Trend Following with Michael Covel
Bestselling author Michael Covel is the host of Trend Following Radio with 7+ 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 600+ eps at www.trendfollowing.com/podcast.

Ep. 515: Epic Trend Following Episode with Michael Covel

Episode 515 is another “Mega episode.” It is a culmination of interviews comprised of four of the most successful trend following traders alive today: Ewan Kirk, Jean-Philippe Bouchaud, Martin Lueck and Christopher Cruden.

Ewan Kirk is the head of Cantab Capital and has brought his firm from $30M AUM in 2006 to over $5B today. Kirk employs several strategies but clearly uses a trend following foundation.

Jean-Philippe Bouchaud is founder and Chairman of Capital Fund Management (CFM) and professor of physics at École polytechnique.

Martin Lueck holds an M.A. in Physics from Oxford University and currently is the Research Director and President of Aspect Capital. Lueck was originally with Adam, Harding and Lueck Limited (AHL), which he co-founded with Michael Adam and David Harding.

Christopher Cruden has been in the trend following space for over 25 years. In 1988 he became a Director of Adam, Harding and Lueck Asset Management Ltd (AHL). He is currently the head of Insch Capital Management.

In this episode of Trend Following Radio:

  • Importance of consistent marginal improvements
  • Understanding a client’s drivers
  • Benefits the economy, society, and the world
  • Randomness is everything
  • Discretionary traders
  • Losses are statistically inevitable
  • Holy grails in trading
  • Behavioral biases
  • Volatility as measuring risk
  • Exploiting vs. Exploring
  • Tail risk premia vs. Pure alpha
  • Behavioral economics
  • Systematic trading
  • Price action
  • Benchmark selection
  • Time period selection
  • Markets teach humility
        Time management
Direct download: 515.mp3
Category:general -- posted at: 10:00pm EST

Ep. 514: Epic Behavioral Episode with Michael Covel on Trend Following Radio

Michael has put together a compilation of past appearances aggregated into a four hour episode. Guests today include: Daniel Kahneman, Laurie Santos, Steven Kotler, Anders Ericsson, Philip Tetlock, and Colin Camerer.

Daniel Kahneman has been called the most important psychologist alive today. He is the 2002 winner of the Nobel Memorial Prize in Economic Sciences, and is the guy behind the theories of behavioral economics and behavioral finance.

Laurie Santos is a professor of psychology and cognitive sciences at Yale University. Her research explores the evolutionary origins of the human mind by comparing the cognitive abilities of human and non-human primates. Santos is able to look at monkeys and their behavior in markets and money, and see the similarities with humans.

Kotler is an American bestselling author, journalist, and entrepreneur. His articles have appeared in over 70 publications, including The New York Times Magazine, LA Times, etc.

Anders Ericsson is a Swedish psychologist and Conradi Eminent Scholar and Professor of Psychology at Florida State University. He is internationally recognized as a researcher in the psychological nature of expertise and human performance. His new book is “Peak: Secrets from the New Science of Expertise.”

Philip Tetlock is a Canadian American political science writer currently at The Wharton School of the University of Pennsylvania. He is right at the intersection of psychology, political science and organizational behavior. His book, “Superforecasting: The Art and Science of Prediction,” is about probabilistic thinking defined.

Colin Camerer is an American behavioral economist and a Robert Kirby Professor of Behavioral Finance and Economics at the California Institute of Technology (Caltech). Camerer’s research is the interface between cognitive psychology and economics.

In this episode of Trend Following Radio:

  • Remembering self vs. Experiencing self
  • How the measures of happiness are being implemented into public policy
  • How failure to accept one’s losses can lead to risk-taking in trading
  • Crowd behavior relating economic bubbles
  • Why capitalism is largely driven by optimism
  • Behavioral economics affecting the trading world
  • Monkeys and humans
  • The monkey economy
  • The endowment effect
  • G.I. Joe fallacy
  • Discipline and practice
  • Solo and group practice
  • Flow state
  • Social motivation
  • The late birthday rule
  • 10,000 hours of practice
  • Nature vs. nurture
  • Brain plasticity
  • What are superforecasters?
  • Probabilistic thinking
  • Looking at data
  • The basis of decision making
Direct download: 514.mp3
Category:general -- posted at: 10:00pm EST

Ep. 513: Ayn Rand Returns with Michael Covel on Trend Following Radio

Phil Donahue and Ayn Rand are on the podcast today, but one of them is of course dead. Rand is best known for her two best selling novels, “The Fountainhead” and “Atlas Shrugged.” Michael plays two clips of Donahue interviewing Rand. Rand is controversial, but her thinking is accurate and clear. She breaks down altruism, government regulation, free market, monopoly, God, feminism, terrorism, and many more topics. You may not agree with her on all points, but there is inspiration to be taken away from her passion and to-the-point thinking.

In this episode of Trend Following Radio:

  • Altruism
  • Government regulation
  • Acting on faith
  • Living by emotion, not reason
  • Women’s rights
  • Religion
  • Monopoly
  • Spending money on the un-gifted minds rather than the gifted
  • A “me” society
  • Definition of a dictator
Direct download: 513.mp3
Category:general -- posted at: 10:00pm EST

Ep. 512: Tim Price Interview #3 with Michael Covel on Trend Following Radio

Tim Price has worked in capital markets for over 25 years across three management firms. His book is “Investing Through the Looking Glass.”

Tim thought Brexit would be the biggest thing in politics during his lifetime, until Trump. People love a narrative and those behind Brexit and Trump produced a great one. People were so fed up with the establishment that even though they may not have agreed with the idea of Brexit or the agenda of Trump, they wanted a vote against the establishment.

“What was the driving force behind wanting to write your first book?” The seminal event for him was the collapse of Lehman Brothers, which led him to think: “How on earth did we end up in this mess?” Interest rates are still at zero eight years post crisis and central banks are still printing money out of nowhere. He has spent the years since 2008 researching what the causes were and essentially the “Who done it” in the bailouts. Michael and Tim talk about the economy and the avalanche that is building on the horizon. Michael asks, “How did we get to the point where so many of us have just accepted that there are these show figures making decisions for us that we have no choice in?”

In Tim’s work he takes people on a detailed journey through the banking system, bailouts, bond market, stock market and the solutions. “What other options in trading exist after you have value, momentum and gold?” Michael and Tim discuss why there aren’t really any other options beyond those.

In this episode of Trend Following Radio:

  • Trusting central planners
  • Going against the establishment
  • Banking system
  • Owning gold
  • Lehman Brothers collapse
  • 2008 bubble
  • The Brexit and Trump narrative
Direct download: 512.mp3
Category:general -- posted at: 10:00pm EST

Ep. 511: A Zen Money Perspective with Michael Covel on Trend Following Radio

Building off of last weeks podcast Michael brings another dead guest on his show, Alan Watts. Watts is responsible for introducing eastern traditions to the West, i.e. Buddhism. He has been featured many times on the podcast. Is money the root of all evil? Is money the goal? Why are making mistakes so crucial to your life? Does money equal wealth? These are all topics that are discussed and answered on the podcast.

Before Michael plays a clip from Watts, he shares a story from his recent trip to California. Michael had lunch next to a table that was the quintessential example of money, wealth, and the stereotypes that live in Los Angeles. His opening story is food for thought as you listen to Watts and his wisdom.

In this episode of Trend Following Radio:

  • Liberty
  • Relationship between guilt and gold
  • You don’t learn if you don’t make mistakes
  • Psychological attitude toward money
  • Money is just bookkeeping
  • National debt
  • Money as the circulation of information
  • Changing the psychological attitude toward money
  • The cost of paying income tax
  • Psychologically poor
Direct download: 511.mp3
Category:general -- posted at: 10:00pm EST

Ep. 510: Milton Friedman Returns with Michael Covel on Trend Following Radio

Milton Friedman is one of Michael’s favorite dead guests to bring on the podcast. He takes complicated subjects and breaks them down clearly. Today, Michael curates two interviews between Phil Donahue and Milton Friedman. These interviews were recorded back in the 1980’s, but many of the points made are more relevant today than ever. Milton foreshadows Uber, talks about the deep state (without mentioning the deep state), brings up airline service and monopoly. His solutions to problems in government 35 years ago were to cut government spending, hold monetary growth back and cut regulations. The same solutions to government are at the forefront of American politics today.

In this episode of Trend Following Radio:

  • Government spending
  • Liberty in trading
  • Government regulation
  • Unknowingly supporting private interests
  • How to prevent monopoly
  • Legalizing drugs
  • Prohibition
Direct download: 510.mp3
Category:general -- posted at: 10:00pm EST

Ep. 509: Van Tharp Interview #3 with Michael Covel on Trend Following Radio

Van Tharp is on today’s podcast. It is his third appearance on the show. Van 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. His new book is called Trading Beyond the Matrix. 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.

Michael starts the podcast asking Van how he felt the year Eugene Fama and Robert Shiller won the Nobel Prize. Van has a long standing theory that those who win the Nobel Prize are just supporting the ideas of the status quo. It is meant to propel the majority into believing they are in the right. Trend following does nothing to support the status quo, therefore Van says that Michael and himself will not be winning the Nobel Prize anytime soon.

People looking for help constantly approach Van. Michael asks, “What is it like to observe the learning of people who come into your world?” Van goes into the steps he takes new students through when teaching them how to trade. He shares some typical biases that new traders have when starting their training. He first teaches people to understand that they need to take total responsibility for what happens to them while trading. If was easy to make money in the markets then big money would make it hard to participate in the game, but since it is not easy to make money in the markets, they make it easy to join.

Michael switches gears and asks, “When were you first exposed to the ‘how much’ question?” Van says that it was at a workshop with Ed Seykota. Seykota asked, “What is the most important factor in your trading?” Van responded, “Well, It’s you.” And Seykota said, “No, it’s how much.” It all starts with how much you are willing to lose and how much you can afford to lose. Michael moves on to ask “Are there anymore interesting things that you learned from working with Ed Seykota?” Van shares a story about Seykota and the psychology behind what makes him such a legendary trader. He moves on to share some stories about another legendary trend following trader, Tom Basso. Van shares personal stories about how he conducted his business and trading.

Discretionary trading is the next topic. Van says, “If you are a pure discretionary trader, it seems to me that it would be very difficult to implement some of the position sizing methodologies that are in your work.” A trader needs to know when something is not working anymore. You need to be aware of market changes, and subtle changes in that market that no longer works.

Michael ends the podcast asking, “Who changed your thinking in your life? Who helped to send you down this path?” Van started his business around 1982, which coincidentally was probably the low point in his life. He went to a life science church that helped him work on himself. He can’t pinpoint a specific event or person that has molded him into who he is right now, it was a collaboration of events and people.

In this episode of Trend Following Radio:

  • Systems theory
  • Money management vs. Position sizing
  • Ed Seykota’s trading and psychology strategies
  • Tom Basso’s trading and psychology strategies
  • Yoga
  • Training your brain how to think
Direct download: 509.mp3
Category:general -- posted at: 10:00pm EST

Ep. 508: Hysteria with Michael Covel on Trend Following Radio

“If you are in a dead end existence and feel like you need something else, get on a plane.” Fly to a foreign country, go alone, and do not have a plan. The influx of adrenaline from getting away and exploring can break anyone out of their day to day hypnosis.

Michael plays a series of news clips starting from the beginning of the Presidential race. The various clips start off profiling Donald Trump’s campaign as a joke, and then slowly morphing into him inching his way up in the polls and taking the Presidency. Michael then reads an excerpt from “Follow Me and Die” by Cecil Curry.

Michael ends the podcast with a quote from a recent Financial Times article featuring David Harding. The excerpt explains how Harding exploits the failures in the efficient market theory. He says that the markets are a psychological game and should not based off of fundamentals. Bet your money on the price, not what is happening in politics.

In this episode of Trend Following Radio:

  • Trump as President-elect
  • Trading off of price, not politics
  • Nazi’s in America
  • David Harding
  • Efficient market theory
Direct download: 508.mp3
Category:general -- posted at: 10:00pm EST

Ep. 507: Lanny Bassham Interview with Michael Covel on Trend Following Radio

Olympic gold medalist Lanny Bassham is on today’s podcast. After falling short in the 1972 Olympics winning the silver medal rather than gold, Lanny went home and re-applied himself. He returned to the 1976 Olympics and won the gold medal in rifle shooting.

Lanny was the kid in school that nobody wanted on their team. He was slow, short and uncoordinated. He worked hard, but he was never going to be able to compete against others that were taller, faster and more coordinated. He shares a story about being in school and one of his classmates saying that he would be the least likely person to become an Olympic gold medalist. This prompted him to go home and learn all he could about the Olympics. This began his journey in finding his place in Olympic history.

Lanny moves on to share how much practice and work he had to put in to become an elite performer. He never felt like practice was something he had to do, it was something he got to do. He loved rifle shooting not just because of the action of it, but because he was good at it. He took obstacles and turned them into opportunities.

