, "Trading Places". In the second segment of this podcast Michael interviews trader and investor Jim Byers. In the 2006-2008 period, Byers started studying trend following; since then, he's started a fund with his partner, Todd Miller. Covel and Byers discuss how trend following can still be a winning game even if you aren't right the majority of the time. Further topics include more in depth "light bulb" moments that Byers has had since taking up trend following. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto040412.mp3
Category:general -- posted at: 9:15pm EDT

Michael Covel explores some of the classic trading principles featured in his book Trend Commandments, and offers his own brand of "perspective". Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto032912.mp3
Category:general -- posted at: 10:09pm EDT

Michael talks to Nick Radge ( author of the new book, "Unholy Grails". Nick has been trading and investing since 1985. During this time Nick has worked for numerous international investment banks and spent time on the trading floor of the Sydney Futures Exchange. In 1998 Nick returned to Australia and started his own hedge fund and until 2005 he was an Associate Director at Macquarie Bank. Michael and Nick discuss Nick's beginnings; the analogy of hitchhiking to trading; the necessary emotional constitution needed to successfully stick with a trend following trading strategy; the popularity of algorithmic trading jargon; and risk management. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto032612.mp3
Category:general -- posted at: 10:26pm EDT

Interview with Michael Covel on Trend Following Radio.

Direct download: TrendFollowingManifesto030612.mp3
Category:general -- posted at: 10:01pm EDT

Ep. 3: Charles Faulkner Interview with Michael Covel on Trend Following Radio

Michael Covel interviews Charles Faulkner (a master Neuro-linguistic Programming practitioner, trader, author, and trainer). In this unique conversation, Charles and Michael discuss the topics of mental mapping, risk, expertise, the metaphor of trading to motorcycling, and how human nature and biology influence investment decisions.

Direct download: TrendFollowingManifesto022912.mp3
Category:general -- posted at: 1:27pm EDT

Michael Covel interviews Robert Pardo (of Pardo Capital Limited and author of The Evaluation and Optimization of Trading Strategies). Michael discusses with Bob some of his beginnings, his philosophies, and the idea of risk. Insights from a trader who has seen it all. Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto022212.mp3
Category:general -- posted at: 3:47pm EDT

Michael Covel interviews Michael Dever author of "Jackass Investing: Don't Do It: Profit From It." Special Offer: receive free DVD delivered to your home or office:

Direct download: TrendFollowingManifesto021312.mp3
Category:general -- posted at: 6:20pm EDT

Introduction: The Trend Following Manifesto with Michael Covel

Michael Covel, author of Trend Following, The Complete TurtleTrader, The Little Book of Trading, and Trend Commandments, introduces his podcast--The Trend Following Manifesto with Michael Covel. This is the first episode, the starting introduction, of the podcast. Want to get started in your trend following understanding? Receive a free trend following DVD delivered to your home or office:

Direct download: covelpodcast2final.mp3
Category:general -- posted at: 1:44am EDT