Next, Lanny says there is a big difference between winning silver and winning gold. When you go back home and everyone asks how you did, they always ask who won the gold, not who won the silver. Lanny relates winning silver saying, “It is like going to the super bowl and losing.” Doesn’t matter that you made it there if you don’t win. He quickly realized the reason he won silver wasn’t because of his shooting capabilities, it was his mental game. He teaches people how to have a mental process and tap into it when they need it the most.

Lanny breaks performance down as a function of three mental processes: the conscious mind, subconscious, and self image. He goes into depth explaining the balance between all of these psychological functions. He says that you need to focus on your process rather than outcome. When you are 100% in control, then you will be much more mentally consistent. Outcome will always follow process. Lanny finishes up the podcast asking the question, “Do you really want it to be easy?”

In this episode of Trend Following Radio:

  • Creating a mental process
  • Changing your self image
  • How the top 5% think
  • Hard work in practice vs. Hard work in tournaments
  • Thinking of process not outcome
  • Valuing performance not just participation
Direct download: 507.mp3
Category:general -- posted at: 10:00pm EST

Ep. 506: Stepping Aside with Michael Covel on Trend Following Radio

Michael brings football into the podcast today. He starts off playing a press conference clip with Tony Romo and his response to being injured and falling from his spot as the starting quarterback.

Michael moves on to Donald Trump and what government should be. There are pro’s and con’s to Trump becoming President, but the bottom line is that people voted against the current political system. 50% of Americans decided to roll the dice and see what happens.

Big picture: Your trading strategy must not be based on who the President might be. Just follow the trend.

In this episode of Trend Following Radio:

  • Meritocracy
  • Donald Trump as President
  • Trading off the trend, not fundamentals
Direct download: 506.mp3
Category:general -- posted at: 10:00pm EST

Ep. 505: Daniel Crosby Interview with Michael Covel on Trend Following Radio

Michael welcomes Daniel Crosby, author of “The Laws of Wealth: Psychology and the Secret to Investing Success.” His background is in behavioral psychology and he sees the markets as a great backdrop to view human behavior in a real world setting.

Michael and Daniel start breaking apart the efficient market theory into two concepts: 1. You can’t beat the market, and 2. The price that you see is always right. They discuss debate in the academic world between the efficient market camp and the behavioral finance camp. Daniel says that the 2008 crash shows where the efficient market theory starts to break down. He moves into value and momentum trading.

Daniel brings in research proving that rules based approaches is 94% more successful than expert personal discretion. “Let your profits run and cut your losers short” is perhaps the biggest rule in trend following which takes great psychological discipline. Daniel says that it is an easy concept to grasp, but so hard to follow. Any investment discipline rooted in human psychology has a much better chance of working and sticking around than other strategies that don’t take human nature into account.

To make the risky choices Daniel says you need a mentor. Humans don’t do well with volatility and uncertainty. We live in the present and not in the future so a lot of people need coaching to look beyond the day to day. The hallmark of a good investor realizes that the rules do apply to them and they own the fact that they are no more gifted or special than the next person. Most investors tend to leave about 50% of their profits on the table due to bad emotional decisions.

Daniel says that everyone talks about the idea of “trouble is opportunity” but they don’t really live by it. People need to take a closer look at what “opportunity” really is. They need a rule, system or automation in place that makes them do the thing they don’t want to do. Michael and Daniel finish up the podcast talking about “benchmarks” and how they hinder investors performance and aid in making bad decisions. People who have personal benchmarks rather than index benchmarks have shown to trade more successfully.

In this episode of Trend Following Radio:

  • Expert discretion
  • Efficient market theory
  • The eradication of guinea worms
  • Human ego
  • Warren Buffett and his trading strategy
  • Passive investing
  • Sigmund Freud’s impact on trading
  • Standard deviation as a proxy for risk
  • Matching “the benchmark”
Direct download: 505.mp3
Category:general -- posted at: 10:00pm EST

Ep. 504: Jim Rickards Interview with Michael Covel on Trend Following Radio

On today’s episode of Trend Following Radio Michael Covel interviews Jim Rickards. Jim was front and center during the 1998 LTCM blow-up. He was a partner and general counsel for Long Term Capital Management. Following their blowup, he was principal negotiator in the 1998 bailout of LTCM by the Federal Reserve. He has had a bird’s eye view of some of the most interesting events in the economy over the last 20 years.

In Jim’s latest book, “The Road to Ruin: The Global Elites’ Secret Plan for the Next Financial Crisis,” he talks about 1998, 2008 and 2018. Jim gives these dates as examples of financial crises that happen (and will happen) every six to ten years. He relates financial panics to earthquakes. If you could stop an earthquake mid earthquake, this is similar to how we have been dealing with financial crises over the years. When bubbles are created, and then bailouts occur, government is only putting a stopper in the problem, however the problem is still there and building. The next bailout can’t come from the central banks.

Jim and Michael finish the podcast discussing cyber hacking and WWIII. Jim believes WWIII has already begun between Russia and America on a cyber warfare front. Cyber warfare has been happening between Russia and the U.S. for years. It is the worse kind of attack because you can get into major operating systems. Jim uses the operating systems of the Hoover Dam or getting into the operating system of the New York Stock Exchange as examples. If a terrorist got into the operating system of the Hoover Dam and opened up the flood gates it would wipe out hundreds of thousands of people.

Direct download: 504.mp3
Category:general -- posted at: 10:00pm EST

Ep. 503: John Miller Interview with Michael Covel on Trend Following Radio

John Miller, author of “QBQ: The Question behind the Question”, is on today’s podcast. John’s message is all about person responsibility. His dad was the wrestling coach at Cornell University and he taught John the foundation for his way of thinking early on.

What could I have done different? How could I have done a better job? These are just a couple questions John tells people to ask themselves before they try and pass blame onto someone else. John shares a personal story of someone going above and beyond in their service. This story is referred to as “The coke story.” He shares it with every audience he speaks in front of because it is the perfect example of someone going above and beyond. John says that people need to rise above situations, swallow pride, and fix problems even if it wasn’t their mistake to fix.

Next, John shares what he did before writing books and doing speaking engagements. He was bored and depressed working behind a desk. Michael asks, “Even in a bored and depressed state, did you ever have a victim mentality in your psyche?” John shares another personal story about him shutting down an entire branch of his company (for good reason) so he could move locations and be in a more positive place. He says that he has always been proactive in how he looks at a situation. He gives a few “rule of thumb” phrases to try and stay away from: Whenever you ask “Why me”, that is falling into a victim mentality. “When” questions are typically linked to procrastination. “Who” questions seek culprits or people to pass blame onto. Ask questions that contain an “I” in there because "I" can only change me.”

In this episode of Trend Following Radio:

  • Staying accountable for your actions
  • Social media bullying and accountability
  • Stress is a choice
  • Asking yourself the right questions to stay accountable
  • Entitlement
Direct download: 503.mp3
Category:general -- posted at: 10:00pm EST

Ep. 502: Efficient Market Thinking wth Michael Covel on Trend Following Radio

Are markets efficient? Can you beat the market? Is the market the right price? These are questions Michael answers today. Michael brings in Benoit Mandelbrot to help explain the efficient market hypothesis and where we have all gone wrong in our thinking over the years. Next, he goes to Richard Feynman to explain the scientific method and how one goes about comparing and contrasting. Lastly, Michael lets Gerd Gigerenzer elaborate on the concept of heuristics.

In this episode of Trend Following Radio:

  • Efficient market hypothesis
  • Scientific method
  • What is a heuristic?
  • The market price
  • What if money was no object?
Direct download: 502.mp3
Category:general -- posted at: 10:00pm EST

Ep. 501: Roger Housden Interview with Michael Covel on Trend Following Radio

Roger Housden is an author, speaker, and writing guide. He writes for “living and writing wild.” He has authored 22 books and has been featured everywhere from the New York Times to the LA Times. His latest book is titled, “Dropping the Struggle.”

Michael and Roger start the episode by breaking apart Roger’s book title, “Dropping the Struggle.” Roger looks at different areas of life where struggle doesn’t work such as the struggle for meaning or purpose of life, the struggle for love, and the struggle against change, just to name a few. Next, Roger expands on the idea of “the moment of now.” He says that the idea of “fate” does not mean that your life is predetermined. The love of ones fate, and embracing fate as your life is how you write your own story. Planning for the future has its place, but when it preoccupies current life completely, then it can be problematic.

Next, Michael and Roger talk about the always occurring “end of the world” debate going on. They use the upcoming election as an example. Once the presidential election is over, the debate will move onto something else. Life is a constant river. There will always be ups and downs. It is just the way the world works. It is how people respond to the ups and downs that define how things work out.

Love is the next topic of conversation. Roger says that there will always be imperfections with love but even those imperfections contribute to who we are as people. If you take those imperfections out, then we wouldn’t be the people that we are. It is part of the process of humility. Michael and Roger finish up discussing the differences between eastern and western cultures.

In this episode of Trend Following Radio:

  • Reflective contemplation
  • The moment of now
  • The fantasy of control
  • Imperfections with love
  • Buddhist culture
  • Individuality in western culture
Direct download: 501.mp3
Category:general -- posted at: 10:00pm EST

Ep. 500: Charles Faulkner Special with Michael Covel on Trend Following Radio

My special 500th episode is a 6-hour aggregate show featuring Charles Faulkner.

Direct download: 500.mp3
Category:general -- posted at: 10:00pm EST

Ep. 499: Jenny Blake Interview with Michael Covel on Trend Following Radio

Jenny Blake is author of “Pivot: The Only Move That Matters is Your Next One.” She is a former Google employee and has a perspective that everyone can learn something from, especially if you feel like you are at a plateau in life.

Michael and Jenny start the conversation off with the benefits of yoga. Jenny says that “Your body is your business.” She quickly realized that when her body was operating at 50% then her business was operating at 50%. Yoga has always been her outlet and her source of strength, flexibility, and one of her biggest accelerators of focus.

Michael asks, “How did we get to this point where everyone thinks that life goes in a straight line?” Jenny says we are all hungry for a sense of adventure, however we so often resist change. 2008 was a game changer that made many realize that anything can happen at any time. Social media has contributed to this also by creating a sense of restlessness and what Jenny refers to as “cognitive junk food”.

Jenny talks about the word “plateau” next. Plateau is the word she uses for when one thinks things/life are generally OK and then things start to gradually decline. When you hit a plateau, it is usually a case of mastering the job that you are doing at hand. It isn’t about personal failure. Plateau’s are more about figuring out what is next, how you can continue to grow, and how you can make the most impact on the world, Jenny interviewed a wide variety of people from peak performers to others who peak in some other way. She found that pivots were the most successful when the answer was already within someone. When it doesn’t work out is when people try to pivot too sharply. We can’t always know 100% if a pivot is going to work or if it is right but you need to put yourself outside of your comfort zone and take the risk.

Jenny moves on to explain what she calls “the pivot method”, which is comprised of a four step process. Plant, is the first step: One foot stays planted and the other foot pivots and scans the other options. It is about where you want to end up one year from now. The second step is scan: As you plant your feet you scan all the options. The third step is piloting: This is the experimentation phase. The last step is launch: This step is exactly how it sounds, you are launching into whatever that pivot is that you have been experimenting with. Michael and Jenny give lots of personal examples of all of these steps and go into great detail.

In this episode of Trend Following Radio:

  • Ditching the cognitive junk food
  • Efficiency
  • The pivot method
  • Mindfulness practice
  • The happiness formula
  • Rejection is a stepping stone
Direct download: 499.mp3
Category:general -- posted at: 10:00pm EST

Ep. 498: Norton Reamer Interview with Michael Covel on Trend Following Radio

Norton Reamer is the former Chief Investment Officer and CEO of Putnam Investments. He also founded and ran United Asset Management for 20 years. He has 50 years of experience on Wall Street. Today, Michael and Norton talk about his new book, “Investment: A History.” It is a detailed anthology on investment.

Norton stresses that everyone has a responsibility to understand their investments and to educate themselves to know what they are getting themselves into. Most people seem daunted by the challenges of investing. Real ownership, seeking a value, the role of leverage, and resource allocation are four key points of investment that Norton lays out in his book. When someone makes an investment, they need to really own that investment. It isn’t just a piece of paper.

Michael moves the conversation to economic bubbles and asks, “What are some of the timeless lessons that can be learned from bubbles you have witnessed in your lifetime?” Norton’s favorite bubble to have witnessed in his 80+ years is the latest bubble that popped in 2008. It was the way in which the bubble was created that fascinated him. He relates it to the great depression and discusses the similarities in recovering from it.

Next, Norton gives his perspective on efficient markets vs. the behavioral school. He says that it is a conundrum that has not yet been solved. Survivorship bias is the next controversial topic. They discuss the success of Warren Buffett and the “survivorship bias” argument that has been attached to him. Buffett has been around for many decades and both men agree that there is much that can be learned from Buffett. On the other side of the spectrum is Bernie Madoff. Norton explains how an operation like Madoff would be almost impossible to pull off in today’s markets. He also agrees with Michael in saying, “I would be deeply skeptical of someone producing 1% returns every month. You need risk to have returns like that.”

Michael brings up tail risk next. Norton describes tail risk as, “A one in a one hundred year event.” Things can be rare and unlikely but it is not the same as saying something is impossible. Conditions can always get extreme and produce “a one in a one hundred year event” and wipe you out. Norton uses Long Term Capital Management as a great example. Michael and Norton finish the podcast stressing that people can never be too cautious when investing in the markets. Educate yourself and prepare for risk adequately.

In this episode of Trend Following Radio:

  • Personal responsibility in the stock market
  • The role of financial leverage
  • Resource allocation
  • The suspension of diligence during economic booms
  • Efficient markets vs. Behavioral markets
  • Warren Buffett and survivorship bias
  • Tail risk
  • Quant and momentum style trading
  • Practicing caution in the markets
  • What impact does interest rates have on the value of assets
Direct download: 498.mp3
Category:general -- posted at: 10:00pm EST

Ep. 497: David Stockman Interview #2 with Michael Covel on Trend Following Radio

David Stockman is on the podcast today for his second appearance. He is a former United States congressman, who also served as the Director of The Office of Management and Budget under president Ronald Reagan. His books include, “The Great Deformation”, and “Trumped: A Nation on the Brink of Ruin… And How to Bring it Back”.

Michael and David start off discussing the recent news of Larry Summers suggesting that the Fed should start buying common stocks. David says that this is an act of sheer desperation and that any economist, 20 years ago, would have never come up with such an idea. What has happened is that policy makers have been led into a dead end path. “Madness” is how David describes the Fed right now. The mentality people have today, with Janet Yellen, is that intervention is necessary and without it, the whole system will fall apart. This mentality was not present prior to the year 2000 or maybe even 2008. Wall Street and Washington applaud the policy only because the market continues to go up.

Michael turns the conversation to the present election and asks David how he perceives the rise of Donald Trump and Bernie Sanders. “What does it say about America’s present state of mind?” David says it shows that America has had enough. The public is responding to Trump because he isn’t part of the system. Regardless of Trump’s stance on issues he will probably get a large part of Sanders supporters because they both have an “against the grain” political stance. David refers to Hillary Clinton as “the class president of a failed generation”. He gives examples back to 1991 when Bill Clinton was president, pointing out the senseless wars and damage that has been done to the economy due to policy. Clinton is “A survivor of what has been a 30 year consolidation of bad policy” says David. Hillary Clinton was the survivor who happened to be in the right place at the right time.

Next, David goes into his stance on Glass Steagall and how he would reinstate it in a way that would re-stabilize the financial system. Michael then has David elaborate on Deutsche Bank and some of the other problems the European banking system is facing. Michael asks, “What will happen if there is another 50% decrease on the S&P? What will the authorities do next?” David believes they are out of options. Going to negative interest rates will create a firestorm that they can’t take on. It will induce the sensible people in America to riot. A real correction will not happen until the market is able to stay down and correct from the damage that happened in the propping up in 2008. Michael and David finish up the podcast discussing the Chinese economy. David believes their economy is just as unsustainable as the United States. They are a “huge financial accident waiting to happen”.

In this episode of Trend Following Radio:

  • Glass Steagall
  • Clinton and Trump campaigns
  • Donald Trump and Bernie Sanders supporters
  • Deutsche Bank
  • European banking system
  • Sub-zero interest rates
  • Chinese economy
  • 2016 Election as a turning point in America
Direct download: 497.mp3
Category:general -- posted at: 10:00pm EST

Ep. 496: Six Feet Under with Michael Covel on Trend Following Radio

Michael Covel interviews Milton Friedman. Of course, Friedman is dead. Such the conundrum.

In this episode of Trend Following Radio:

  • Free lunch myth
  • Robin Hood myth
  • Collectivism
  • Case against equal pay for equal work
Direct download: 496.mp3
Category:general -- posted at: 10:00pm EST

Ep. 495: Ted Parkhill Interview with Michael Covel on Trend Following Radio

Michael talks with Ted Parkhill. Ted has over 25 years of management experience in the investment business. He is a founding partner of systematic macro investment manager Incline Investment Management (IIM). He is also serves as an Assistant Professor of business at Sierra Nevada College in Incline Village, NV.

Prior to IIM he was the director of marketing for Zazove Associates a multi-billion dollar quantitative convertible securities manager. He was a senior marketing executive at John W. Henry & Company one of the original Commodity Trading Advisors.

In this episode of Trend Following Radio:

  • It is possible to consistently generate profitable returns through systematic trading
  • Markets are inefficient and therefore trends materialize
  • Trends last longer than people think
  • Prices reflect the sum of the knowledge of all market participants
Direct download: 495.mp3
Category:general -- posted at: 10:00pm EST

Ep. 494: The Fight for Liberty with Michael Covel on Trend Following Radio

Today, Michael dives into the fight for liberty. No show notes. Listen or not, your choice.

Direct download: 494.mp3
Category:general -- posted at: 10:00pm EST

Ep. 493: Adam Khoo Interview with Michael Covel on Trend Following Radio

Michael welcomes Adam Khoo to the podcast.

Khoo is a Singaporean serial entrepreneur, author, trainer and a professional stock and FX trader. Khoo became a self-made millionaire at the age of 26, making him one of the youngest millionaires in Singapore.

Khoo is the Executive chairman and Chief Master Trainer of Adam Khoo Learning Technologies Group, one of Asia’s largest private educational institutions, which runs educational seminars for over 80,000 people annually in 7 countries.

From Neuro-linguistic programming to trend following, Adam and Michael cover the key topics.

In this episode of Trend Following Radio:

  • Neuro-linguistic programming
  • Technical analysis
  • Finding the edge
  • Trend following
  • Market Wizards
Direct download: 493.mp3
Category:general -- posted at: 10:00pm EST

Ep. 492: TurtleTrader Plus Lemmy with Michael Covel on Trend Following Radio

Michael provides a FREE chapter from his audio book versions of The Complete TurtleTrader and Trend Commandments.

Mentions & Resources:

  • The Complete TurtleTrader
  • Trend Commandments
Direct download: 492.mp3
Category:general -- posted at: 10:00pm EST

Ep. 491: Brian Christian Interview with Michael Covel on Trend Following Radio

Brian Christian, co-author of “Algorithms to Live By: The Computer Science of Human Decisions,” is on today’s podcast. The book shows how common algorithms relate to our everyday lives.

Brian starts off giving a historical explanation of an “algorithm”. Algorithms do not just relate to computers or mathematical procedures. A cooking recipe can be described as an algorithm or you could use an algorithm to solve the question, “How do you know when your best opportunity is?” Brian says you use an algorithm known as “optimal stopping” to solve this question. He explains the algorithm that provides the best probability of the best outcome.

Probability is the next. Is it worth exploring a new business possibility? Or is it better to hone in your skills and continue on with what you are doing? There is a formal framework or algorithm to help make these decisions. Brian explains the “win stay, lose shift” approach. If a restaurant is good, go back. If you don’t have a good experience, don’t go back. It may not be the optimal approach but it is a good approach and easy to live by.

Michael jumps to an example with Jeff Bezos, the CEO of Amazon. Brian tells Jeff’s story of Amazon and how he left his successful job at the time to start up this “online bookstore”. He ultimately used a “regret minimization framework” to make his decision. There was a possibility Jeff may not have been successful starting Amazon, but had he not tried it, he would have regretted not trying for the rest of his life. Brian also gives other examples of regret minimization algorithms.

Michael and Brian discuss threading next. Lastly, Michael brings up the “searching vs. sorting conundrum” that Brian discusses thoroughly in his book. Brian gives examples about sorting through information on the computer. He says that people should ask themselves “Should you be sorting at all?” Brian explains why “messy” is sometimes better.

In this episode of Trend Following Radio:

  • Optimal stopping
  • What is an algorithm
  • Process vs. Outcome
  • The explore, exploit trade off
  • The multi-arm bandit problem
  • Win stay, lose shift
  • Regret minimization framework
  • Frequency and intensity of mistakes related to age
  • Upper confidence bound algorithm
  • Threading
Direct download: 491.mp3
Category:general -- posted at: 10:00pm EST

Ep. 490: Trump the Fed with Michael Covel on Trend Following Radio

Michael dives into Donald Trump and the Fed. Listen at your peril!

Mentions & Resources:

  • Donald Trump
  • Janet Yellen
  • The Fed
Direct download: 490.mp3
Category:general -- posted at: 10:00pm EST

Ep. 489: Chris Voss Interview with Michael Covel on Trend Following Radio

Chris Voss is the author of, “Never Split The Difference: Negotiating As If Your Life Depended On It.” Chris is a former international hostage negotiator for the FBI. He has had an amazing career full of great experience and insights. Chris first entered the FBI in 1983 and has been involved with over 150 kidnapping cases. He started out working on a suicide hotline and quickly realized that his negotiating skills were applicable to all areas of life, not just hostage situations.

Chris starts the conversation off talking about how he begins hostage negotiations. It is about exchanging power and getting the upper hand early on in the negotiations. A lot of people want to think of negotiations as chess. Chris explains why this is not the case. You can make four moves in a row if you want. Not necessarily making one move, then a counter move by the other person. Chris goes on to explain that if you can walk out of any situation you don’t like, then you can win in any situation and you are able to have more fun with negotiating.

Next, Michael asks, “How do you go about negotiating with bat shit crazy people?” Even “bat shit crazy” has it’s patterns. Chris talks about being on Comedy Central and doing a skit on this exact situation. As long as he starts looking at patterns then things become aware to him and he can influence people’s emotions. When people don’t open themselves up to you, that is the first sign of danger. If people won’t talk, this is when you know psychologically they have shut down. 9-11 is an example of people being silent on the other side, shutting down, and leaving no room for negotiation. If you can ask someone “Have you given up on resolving this situation amicably?” Even having someone say “Yes” means they are immediately opening up a little more than they were before. Chris was always taught to go into situations knowing that people are not rational. They are driven by passion and purpose.

Chris also elaborates on “Why, How and Lying three times”. In general, “Why” questions make people feel defensive instantly. “How” questions make the other person feel powerful. People feel in charge when they are asked “How”, but it puts a lot of constraints on their answer. His last rule of negotiations is the “Lying three times” rule. If you get someone to lie three times then they most likely won’t act on that lie.

The podcast wraps up with bonus material of an interview between Michael and Chris recorded on a previous day.

In this episode of Trend Following Radio:

  • Aversion to negotiation
  • Negotiating skills
  • Never pretend people are rational
  • Business negotiations compared to hostage negotiations
  • Lying three times
  • “How” and “Why” questions
Direct download: 489.mp3
Category:general -- posted at: 10:00pm EST

Ep. 488: Never Forget the Lessons with Michael Covel on Trend Following Radio

Michael reads some of his favorite quotes circa 1920’s/1930’s from a famed trader. These quotes are timeless bits of wisdom. Michael adds commentary throughout.

In this episode of Trend Following Radio:

  • How is the “price” made?
  • You will never know all the fundamentals
  • Speculation
  • Getting mad at the market gets you nowhere
  • Bull and bear markets
  • Entry and exit signals
  • 1920’s wisdom on numbers
  • Always be ready to catch that unexpected move
  • Follow the price action
Direct download: 488.mp3
Category:general -- posted at: 10:00pm EST

Ep. 487: Robert Cialdini Interview with Michael Covel on Trend Following Radio

Robert Cialdini is on today’s podcast. He is best known for writing “Influence: The Psychology of Persuasion” published back in 1984. Robert is the “go to man” for understanding effective persuasion. Reciprocity, commitment and consistency, social proof, authority, liking and scarcity are his six key principles of influence that he teaches. His new book, “Pre-Suasion: A Revolutionary Way to Influence and Persuade”, introduces a seventh key principle of influence.

Michael asks “How did you start down this path? What was your ‘A-ha’ moment that got you researching for this new book?” Robert says it was a series of recognitions as he was reading the newest work in behavioral studies that made him realize that creating mindsets in people didn’t involve just six principles. He went back to his notes and looked at what the top people in various professions were doing. He realized that they were acting like gardeners. They were preparing the earth before planting the seed. These professionals were priming a persons mind to perceive their idea more fully.

Next, Michael and Robert talk about anchoring a persons perception of what they are paying or asking for. You start off with a higher number or a grander request before hitting the other person with what you really want. “Are there types of thinkers where pre-suasion is not as effective? Or have you found universally across the populations that pre-suasion is just very effective?” Robert says it seems to be a universal operating procedure that is built into us from birth. He uses a study done with 18 month old babies that proves that this is built into our psyche.

Lastly, Michael asks Robert to elaborate on the idea of unity. Robert shares a story of Warren Buffett and unity taken from his book. Michael finishes up the last 20 minutes of the podcast with a presentation on behavior change and the part that social norms play in creating that change, given by Robert. He focuses on how to make people move more towards a environmentally socially responsible role.

In this episode of Trend Following Radio:

  • Establishing trust before asking for anything
  • Rational self interest
  • Anchoring a persons perception
  • Asking for advice rather than an opinion
  • Warren Buffett’s shareholder letter
  • Environmental responsibility
Direct download: 487.mp3
Category:general -- posted at: 10:00pm EST

Ep. 486: Individualism with Michael Covel on Trend Following Radio

Michael opens the podcast with an excerpt from “The Fountainhead” about creating, entrepreneurism, and living for one’s self. “The Fountainhead” is one of Michael’s favorite books and encourages all to read it.

Michael dives into an example that dovetails right into “The Fountainhead” excerpt. Recently Michael tweeted a quote from Derek Bok, “If you think education is expensive, try ignorance.” He quickly got a response on Twitter saying he was “bearish”. Michael stresses throughout the conversation that it doesn’t matter if you are liberal or conservative. Trend followers don’t care about politics or media. It is all about price action.

In this episode of Trend Following Radio:

  • Creators vs. parasites
  • Human relationships
  • Altruism
  • The individual vs. The collective
  • Liberal and conservative trading perspectives
  • Price action is paramount
Direct download: 486.mp3
Category:general -- posted at: 10:00pm EST

Ep. 485: Jared Dillian Interview with Michael Covel on Trend Following Radio

Jared Dillian is editor of The Daily Dirtnap: A daily market newsletter for investment professionals. Jared is also author of “All the Evil of This World” and “Street Freak”. He gives a behind the scenes look at the good, the bad, and the ugly of Wall Street.

Jared’s interest with Wall Street didn’t start with the idea of making money. It was more academic. He wanted to learn why so many traders were trying to beat the market when all the Wall Street books he was reading said that beating the market was a huge waste of time. He started working at Lehman Brothers and quickly learned the culture within an investment bank was completely different. Everyone working at investment banks were in the business of making money, they are all traders. Jared speaks about the structure of Lehman Brothers and how they changed under the management of Dick Fuld. He then dovetails into detailing the dot-com bubble and the housing bubble, and explains why some firms were able to fail and others were able to survive.

Next, Michael and Jared talk about the “sex drugs and rock and roll” aspect of Wall Street. Jared looks back on what he saw when he worked in the pits of Wall Street and says that, “that culture” doesn’t really exist anymore since the 2008 crash. They finish up talking about the pros of being an entrepreneur rather than working for a big investment bank on Wall Street.

In this episode of Trend Following Radio:

  • Behavioral finance
  • Market psychology
  • Housing bubble
  • Dot com bubble
  • Lehman Brothers
  • Starting your own hedge fund
Direct download: 485.mp3
Category:general -- posted at: 10:00pm EST

Ep. 484: Evolution with Michael Covel on Trend Following Radio

If you can’t change the data, then why try and fight it? Listening to people who have spent their lives researching and digging into the data is how we learn and progress. In today’s podcast Michael plays a clip by Richard Dawkins about data. Michael shows that listeners can find insight within the talk that can be applied to their lives–all aspects.

In this episode of Trend Following Radio:

  • Evolution
  • Looking at the data
  • Natural selection
  • Long term macro evolution and short term evolution
  • Fossils do not prove evolution
  • Comparing animal and human bodies
  • Evolutionary arms race
Direct download: 484.mp3
Category:general -- posted at: 10:00pm EST

Ep. 483: Paul Tough Interview with Michael Covel on Trend Following Radio

“What is it about growing up in poverty that leads to so many troubling outcomes? Or to put the question another way, what is it that growing up in influence provides to children that growing up in poverty does not?” This is the question that today’s guest, author Paul Tough, poses in his newest book, “Helping Children Succeed: What Works and Why.” It is a data driven book about how young kids are growing and developing in today’s world.

51% of children in the public school system are below the low income bar set by the government. Paul goes through the psychological issues of children from low income homes starting from birth all the way through high school. Science is very clear that children develop the most during the first three years of their life. He says there are two main things to think about when children are developing: stress, and day-to-day interaction with parents or caregivers. Paul gives examples of the types of stress and interaction that is good and bad during early childhood.

Paul talks about the education system next. He says that development should be looked at as on a continuum rather than separated into segments such as preschool, kindergarten, and so forth. Michael and Paul also speak to the behavioral issues that may come from different socioeconomic backgrounds and what schools can do to improve the outcome of a child. “Grit” and curiosity needs to be taught and encouraged along with standard learning, in and out of the classroom. Intervening more intensely in the first few years is a huge way of creating this motivation and curiosity.

Michael brings up the higher income children who also are having trouble finding “grit and perseverance”. Paul says we aren’t giving children the opportunity to struggle with adversity. The difference between not having grit in a higher income family as opposed to low income is that you can usually get by in life. You can usually find an average job and have food on the table. However, not having drive coming from a low income family, you may not be able to put food on the table and have a roof over your head.

In this episode of Trend Following Radio:

  • Early childhood development
  • Creating the right environment for children
  • Childhood poverty
  • Serve and return parenting
  • Teaching grit and curiosity
  • The accountability movement
  • What motivates us?
  • Education as a national problem
Direct download: 483.mp3
Category:general -- posted at: 10:00pm EST

Ep. 482: Two Takes with Michael Covel on Trend Following Radio

There are back-to-back monologues on today’s episode. The two episodes consist of the same material, just said a little different. The first take Michael was told was too aggressive with too many F bombs, so he re-recorded but still left it up on the tail end of the podcast. The double header podcast today was inspired by a film Michael recently re-watched called, “Boom Bust Boom”.

Michael talks about Hyman Minsky’s “financial instability hypothesis”. Minsky said that there is instability in capitalism and if capitalism was eliminated, that would help eliminate bubbles. Minsky believed that offsetting the economy is how you eliminate instability. This is where the government came up with zero interest rates, and in some places, negative interest rates. Due to the Minsky mentality, economists think they can control the markets and stop human nature from happening.

Michael ties his documentary film into the discussion and describes the insight he got during ’08 when he happened to be filming. Trend following strategies and behavioral economics have these characteristics in common: 1. People will never be rational. 2. Markets will always trend up, down and sideways. 3. You can’t predict trends. 4. There are ways to make money even though numbers 1-3 are set in stone and will not change.

In this episode of Trend Following Radio:

  • The tulip bubble
  • March 2000
  • Fall of 2008
  • Financial instability hypothesis
  • Trend following philosophy
  • Behavioral economics
Direct download: 482.mp3
Category:general -- posted at: 10:00pm EST

Ep. 481: Chris Zook Interview with Michael Covel on Trend Following Radio

Chris Zook is co-author of “The Founder’s Mentality: How to Overcome the Predictable Crises of Growth.” The work leading to “the founder’s mentality” started for Chris about 5 years ago. It is predicated on, “What are the deep root causes that allow some companies to stay young, stay energetic, and be sustainable in their performance over time?”

Only 1 in 10 companies sustain a modest level of growth over a decade. Chris, and his co-author James Allen, found that when the founder of a company was still evolved and their presence was still looming, companies had about three times higher performance than other companies where the founder had stepped away. Chris elaborates on their research process and the steps he and James took in writing “The Founder’s Mentality”.

A deep sense of insurgency, frontline obsession, and an owner’s mindset are the three characteristics that make up the founder’s mentality. Keeping an open mind at all times and willingness to adapt to your company’s growth is key. When companies fail to be open minded, they become short term minded. Chris has found a great response from this way of thinking. He has now written 5 books over the last 12 years on this topic and all have been extremely well received, especially his latest work, “The Founder’s Mentality”.

People are searching for happiness in their work and Chris is helping outline how to get there. He helps people own the customer service experience in their company. Chris and Michael use Nokia as a great example of an industry leader that failed to adapt. Nokia was the first to use email on phones, they were huge in cameras, and had the first smart phone but they failed to be innovative enough and became institutionally closed minded. Ultimately what looked like a tech company that could not have died, ended up committing suicide.

Chris uses Starbucks as another example of a company that started something special, but as soon as the company moved away from what Howard Schultz, the founder, had started they began to crumble. After profits started to take a hit, Howard Schultz was asked to come out of retirement and revive the company. Starbucks was self inflicting wounds that were unraveling the core of the Starbucks experience. Michael and Chris wrap up the podcast giving a few more examples of companies that caught what he calls the “founders disease” or lost the owners mindset.

In this episode of Trend Following Radio:

  • The founder’s 100
  • What keeps millennials in their jobs
  • Frontline obsession
  • Sense of insurgency
  • Owners mindset
  • Founders disease
  • Meritocracies
Direct download: 481.mp3
Category:general -- posted at: 10:00pm EST

Ep. 480: Efficiency with Michael Covel on Trend Following Radio

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

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

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

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

In this episode of Trend Following Radio:

  • Donald Trump politics
  • The 1%
  • Generation snowflake
  • Efficiency in your thinking
Direct download: 480.mp3
Category:general -- posted at: 10:00pm EST

Ep. 479: Zen DeBrucke Interview with Michael Covel on Trend Following Radio

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

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

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

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

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

In this episode of Trend Following Radio:

  • Your inner GPS
  • Your inner flow
  • Emotional experiences
  • Neuroplasticity
  • The breadcrumb approach
  • The relationship between stress and disease
Direct download: 479.mp3
Category:general -- posted at: 10:00pm EST

Ep. 478: Desert Island Prices with Michael Covel on Trend Following Radio

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

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

In this episode of Trend Following Radio:

  • Black Swans
  • Anti-fragile
  • Market Crashes
  • Price action analysis
  • Shutting out the noise
  • Island trading
  • Price distribution
  • No free lunch
Direct download: 478.mp3
Category:general -- posted at: 10:00pm EST

Ep. 477: Morgan Wright Interview with Michael Covel on Trend Following Radio

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

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

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

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

In this episode of Trend Following Radio:

  • Snowden effect
  • Milton Friedman and Michael Moore
  • Teaching at the NSA
  • Manipulating human behavior
  • Combining the legal system and mental health system
  • Lack of accountability in government
  • Government using yesterday’s technology
Direct download: 477.mp3
Category:general -- posted at: 10:00pm EST

Ep. 476: Commandments with Michael Covel on Trend Following Radio

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

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

In this episode of Trend Following Radio:

  • Political correctness
  • Pussy generation
  • Absolute returns
  • Inefficient markets
  • Market bubbles
  • Fundamentals are religion
  • The market is never wrong
  • Cutting your losses
  • Learn to love your losses
  • Price action
  • Betting the markets properly
  • Failure is the secret to success
Direct download: 476.mp3
Category:general -- posted at: 10:00pm EST

Ep. 475: Chase Jarvis Interview with Michael Covel on Trend Following Radio

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

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

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

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

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

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

In this episode of Trend Following Radio:

  • Gaining freedom in your life
  • Entrepreneurship
  • There is no overnight success story
Direct download: 475.mp3
Category:general -- posted at: 10:00pm EST

Ep. 474: Freedom with Michael Covel on Trend Following Radio

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

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

In this episode of Trend Following Radio:

  • Unanimity in government vs. Majority rule
  • Principles vs. Expedients
  • Government conformity
  • Government autonomy
  • The meaning of property
  • Responsible individuals vs. Irresponsible individuals
  • Human rights
  • Freedom of speech
  • Government failure on a large scale
  • Market failures
  • 3rd party benefits for society
  • Government failure vs. Market failure
Direct download: 474.mp3
Category:general -- posted at: 10:00pm EST

Ep. 473: Chris Lochhead Interview with Michael Covel on Trend Following Radio

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

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

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

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

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

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

In this episode of Trend Following Radio:

  • Disrupting the marketplace
  • Product marketing
  • Teaching consumers about your product
  • Creating new market categories
  • The anchoring effect
  • Thunder lizards
  • Category kings
  • The Innovator’s Dilemma
  • Category design
Direct download: 473.mp3
Category:general -- posted at: 10:00pm EST

Ep. 472: Silence with Michael Covel on Trend Following Radio

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

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

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

In this episode of Trend Following Radio:

  • Peace and quiet is all about the noise in your head.
  • Correlations between high blood pressure and chronic noise sources.
  • Possible therapeutic uses for silence.
  • Trend following.
Direct download: 472.mp3
Category:general -- posted at: 10:00pm EST

Ep. 471: Emma Seppala Interview with Michael Covel on Trend Following Radio

Emma Seppala is today’s guest. She is author of “The Happiness Track: How to Apply the Science of Happiness to Accelerate Your Success.” She is the Associate Director for the Center of Compassion at Stanford University. Emma’s work isn’t based on theories or common knowledge, there is a tremendous amount of neuroscience backing her work.

Emma starts the podcast off stating that being happy is a very subjective experience. With that in mind, in general, happiness is divided into two main categories; hedonic and eudemonic. Hedonic happiness doesn’t last long and is more associated with short burst of excitement such as sex and food. Eudemonic is much longer lasting and is more associated with self-fulfillment. Emma goes into depth explaining and giving example of both forms of happiness.

Michael asks Emma to talk about the myth of success next. Emma says Americans are over stimulating themselves, and believing that running on adrenaline is the best way to get things done. Chronic stress is actually what we are embracing and it starts to deplete our immune system. Emma acknowledges that you may not be able to control the world around you, but you can control your state of mind. Working on Stanford’s campus, Emma has seen first hand the severe epidemic of students buying into myths of happiness, especially on higher achieving campuses. They believe the only way to be successful is to burn themselves into the ground and of course, this notion is completely false. Unplugging and taking more vacations is the best way for us to reach our maximum potential. Creativity and happiness in the workplace depends on it.

Next, Emma discusses the impact breathing has on our emotions. There are different breathing practices that help out with stress and anxiety. Nurturing more calmness in our life helps us manage our energy much more. There was a study done at Harvard that showed our brains wonder 50% of the time. However, science shows that we are never happier than when we are in the moment of now. With technology constantly at our fingertips, it is getting harder and harder to be in the present moment. But when we are in the moment, it boosts our charisma and happiness. People are drawn toward others that are satisfied being in the present moment with them. Michael and Emma turn the conversation to negative emotions. These emotions make us more focused on ourselves and selfish. When the focus shifts to positivity, authenticity is created. Others crave authentic people they can connect to. They finish on talking about creativity and how to best tap into the creative parts of your brain. Just by making small changes in the way you work can really make a huge difference in the way your feel and your brain works.

In this episode of Trend Following Radio:

  • Benefits of happiness
  • Stresses in life
  • Controlling your mind
  • Happiness in college
  • Cultivating resilience
  • Tapping into the opposite of fight or flight response
  • Impact of different breathing techniques
  • Living in the moment of now
  • Authenticity
  • The flow state
  • Activating creativity
Direct download: 471.mp3
Category:general -- posted at: 10:00pm EST

Ep. 470: Objective with Michael Covel on Trend Following Radio

Michael takes the podcast back to 1959 with an interview between Mike Wallace and Ayn Rand. Wallace and Rand focus on her ‘revolutionary’ view on the world. Rand capsulizes her views as a philosophy based on objective reality. She expands on a new code of morality centered around mans life as a standard of value. This means that a mans highest moral purpose is the achievement of his own happiness and each man must follow his own rational self interest.

Atlas Shrugged demonstrates Ayn Rand’s philosophy in human terms. Rand and Wallace briefly touch on many subjects such as; self sacrifice, love, altruism, the democratic system, and welfare.

Michael wraps up the podcast by summarizing the interview and comparing it to life in 2016. He talks about the importance of leaving his own impact on the world and how necessary logic and reasoning is to being successful.

In this episode of Trend Following Radio:

  • Man’s morality
  • Altruism
  • Self sacrifice
  • Free and unregulated economies
  • Capitalism with government help
  • Welfare
  • Depressions due to government interference
  • Strategic decision making
Direct download: 470.mp3
Category:general -- posted at: 10:00pm EST

Ep. 469: Laura Roeder Interview with Michael Covel on Trend Following Radio

Laura Roeder is a serial entrepreneur and her newest company is Edgar, a social media application. She started working for herself creating websites for people when she was 22 living in Chicago. It spread to optimizing traffic and online marketing for her clients. In 2014 she launched her social media software business, Edgar. They haven’t taken any money from investors and have grown to 2.8 million annual revenue.

Twitter, Facebook, and LinkedIn are the biggest social media platforms today. Many entrepreneurs get overwhelmed by the scope of content creation and posting needed to be successful. They tend to give up before they have even begun. Laura goes into the advantages of recycling content, notes that small percentages of your audience will ever see your content, and that the nature of the internet is all about repeated content.

The questions to ask yourself are, “How much traffic are you driving back to your website? How many people are buying off of that traffic?” There needs to be a balance between providing worthy content to your social media followers and not just pushing ads at followers. Michael then asks, “How important is it to be authentic?”

Don’t worry about people who want to un-follow or unsubscribe to your email. If they don’t want to follow you, then you don’t want them anyway. The extreme side of un-followers are critics. Laura and Michael talk about critics and how to cut them loose. They finish up talking about Edgar and how it works to make social media easier by automation, along with how Laura has carved out her space as a entrepreneurial woman in the tech space.

In this episode of Trend Following Radio:

  • Social media
  • Business competitors
  • Success of Dropbox
  • Keeping up a great reputation
  • Be aware that competitors can access everything
  • Women in the entrepreneurial space
Direct download: 469.mp3
Category:general -- posted at: 10:00pm EST

Ep. 468: Irrationality with Michael Covel on Trend Following Radio

Michael starts off explaining how Trend Following Radio has morphed into the diverse podcast it is today. He started Trend Following Radio in 2012. It originally was all about trading, but with a Vernon Smith interview, then Gerd Gigerenzer and Dan Ariely interviews, he realized he could take it in a different direction. With those three interviews under the belt, he was able to secure Daniel Kahneman on the podcast which he believes was the real tipping point for the podcast.

For the rest of the episode Michael plays curated clips from the men mentioned above: Vernon Smith, Gerd Gigerenzer, Dan Ariely and Daniel Kahneman. He wraps up by playing a short clip from another brilliant mind in behavior finance, Nassim Taleb. The clips exemplify the spirit of behavioral finance. They range from helping people understand their behavior at a fundamental level to behavior in markets and what drives the average person to make particular risky moves in life and in their trading.

Michael finishes up talking about the enormous amount of misinformation in news and media. You need to do the reading and educate yourself. Absorb wisdom from the right people, do your homework and put in the work to get ahead. It will not just come intuitively or from “for profit” media outlets.

In this episode of Trend Following Radio:

  • Law of demand
  • Behavioral economics
  • Experimental economics
  • How do you make bubbles go away
  • Using algorithms over emotions
  • Noise reduction
  • Statistical thinking
  • Understanding the difference between risk and uncertainty
  • Probability theory
  • Risk Communication
  • Unconscious things that make us fearful
Direct download: 468.mp3
Category:general -- posted at: 10:00pm EST

Ep. 467: David Burkus Interview with Michael Covel on Trend Following Radio

Michael and David Burkus start off talking about Fredrick Winslow Taylor. Fredrick’s claim to fame is discovering that it isn’t about innovating a product, but rather about innovating the factory. He looked into factory processes and what it took to make a product most effectively. The downside of his work was that he believed management should be operated scientifically as well. He thought that management was smart and factory workers were dumb. His values helped people focus on how to make a product most efficiently not how to make people sustainable, prolific and healthy. He took a lot of the emotion out of it. Most of his work has shifted from the United States and moved to other more factory driven places such as China.

The new form of work that we are seeing in most countries is creative work. Employees are required to make decisions or make collective designs with people in their company. Michael asks, “Isn’t this about making employees feel like entrepreneurs in their company or organization?” David uses tech start-ups as examples; Even as they get big they aim to make their companies continue to feel like a start-up and train their employees to think like solo entrepreneurs. This is how trust and intellect gets built within a company.

Next, Michael and David discuss the effectiveness of email. Pros: The cost of email is cheap and you can respond on your own schedule. Cons: Constant text and emails have diverted focus and created too much distraction. David stresses that there is no such thing as “multitasking”, there is only task switching. Some studies say it could take up to 15 minutes to get back to the focus you were at before you were interrupted.

Michael and David move the discussion back to the importance of keeping your employees happy. Having outstanding customer satisfaction comes down to putting employees first. Sometimes that means siding with your employees over your customers. You need to be able to tell some customers that your company or product simply may not be right for them. Also, creating the right work environment is key. Open work environments as opposed to more closed work environments have been becoming the norm. In an open office environment the idea is that working together is easy and creates a better collaborative environment. However there are negative effects such as increased sick days (perhaps because they do not want to see certain co-workers) and more distraction.

Michael and David finish talking about non-compete clauses and the counter productiveness of them. There is a difference between a non-compete and a non-disclosure. Apple and Google have two totally different views on this. Google is 100% fluid and open. Apple is very closed off and believes in the non-compete clause. When people migrate from one company to another, it has been shown in studies that both companies actually win from the intellectual knowledge transferred and gained from each other. Non-compete environments benefit everyone in the long term. Also, on a societal level you can see a huge benefit when non-competes are not allowed.

In this episode of Trend Following Radio:

  • Re-designing the factory
  • Physical labor vs. Intellectual labor
  • Machines vs. Man
  • Multitasking = Task switching
  • “The customer is always right” mentality
  • Confirmation bias
  • Introverts and extroverts
  • Customer service
  • Non-compete clauses
Direct download: 467.mp3
Category:general -- posted at: 10:00pm EST

Michael starts an email from a listener that starts with praise, then turns around and claims that a top trend following trader has 400 employees and “super computers” to carry out trades, and that is why he is so successful. Michael uses this listener as just one example of how millions think. They are confused by what a computer does, and simply don’t understand what trend following is all about. The trader he refers to is on record saying that he trades off of Excel spreadsheets. For the remainder of the podcast, Michael expands on his response to the listeners email, and breaks apart algorithmic trading.

Michael next reads an excerpt from “Intuition Pumps and Other Tools for Thinking”, by Daniel Dennett. The excerpt breaks down algorithms in depth. Michael’s point is to show that a computer doesn’t make a great trader, it is the algorithms programed in the computer that creates the success. Where do the algorithms come from? Humans. Trend following is all about having the brilliance to come up with a strategy, but the execution is straightforward.

In this episode of Trend Following Radio:

  • “Super computers”
  • Systematic trading
  • Creating algorithms
  • Coding
  • Machines replacing humans
  • Breaking down the use of software
Direct download: 466.mp3
Category:general -- posted at: 10:00pm EST

Jason Gerlach and Chris Stanton are the CEO and CIO of Sunrise Capital Partners. Sunrise Capital is a systematic firm located in San Diego. They were featured in The Little Book of Trading. Sunrise has been in business for four decades trading. Their goal is to invest in an intellectual way by taking human emotion out of their decision-making.

Michael opens the conversation up with Brexit and how Sunrise Capital reacted. There are foreseeable events and unforeseeable events. Brexit was a foreseeable event. Jason and Chris breakdown the weeks before Brexit, and how Sunrise has been positioning their portfolios in contrast to other firms. Jason and Chris say that in the systematic world there have been two different camps of thought in how to approach Brexit.

Michael moves the conversation from Brexit to Oil dropping in 2014. Jason and Chris say that these events are not just moneymaking events, they are also risk management events. People live in the middle of a bell curve and never think of the tail events in life. They trade and invest for the non-random times and are always shocked when events tend to go further than expected. Sunrise does the opposite and uses technology to curb our human irrationality.

Michael and Chris dive deeper into risk management and the importance of diversification. Sunrise has five systems that operate differently in all market situations. Chris explains risk adjusted return and how setting the “heat” is really the heart of leverage. “What kind of return is optimal for you?” The higher expected rate of return, the more drawdown you may have. When you look at someone’s rate of return, you have to look at what their drawdowns are like. Leverage is a reality in strategies; you just need to be responsible with that leverage and cater it to each individual investors needs.

Michael moves on to ask, “Has Brexit opened up Pandora’s box?” Chris and Jason say Sunrise believes that price distribution has changed since 2013. Intraday volatility has changed and prices now make huge jumps in smaller time-frames than they ever have before.

In this episode of Trend Following Radio:

  • Brexit and systematic trading
  • Price distribution
  • Price action
  • Directional betting on a coin flip event
  • Preparing for black swan events
  • Are computers good or bad?
  • MAR ratio
  • Diversification
Direct download: 465.mp3
Category:general -- posted at: 10:00pm EST

Everyone was told to trust the system and be happy: “Save your money and interest income will be your retirement.” This has come to be completely untrue and people are collectively beginning to wise up, as seen in Brexit.

Michael goes into a timeline of market crashes illustrating trend following success: 1973-1974 stocks go down 50% and trend following kills it. 1987, known as Black Market Monday, US stocks go down 20%+ in a day and trend following kills it. Barings Bank collapses spring of 1995, trend following kills it. August 1998, Long Term Capital Management craters, and trend following made a fortune. It was almost a zero sum transfer from LTCM to trend followers in August of 1998. Spring of 2000, the dot com bubble bursts and trend following cleans up again. 2002 was one of the best trend following performance years ever. After 2002 another bubble is built and when it burst in October of 2008, trend following had outstanding performance results yet again. When the majority of people think the world is ending, trend following is reaping the profits. Brexit? Yes, too.

Nobody can predict the future but if you want to play the game, you have to place bets. Trend followers were in established trends once Brexit hit. They do not predict, but they have educated bets. Michael ends with one question, “What side are you going to be on? The side of the winners or the side of the losers?” It’s your choice.

In this episode of Trend Following Radio:

  • Boom and busts
  • Brexit
  • Certainty in markets
Direct download: 464.mp3
Category:general -- posted at: 10:00pm EST

Michael and Jack Schwager talk about his new venture Fund Seeder. Jack is the author of the Market Wizard series. His books have remained relevant over the past 25 years, and for many traders they are the best trading books on the shelves today. Michael and Jack talk about the structure of the Market Wizards books and how they evolved to interview style format. Michael thanks Jack for opening his mind on the direction he took the Trend Following Radio podcast.

Many of the traders Jack was able to interview, such as Bruce Kovner and Michael Marcus, never did another interview after “Market Wizards.” A lot of the secret to the book series success was the exclusivity of the interviews. Michael asks, “Of all the traders you have talked to, what trader impressed you the most?” Jack has a hard time, of course, narrowing it down to just one because there has been so many extraordinary people that he has interviewed. That being said, in terms of track records and sheer intellect, he would chose one. Jack was completely awed by his accomplishments and was surprised how great he was on a personal level.

There has been a strong trend over the years for money to go to bigger and bigger asset managers. It has become a safer thing to do, to put money with a larger manager. It isn’t performance driven, it is purely safety driven. Jack says that even if you have skill it is becoming exceedingly more difficult to gain new clients and get big. Jack’s new venture is focused on helping these start up traders. The firm helps connect investors as well as companies that may want to find new and upcoming traders. Jack elaborates on the match making process and how they present verified and unverified track records.

In this episode of Trend Following Radio:

  • Trading legends
  • Futures markets
  • Equity markets
  • Gaining clients as a new trader; Fundseeder
Direct download: 463.mp3
Category:general -- posted at: 10:00pm EST

Michael starts the podcast asking, “Do you need permission to get through your day?” He goes right into two examples: The first example is of his 12 year old nephew who just finished his baseball season. The second example is of a new show called “Billions.” It is about a hedge fund manager pitted against the U.S. attorney of New York.

Michael argues against/for the political corruption that starts in child sports. Michael says that being screwed over early by the system is a good thing. It makes you stronger in the long run. Every time you face these types of obstacles, you need to learn to punch through them. You can’t get bogged down with seeking permission. Especially at a young age, if children learn to push through and work hard they will have a much better chance at success later on in life.

Michael recommends watching the show, “Billions”. However, there are some things about Wall Street that have been left out. The show is based around a corrupt hedge fund manager that only trades off insider trading. The show does not highlight any other form of trading other than trading off fundamentals. Basing a character off of trend following is not nearly as “sexy” or dramatic. They want to position all of Wall Street as insider traders and corrupt because that is a far better story than making money off of rules and algorithms.

In this episode of Trend Following Radio:

  • Baseball politics
  • Asking for permission
  • “Billions” (TV show)
  • Insider trading
Direct download: 462.mp3
Category:general -- posted at: 10:00pm EST

Michael takes a sci-fi journey on today’s podcast as he interviews Robin Hanson. Robin is professor of economics at George Mason University and his new book is, “The Age of EM.” Robin and Michael look forward about 100 years and analyze what the world will look like.

They start the podcast discussing singularity and what it will be like when robots take over. Michael asks, “How much time will it take to get to singularity and are there faster ways that we may get to this point?” Robin says that robots are a staple of where the future is headed. There are a few different schools of thought on how they will evolve but Robin’s theory is based on porting. In a nutshell, this means that you re-write old software to fit your new criteria. The idea is to do the same thing with the human brain. Robin goes into detail on this idea and says that it may take as little as one century to unfold.

Next, Robin discusses the types of people that will start out being emulated. The first will be top intellectuals of the time. After some years that will expand to other types of humans. Robin says that the economy will boom and double in size quickly. He also expands on “Em cities”, what they are, how they are created, and how they are run. “Em’s” is the term Robin uses for emulation robots.

Michael brings up the effects this next reality will have on mother nature and Em sex. Em’s live in a virtual reality. They never have pain or disease. They have perfect bodies and just have sex for recreational purposes. However, they do not last forever. Em’s will have to retire eventually because of software rot which Robin gives examples of and expands on.

Next, Michael asks about the political ramifications of robots entering the work space. Will Em’s run for politics? Robin says that they will most likely be involved in politics because they would never want to be run by people that are not nearly as fast and smart as them. He then expands on what the bodies of Em’s will look like. He describes the different shapes and sizes that Em’s are going to employ. This leads to the question of death. “Will Em’s be afraid of death?” Robin says that they probably wont see it coming.

Many people, when they look at the future, like to discuss what will happen. There is a degree at which our future can be influenced but to a large degree it is out of our control. Technology has been out of control for awhile. There are such varied interests among people that it will not matter if one group wants to move forward with Emulations or not. Things will continuously evolve. Michael and Robin end on how the political system will be run in the Em world.

In this episode of Trend Following Radio:

  • Singularity
  • Robots taking over
  • Artificial intelligence
  • Slavery
  • Reversible computing
  • Virtual reality
  • Future of politics
  • Democracy in the future
Direct download: 461.mp3
Category:general -- posted at: 10:00pm EST

On today’s podcast Michael breaks apart comments from a Ray Dalio article. Dalio is one of the most successful hedge fund managers alive. He does not give out too much information on his trading strategy, except that he is 100% systematic.

Before Michael begins reading the article he asks, “When the Fed raises interest rates, what will happen? Will the world end like people seem to think?” The first article he reads from was written in 2015 and answers questions on interest rates and the Fed. Next, Michael reads an article from 2016 where Ray comments on the Fed further. Ray is running a systematic firm, however, he gives historical narratives of the debt cycle. Michael still asks the question, “How do Ray’s words connect to trading? When to buy? When to sell?”

Michael stresses that presenting “Oz behind the curtain” statements do not help anyone in there trading. If someone said buy here, sell here, that would help people, but using terminology that could be interpreted as anything is worthless.

In this episode of Trend Following Radio:

  • Fundamental analysis
  • Bubbles
  • Zero Interest Rate Policy
  • Fed
  • Crony capitalism
  • Quantitative easing
Direct download: 460.mp3
Category:general -- posted at: 10:00pm EST

Michael interviews Tucker Max. Tucker has authored many books, however today he is on the podcast to talk about a new entrepreneurial venture. Tucker created a simple algorithmic process to writing a book. He began by asking himself: What do we have to do to position a book? How do we structure it? How do we outline it? How do we conduct an interview to get the information out of a authors head? And then how do we transcribe it? Once he had these answers, he had a company.

Today, 18 months in, he has signed about 230 authors and has put out about 50 books. With a price point of $20,000-$50,000, Tucker and his company offer the exact steps to writing a book. His company is not ghostwriting. They aren’t learning anything about your content, just getting your ideas on paper in a cohesive manner. You have to qualify in a few ways for their service: Can you pay for it? Do you have sufficient ideas for writing a book? And are you an a**hole? A**holes do not make the cut.

Michael and Tucker bring up the importance of Amazon when it comes to successful marketing. Although Google is the #1 search engine, Amazon is the search engine when looking for legitimate products or the best books to buy on any given subject. When people are looking for a book or a product with reviews, they turn to Amazon.

If you are going into any business, writing a book is the best way for you to become an information authority in that field. Tucker goes into depth describing the steps he takes client through to write their book. He also goes into detail about his clients motivations to writing a book or being held back from writing. Many people see writing a book as an extension of themselves and this holds them back. People don’t want to fail.

In this episode of Trend Following Radio:

  • Marketing positioning
  • Selling to your audience
  • Finding your niche
  • Writing a book
Direct download: 459.mp3
Category:general -- posted at: 10:00pm EST

Today on Trend Following Radio Michael starts the podcast reading an email from a listener. This listener is a fan of the show and agrees with most of Michael’s views. However, he writes Michael asking about his opinion on a fundamental trading strategy that he employs. The listener uses a strategy that can’t be quantified and is not systematic. Michael challenges anyone listening to send their track record.

Next, Michael moves into another trading strategy he is asked about frequently, predictive technical analysis. When you hear predictive technical analysis, you know you are watching a show. It is all made up. Michael throws out the same challenge to any predictive technical analysis trader. Prove that it is a legitimate trading strategy.

In this episode of Trend Following Radio:

  • Systematic trading
  • Fundamental trading
  • Gambling
  • Trend following biases
  • Day trading
  • Predictive technical analysis
  • What is the best strategy?
Direct download: 458.mp3
Category:general -- posted at: 10:00pm EST

Michael Covel has an “out of the box” interview today with Amy Herman. In 2000 Amy started a program called, The Art of Perception at The Frick Collection in New York City. She helps her students figure out how to fix big picture problems by looking at the small details. Her new book is “Visual Intelligence: Sharpen Your Perception, Change Your Life.”

Amy starts the podcast off sharing a story referred to by Michael as “the soap story.” It is about a man from Uganda who was moved by how wasteful the hotel industry is. His big picture movement started with a bar of soap. The staff at a hotel he had been staying at cleaned his room and replaced a bar of soap that he had only used a few times. He contacted the front desk of the hotel and asked why his soap had been replaced when it had not fully been used up. The front desk explained that they replace all the soaps everyday regardless of how much had been used. What came of this small encounter? This man from Uganda jumpstarted a movement that changed the way the hotel industry operates by being more mindful of the how much needless waste they are creating. It was a small detail that changed a big picture problem.

Next, Amy shares an “aha” moment she had in college about art. She went from practicing law to studying museum education which led to her founding The Art of Perception at The Frick Collection in New York City. The program began with teaching medical students about art and how to translate it into their own profession. She started the program in 2000 and in 2004 she was having dinner with some friends which sparked the idea of expanding the program to the police field. It was wildly accepted and in no time, the program was expanded to just about every other professional field. Amy goes into some examples of her students that took her class and that have shared real life examples with her. Her students have been able to apply her teachings to everything from helping diagnose patients to solving crimes. It is all about the small details in the big picture.

Amy says her program has been so successful for two reasons; art is powerful and art is not threatening. She requests that her students do not take notes, and there are no cell phones allowed during class. All that is needed is your eyes, brain, and your ability to communicate. She doesn’t want to teach people how to see art, but rather teaches what she refers to as the five “A’s”: Assess, analyze, articulate information, adapt your behavior, and become accountable for your decisions.

Amy talks about listening to your sixth sense but also being able to articulate what you are feeling so you can act on it. She stresses that precise and consistent communication is paramount and gives some real life examples of why it is so important and what could happen when that ground work is not laid down.

In this episode of Trend Following Radio:

  • Undoing perceptions
  • COBRA methodology
  • Listening to your sixth sense
  • Situational awareness
  • See something say something
  • Pertinent Negative
  • Critical inquiry
Direct download: 457.mp3
Category:general -- posted at: 10:00pm EST

Michael Covel interviews Josh Hawes. Josh is the Risk Officer and Investment Manager of Hawking Alpha. He is a trend following trader now who started off at Goldman Sachs. Josh breaks apart the trading industry, highlighting many of the cons associated with the mutual fund space.

Josh has always had a passion for math. He started looking at the performance of different funds within Goldman. As soon as he started to look at returns of some, he began to see a disconnect. They would judge themselves off “beating the index” but they were still losing massive amounts of money. They would also have access to CEO’s of top companies and still not be able to make money off of the information they would share. This is when he began to transition out of the company and turn to other forms of trading, not just long only.

Josh was given many books to read while at Goldman. “Reminiscences of a Stock Operator” was one that resonated with him the most. “Trend Following” was another book that Josh had come across. “Trend Following” triggered him to reach out to some of the traders mentioned in the book. Ed Seykota and Jerry Parker were just a couple of the traders he was able to spark up a conversation with by reaching out.

Next, Michael and Josh break apart index investing. Josh says everyone should ask themselves, “Why does the market owe you anything? And if the market goes down, does that not mean that the markets can go down for a long period of time?” You can’t say that you should go long the market because for 200 years the market has gone up. There has been massive ups and downs and you have to be able to navigate the down periods. Michael then asks, “How does one become the next Warren Buffett?” Josh says that 2008 is one of the best examples of why you could never be the next Warren Buffett. There are a lot of people in the mutual fund space that try and mirror Buffett. Some of these people fail trading the exact strategy as Buffett. So does that make Buffett lucky or a genius?

Josh and his firm guarantees to always follow their stops. He guarantees his clients that he will be a trend follower and although he can not guarantee any level of return, he will always follow his stops. This sets Josh and other trend followers apart from fundamental traders. Josh then segues into what he believes are the four ways to make money: When prices move, when prices don’t move, arbitrage, and high frequency trading. He expands on these four points and gives examples. Michael and Josh end the podcast on the importance of talking directly with clients and connecting with people on a personal basis.

In this episode of Trend Following Radio:

  • Trading off fundamentals
  • Keeping up with the Jones’s
  • Smooth equity curve’s
  • Concept of an Index
  • Mutual fund industry
  • 10,000 hours
  • Arbitrage
  • High frequency trading
Direct download: 456.mp3
Category:general -- posted at: 10:00pm EST

Michael Covel interviews Ryan Holiday. Today they discuss his new book, “Ego is the Enemy.”

Ryan makes the case that ego is the worst factor that you can add into any situation. So many entrepreneurial ideas start out as crazy. However, when the idea works out after ignoring every critic or bit of sound evidence that it would not work, then that can create an ego that can easily get out of control. Ryan says, “This is how a person that builds an empire also destroys an empire.” He uses General Sherman from the Civil War as an example of controlled success. His greatness came gradually and unexpected as opposed to a person like Napolean who thought they were set for greatness from the outset. Google is another example. It was started by two men who did not set out to conquer the internet but because they focused on events as they came, one at a time, greatness gradually happened.

Next, Michael brings up one of Ryan’s book chapters relating to being a student. He tells the story of Kirk Hammett, one of the greatest heavy metal guitarist of all time, being a student of Joe Satriani who is one of the most famous guitar virtuosos of all time. Hammett hired him when he was already on his way to being famous. Even with his success, he knew he still had plenty to learn from Satriani. Hammett was able to be humbled enough, even after being chosen as the new guitarist of Metallica, to hire someone who was an even better guitarist than him so he could continue to learn. Steve Jobs is another example that is brought up. Before he created the iPod and iPhone there were many other layers to his story. His story could have ended after he was fired and he could have become a cautionary tail for CEO’s to learn from but instead he became an inspiring story that everyone can learn positives from.

Michael and Ryan move into breaking apart the “10,000 hour rule.” Ryan says that it isn’t a real number. It is egotistical to think that once you hit that 10,000th hour that you will gain your success at that moment. Outcome is one thing, but the process is something else. If we could learn everything from a book that would be great but some lessons can only be learned from painful experiences. It is a balance between learning from your own experiences and learning from others. Landing on the other side of fear, failure, success, and aspirations can be a great feeling. Ryan says that each person is constantly at one of those points in their life. It is ever changing, but the worst thing you can introduce into any of those phases is ego.

Michael finishes the conversation asking Ryan if he thinks his message will translate to the younger “millennial” generation. Ryan says that this is something he had thought a lot about while writing his book.

In this episode of Trend Following Radio:

  • Letting other people win
  • Being seen not heard
  • Only the paranoid survive
  • Dealing with failure
  • Dealing with success
Direct download: 455.mp3
Category:general -- posted at: 10:00pm EST

Today on Trend Following Radio Michael Covel starts the podcast off talking about President Obama and his recent visit to Asia. Michael had an interesting bird’s eye look at the President’s visit. He describes the the reaction to President Obama’s visit and why Obama deserves credit for normalizing relations with Vietnam.

Michael moves into talking about free market systems and the necessity for them. Venezuela is a perfect example of a failed socialistic state. They are failing big time with no sign of recovery. Michael moves into reading from an article written by David Sirota from 2013. Sirota thought that Hugo Chavez was an amazing leader three years ago. However, in 2016 Sirota goes on to say that oil is killing the economy rather than socialism.

In this episode of Trend Following Radio:

  • Venezuela
  • Hugo Chavez
  • Negative interest rate policy
  • Trading off politics
Direct download: 454.mp3
Category:general -- posted at: 10:00pm EST

Michael Covel speaks with Daniel Shapiro. Dan is author of “Negotiating the Nonnegotiable.” He demonstrates negotiation as a process and quantifiable. His work tries to articulate practical negotiation skills based on the most recent science. Dan’s work started when he was working in eastern central Europe when countries were going from open, to closed societies. He wanted to help people deal with conflict more effectively especially the emotional side of it, and more specifically, dealing with identity. He looked at: Do relationships matter in negotiations? Do emotions matter? And how do you deal with them? He has spent the last 20 to 25 years learning how these intertwine. Dan’s website sums up his work perfectly saying, “Drawing on these experiences and his years of research at Harvard, he has developed a wealth of practical approaches to amplify influence and leadership—in business, in government, and in life.”

Dan and Michael start off discussing, “What gets us so stuck in emotionally charged conflicts?” This is a question that drives Dan and his work. In the early 1990’s Dan was working with refugee’s in Yugoslavia hoping to promote good communication. He was doing a workshop in Serbia where he met a women who shared a personal story of tragedy that has stuck with him for the last 24 years. His work is a homage to help people who may feel hopeless, like there could not be any more room for negotiation. Michael says, “Well aren’t there some situations where negotiation is not even on the table and things are just going to play out?” So often we get into ruts of feeling this way, thinking there is no possible way out, but more often than not there is always negotiations that can take place. There is always a way out.

Next, Michael asks, “Don’t both people need to be willing to negotiate to enter a negotiation?” The short answer is no. It only takes one side to move toward a resolution. Also, don’t ever assume that both sides of a conflict need to be rational. The classic challenge within conflicts that he sees is “How do you deal with an irrational person?” Everyone thinks that they are the rational ones and the opposite party is irrational.

Michael and Dan move on to discuss BATNA. BATNA is an acronym for; Best Alternative To a Negotiated Agreement. It is your “walkaway alternative”. Most people walk away to a worst situation than they were in. You always need to think rationally and not emotionally about your alternative. Lastly, Dan gives an overview of what he calls the five lures of the tribal mind; vertigo, repetition compulsion, taboos, assault on the sacred and identity politics. Dan expands and gives examples of these lures. He says that these concepts are obvious and everyone has experienced them. He just puts words to these feelings that people have so people can identify and help work through them.

In this episode of Trend Following Radio:

  • Negotiations
  • Self awareness
  • BATNA (Best Alternative To a Negotiated Agreement)
  • Five lures of the tribal mind
Direct download: 453.mp3
Category:general -- posted at: 10:00pm EST

Michael Covel breaks apart Bill Ackman and Valeant Pharmaceuticals. He reads from a MarketWatch article that highlights documents that came from a Senate committee investigating the Valeant scandal, and the various reactions of top people involved. Michael also outlines and comments on various interchanges between Bill Ackman, Warren Buffett, Charlie Munger, and news outlets.

This episode is a “behind the curtain look” at billionaire traders and the seduction of fundamentals.

In this episode of Trend Following Radio:

  • Fundamentals
  • Valeant vs. Enron
  • The Deep State
  • Fixing the media
  • Trading off price
Direct download: 452.mp3
Category:general -- posted at: 10:00pm EST

Michael Covel talks with Daehee Park and JT Marino. They are the owners and founders of Tuft and Needle, a modern mattress company. They met during college at Penn state, parted ways after college and then met back up in Silicon Valley at a startup tech company.

Two young men, who had never worked at a mattress store and were coming straight out of Silicon Valley, hardly fit the mold of mattress company tycoons. When they first started Tuft and Needle, the majority of questions they received all circled around how and why they came to enter the business of mattresses. The answer was quite simple; JT and Daehee started the company based on horrible personal experiences buying mattresses. After their experiences and talking about them together, the two sat down and wrote out all the painful things associated with shopping for a mattress and discussed how they could eliminate those experiences. They came to find out that their wasn’t any “love” or brand loyalty associated with a mattress or the company. This was something they wanted to change.

Since they started with zero mattress experience, Michael asks the obvious question, “What was the first step you took once realizing you wanted to be in the mattress business?” The first step was building up the list of negative experiences they had encountered with personally buying a mattress. Second step was trying to figure out, “What is a mattress? What is the science involved? What are the root principles? And working backwards from that.” They ripped open one of their own mattresses and figured out the components. After seeing the makeup of the mattress, they called around to manufacturers to figure out what it would cost to build.

Next, Michael asks “What kind of motivation did you have for disrupting the industry?” JT and Daehee only figured out the kind of traction they could gain after about a year. They didn’t know how big of an “old boys club” the mattress industry really was. However, their success has proved that there was definite need for disruption in the industry. The bar was set so low to begin with in the industry that they immediately started disrupting it in all areas: price, technology and service by just by listening to customer feedback. Even with increasing their marketing over the years, the majority of their growth is 70% organic and word of mouth.

In this episode of Trend Following Radio:

  • Marketing a company
  • Growing a startup
  • Product development
  • Importance of customer service
  • Creating art
  • Simplification of products
  • Venture capital
Direct download: 451.mp3
Category:general -- posted at: 10:00pm EST

Today on Trend Following Radio Michael Covel starts off reading a listener email from someone interested in making 3-4% every month with only 15% drawdowns. Michael gives his personal feedback as well as responses from Facebook after posting the email. The responses were mixed. Some people fully believed these kinds of returns are possible, while Michael and others said that if anyone is telling you they can produce 3-4% returns every month then it is absolutely a scam. Only Long Term Capital Management, Bernie Madoff, and some high frequency traders with insider trading access can tout such returns.

Michael finishes the podcast talking about the upcoming American elections. What is the alternative to Trump and Sanders? Hilary Clinton? Michael says that everything is an act with Clinton and that she’s a bona fide…[fill in the blank].

In this episode of Trend Following Radio:

  • Long Term Capital Management
  • Bernie Madoff
  • Leverage
  • Diversification
  • Indian Stock Market
Direct download: 450.mp3
Category:general -- posted at: 10:00pm EST

Michael Covel interviews Neil Pasricha. Neil is author of the New York Times best seller, “The Happiness Equation.” He is also author of the popular blog, “1,000 Awesome Things.” Neil brings great insights on finding happiness and staying positive.

Neil starts the podcast sharing how his success started. During his first years of gaining notoriety for teaching about happiness, he actually wasn’t happy himself. He was going through a divorce, hardly sleeping, and still working a full time job at Wal-Mart management. His creative output was nothing. He ended up falling in love with a women and that ended up shifting his thinking. He went from observing awesome things, which he is probably most known for, to the application of integrating those awesome things into your life, such as “How do you live a happier life?” “The Happiness Equation” started as notes to Neil’s unborn son. He essentially wanted to write down everything he wanted him to know about life.

Neil details some of his techniques on how he starts writing a book. He is a huge believer of “the note card system.” For a few years he carried note cards around and wrote down any thoughts or tidbits that he would see during the day that were interesting. This is a great example of placing action before motivation which is critical to reaching goals. Neil says that taking small steps is the key to success. Michael brings the conversation back to Neil’s book and happiness. The first thing that pops up on Google search when you type in “how to be” is “how to be happy.” Everyone wants to be happy but they are struggling, searching, stressed, and looking for balance.

The traditional way of thinking is, “Study hard, get good grades, and you will be happy.” Neil says that you should flip that upside down and work on; being happy, then doing great work, and then you will have big success. All studies show that choosing to be happy above all other things leads to a better life. The healthiest societies in the world do not have retirement. Instead they focus on loving what they do throughout life. People need to have a challenge and a way to stimulate the mind and body. Retirement, for most, tends to put an abrupt halt to those things. Michael ends with taking quotes from Neil’s book and having him elaborate.

In this episode of Trend Following Radio:

  • Happiness
  • Retirement is a lie
  • Loving your work
  • The lottery
  • The note card system
  • Criticism
  • Goals are never ending
  • Having less wants in life
Direct download: 449.mp3
Category:general -- posted at: 10:00pm EST

Today, Michael Covel interviews Mike Lofgren. Mike’s new book is titled, “The Deep State: The Fall of the Constitution and the Rise of a Shadow Government.” We are in a world where everyone thinks their vote matters and that the next President will fix all of America’s problems.

Michael starts the podcast off reading an excerpt from Lofgren’s new book. The two dig into expectations that people had for George W. Bush. As he failed, the people then voted in Barack Obama. Obama failed to meet people’s expectations as well. Lofgren explains what he describes as a “deep state” phenomenon.

Next, Covel and Lofgren dig into: “Does our vote really matter?” Lofgren says that whoever is elected President matters on the margin. The general vector of who gets what, what the general distribution of income is, and what our general foreign policy is, is going to be pretty much the same no matter who is elected. However, Donald Trump and Bernie Sanders are so far out of the box that they may change those norms because of how out of distribution the system has become. The public knows something is wrong. Trump and Sanders have, at the very least, shaken up the political structure regardless of if they win the election or not.

Lofgren goes into economics and military next. He doesn’t look at economics and military as separate entities. He sees all arms of government as intricately intertwined. When you see a change in the economics of the country, you can see just as large of a shift in the military and vice versa. Michael and Lofgren also discuss Dick Fuld and the Lehman Brother collapse.

Michael moves on to ask, “Why aren’t their more whistle blowers coming out of the government?” Lofgren says that it is largely because people don’t want to go to prison. More people are being charged with espionage in America than within any other government. Michael and Lofgren continue to dig into depth about politics, corruption, and Wall Street for the rest of the podcast. Michael ends asking Lofgren, “Is there really anything on the horizon where this deep state entrenchment goes away?”

In this episode of Trend Following Radio:

  • The deep state phenomenon
  • Military industrial complex
  • Vietnam War
  • National debt
  • Negative interest rates
  • Capitalism in communist countries
  • Does your vote matter?
Direct download: 448.mp3
Category:general -- posted at: 10:00pm EST

Michael Covel interviews Ben Hunt. Ben is the Chief Risk Officer at Salient Partners and the author of “Epsilon Theory.” This is his second time on Trend Following Radio. He has an interesting way of looking at capital markets–through the lens of game theory.

Michael and Ben start the podcast off talking about buy and hold and why the strategy does so poorly. Ben moves on to break apart monetary policy and domestic politics and how they are intimately intertwined. When you have a world of massive debt, like we do today, then deleveraging naturally should take place. Instead, in today’s world you have the ownership of that debt shifted from private entities taking responsibility of it, to the government.

Central bank policies are always a direct reflection of the politics that are going on in the big four economies that drive the world; U.S., China, Europe, and Japan. The domestic political interactions going on in those countries are what you see in the world’s economics. This leads to cooperation during economic crashes, for example, during the great recession. Countries inflate their economy to get out of economic crashes. Going to a lower or negative interest rate is a perfect way to devalue a countries currency. Right now, we are moving from a positive sum on trade, to a zero sum on trade and Ben says that the outcome is very predictable. He says that we have seen this movie before and it isn’t hard to see how it is going to play out.

Michael brings up Ray Dalio and asks the question, “Why are all these companies putting their money in one place, with one company and with the same model?” Ben notes Ray Dalio’s massive amount of money that he manages and what Bridgewater (his company) has created is an easy process that is implemented in an automated and quantitative system. The whole notion of having a rigorous process and managing clients money within that process is Bridgewater and Dalio’s most widely spread influence. Bottom line, instead of trying to predict what is going to happen we need to try and react quickly to circumstances.

In this episode of Trend Following Radio:

  • Monetary policy
  • What drives the value of currency?
  • Economics in recessions
  • Systematic models
  • Central Banks
  • Policy controlled markets
  • Expectations of the public markets
Direct download: 447.mp3
Category:general -- posted at: 10:00pm EST

Michael Covel talks political correctness. Americans take regular issues, and blow them up to the extreme. We see it 24/7. In addition, there is massive abundance, arguably a distraction to the freedom to make choices. Is the freedom to make your own choices even real?

Michael reads excerpts from an article by Josh Brown titled, “Abundance.” He makes the case that abundance is now the enemy, which sets our economy apart from every other culture in history. For example, so much entertainment is free these days; movies, video games, apps, dating websites, music, the list goes on. People are taking paid versions of products and producing cheap and free versions. Josh points out that a year ago he was writing about scarcity, now its abundance. We use to have pop culture or a #1 hit TV show or hit band. Now there are 50 different sub cultures and genres.

But abundance is killing us. Josh notes that it would be best if there was a major flush of the system. Capital needs to be exchanged and shifted. The imbalances we are experiencing will inevitably correct and restart, it’s only a matter of when. Michael stresses that you need to have an investment strategy to prepare yourself for that inevitable correction. You need an investment strategy to take advantage of the next crash, as well as save yourself from the next crash.

In this episode of Trend Following Radio:

  • Ego
  • Preparing yourself for the next crash
  • Abundance
  • Downfall of the economy
Direct download: 446.mp3
Category:general -- posted at: 10:00pm EST

Michael Covel interviews Parag Khanna. Parag is an international relations expert, a CNN Global Contributor and Senior Research Fellow at the National University of Singapore. He is also the Managing Partner of Hybrid Reality, a geostrategic advisory firm, and Co-Founder & CEO of Factotum. Parag’s new book, “Connectography: Mapping the Future of Global Civilization” recently came across Michael’s desk. The concept of connectivity does not just relate to mobile phones and Skype. There is a very physical and tangible evolution of connectivity that can be boiled down into three categories; transportation, energies and communications.

Michael and Parag start the podcast off touching on what connectivity is and then dive into the relationship between cities and states. Parag says that there is not one single successful state that is not built upon the stability of their successful cities. We have more mega and viable cities than states in the world. Cities are the drivers of growth. More mayors are sitting heads of states or presidents nowadays than any other time in history and think of themselves as CEO’s rather than politicians.

Next, Parag elaborates on supply chains. The diversity of products available today is truly global. A product can have digital design from Silicon Valley, assembly in China, and a call center for product customer support in Vietnam. As a business, the combination of infrastructure investment and connecting through supply chains to global markets makes you a real player in the economy. Michael brings up the economical impact that globalization has made, in particular to taxes. Apple is working with Ireland to keep their investments outside the U.S. More and more companies are realizing that they can operate over “the cloud.” Markets are everywhere and sales are everywhere so investments should be able to be everywhere as well. American politicians have been counter productive in trying to capture taxes from some of the biggest companies in America.

Michael brings the conversation back to China and their infrastructure. China has made a global plan to help counties boost their infrastructure. They are spending their own money to help gain trust and also smooth the flow of goods in and out of developing countries by building railways, airports and shipping ports. Most of the world trade growth is happening across the Indian Ocean because of the Chinese.

Next, Michael brings up country borders and the reservations citizens may have about immigrants. No country has gained more from accepting immigrants into their society than America Parag argues. Parag says that unfortunately people are acting more with their hearts rather than acting on the data. There are far more benefits to welcoming immigrants into societies as opposed to shutting them out. People talk about globalization doing us wrong. It is not. It is political governments that are failing. Policies in politics are the problem.

Michael and Parag finish up discussing the booming rise of Dubai, and how the city is a perfect example of infrastructure growing a city. Dubai has thought strategically about all their expansion, from their roads to their buildings to their education system. It’s a place that represents a leap in quality of life for people who are on the move and doing different things.

In this episode of Trend Following Radio:

  • Supply chains
  • Connectivity
  • Cities vs. State
  • Chinese infrastructure growth
  • Trade
  • Trust among China’s neighbors
  • Territory borders
  • Globalization
  • Winners and losers in the 21st century
  • The idea of “not in my backyard”
  • Growth of Dubai
Direct download: 445.mp3
Category:general -- posted at: 10:00pm EST

Michael Covel starts off reading an email from a listener asking, “Do all trend followers use spreadsheets alone to trade? Or do they also use charts for visualization? I am having a hard time trading using a spreadsheet alone and I tend to need to see a chart. It provides the visualization I need.” Michael responds saying “What does the visualization do? Are your trading decisions based on the price or visualization of a chart?” You don’t need charts or multiple monitors streaming at a time. That is not how the best traders trade.

For the remainder of the episode Michael leads with a presentation from Gregg Popovich, the head coach of the San Antonio Spurs basketball team. Gregg talks about organization, discipline, player relationships (between players and the coach and between players and players), and the importance of being comfortable enough in your own skin to take advice from others, among many other subjects. You can’t begin to execute a trading rule until you have sound philosophical grounding. It starts with the right mentality and imagination, and Gregg is a perfect example of this. There are countless lessons to be learned listening to Gregg’s presentation. His outlook is applicable to anything you could want to do in life whether it be starting a business, trading, or running a marathon.

In this episode of Trend Following Radio:

  • Why cultivating your second string is so important
  • Foreign players vs. U.S players
  • Accountability
  • Importance of honesty
  • Having the same standards for everyone
  • Importance of humility
  • Execution
  • A different perspective on goal setting
  • Looking at the big picture
Direct download: 444.mp3
Category:general -- posted at: 10:00pm EST

Michael Covel speaks with Simon Black. Simon is an investor, entrepreneur and the founder of Sovereign Man. He has a travel perspective that has given him unique insights on freedom, making money, keeping as much of it as possible (and protecting it from the government whatever government that may be).

Michael starts off the podcast asking Simon, “I want to know your story. How did you go down this path? How did you start?” Simon’s journey started in the military. He went to West Point. Upon graduation he was commissioned as an Army intelligence officer and stationed in the Middle East around the time Bush was accusing Saddam Hussein of having weapons of mass destruction. As the U.S. was gearing up for war, it became abundantly clear that it was all a lie, and Simon realized that if the president would be willing to go to war over something that was so false, then what else would the government be willing to do?

Simon breaks down the idea of currency. He says that everyone should have physical cash money. There are different forms of money or “legal tender.” One form of currency would be U.S. government bonds which are used by large entities. Another type of money is banking accounts. That is what most of us use. 90% of the money supply is in banking accounts, otherwise known as in digital form. Most people have their money in a computer stored in a windowless building somewhere. Physical cash is another form of money. It is the money you see in your had. Those are three very different forms of money, however they all happen to trade at a 1-1-1 exchange rate. That could change at any point. Simon urges that everyone should have physical money at their disposal in the case that banks shut down our ability to withdraw.

Michael and Simon talk travel next. Modern transport technology has made travel simple and given people a unique opportunity to see different places and cultures. Simon makes the point that freedom is a state of mind, it isn’t necessarily attached to travel. Every country has a unique vantage point such as great health care or education. Simon talks about health care in particular and the cost differences in the U.S compared to certain places in Asia.

The thrust of today’s podcast is to point out that everyone should be responsible for his or her own security and safety. One should be sovereign over his or her own life, experience freedom and live independently. Challenge the status quo. Think outside the box, whether that be choosing your healthcare, profession, or where you want to live. Think differently.

In this episode of Trend Following Radio:

  • Health care
  • Banking system
  • Government
  • Travel
  • Breaking the rules
Direct download: 443.mp3
Category:general -- posted at: 10:00pm EST

Today on Trend Following Radio Michael Covel reads Sam Hinkie’s resignation letter, former general manager of the Philadelphia 76er’s basketball team. His management strategy was stats driven. Sam talks about how critical it is to focus on process and not be fixated on the outcome. Process you can plan out and control, you can’t always control the outcome. The point Michael aims to make by reading the letter is not to show whether Sam was a good or bad GM. His wisdom is something we should all not just consider, but wisdom we should learn from.

In this episode of Trend Following Radio:

  • Thinking about thinking
  • The importance of intellectual humility
  • The necessity of innovation
  • The longest view in the room
  • A contrarian mindset
  • A tolerance of uncertainty
  • Be long science
  • A healthy respect for tradition
  • A reverence for disruption
Direct download: 442.mp3
Category:general -- posted at: 10:00pm EST

Michael Covel interviews Jesse Lawler. Jesse is the host of Smart Drug Smarts, a podcast that is centered around supplements people can take to augment brain function. He has an out of the box perspective on health, fitness and enhancing cognitive performance.

Michael and Jesse start the conversation off with the question, “What is healthy?” Some athletes that can perform amazing feats are actually destroying their bodies to get there, so are they really healthy? Mind and body can be at total odds when it comes to health. Jesse breaks open the idea of cognitive performance and where a good starting point is when trying to increase your performance. He says your brain is meant to do everything. It is a universal machine that does things that we are, and are not aware of. To improve performance of the brain, there are a variety of things one can do. He breaks it down into four categories: Mood, focus, creativity, and anxiety. Jesse goes in depth on different supplements you can take to improve your focus (in particular) such as increasing your dopamine.

Jesse and Michael talk about how Jesse rode his bike from the west coast to the east coast in about 5 ½ weeks. Michael asks “Why do you think you are constantly experimenting?” Jesse says there are a lot of things that you can’t get the gist of without going through the experience. He wants to continue to understand, and maintain his brains capabilities to keep up with the evolving world.

Jesse moves on to explaining what nootropic drugs are and the cognitive effects of them. He is not a doctor but has given himself an education over the last few years by immersing himself in these subjects and talking with field specialists such as doctors or pharmacists a couple times a week. Michael asks about jet lag and how to beat it with different techniques. Jesse says that one of the best ways to beat jet lag is by fasting until it is dinner time at your new destination. Overdosing on tea or coffee can be a good way to stave off the hunger if you choose to use this method. Another trick to help beat jet lag is taking particular weight loss drugs to help you stay awake until it is bedtime at your new destination. Lastly, Jesse talks about some of the more popular drugs on the market such as marijuana and ecstasy and his views on them.

In this episode of Trend Following Radio:

  • Cognitive performance
  • Effects of caffeine
  • Augmenting brain function
  • Dealing with mood, focus, creativity, and anxiety
Direct download: 441.mp3
Category:general -- posted at: 10:00pm EST

Today on Trend Following Radio Michael Covel talks about personal responsibility. Michael brings in basketball references from the Boston Celtics and their head coach Brad Stevens. He goes into the accomplishments of Stevens as a coach and as a quant. Stevens coaching is all about numbers and probabilities.

Michael plays a clip from Chris Mannix of the Vertical Podcast with Brad Stevens. Stevens explains how he uses statistical analysis in his coaching and how the “best of the best” like to be coached. Most don’t care about a numbers to numbers speech but everybody wants to know how they can best play and attack situations. Michael circles the conversation back to trading markets and trading on the numbers. Mannix then asks Stevens if coaching is just coaching being on an NBA sideline as opposed to other sidelines? He says that the longer he has been a coach the more he has been able to take emotion out of the game and it has become a job. By the time a game nears the end he isn’t even thinking of the game, he is thinking of the next practice, and how he can make the team better.

Michael ends with reading interview questions that were asked to Stevens; “Is your calm demeanor a part of your coaching philosophy?” He says that his philosophy is doing 99% percent of the work behind the scenes and hopefully that is enough to prepare him for the next game. He is always thinking about the next play, therefore you will not see him doing cartwheels on the sidelines very often. Stevens is also asked, “How is the style of play at the professional level evolving?” He says the game use to be about height and weight as opposed to skill. The game is now being flipped around.

In this episode of Trend Following Radio:

  • Process vs. outcome
  • Sports and trading analogies
  • Statistical thinking
Direct download: 440.mp3
Category:general -- posted at: 10:00pm EST

Michael Covel, author of Trend Following, The Complete TurtleTrader, The Little Book of Trading, and Trend Commandments, introduces his podcast--Trend Following 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 course to your home or office: www.trendfollowing.com/ecourse.

Direct download: 439.mp3
Category:general -- posted at: 10:00pm EST

Today on Trend Following Radio Michael Covel discusses scams and what can be learned from them. Any scam that takes place today, we have seen before. In the early 2000’s Enron was at the height of its game. Turns out they had a fake trading floor set up just to convince Wall Street they were real. At Enron’s peak, their company was trading at $90 a share. When it crashed, their stock traded around $0.50 a share. And that story brings us up to current day with the latest Enron.

Michael continues to read more feedback, but this time from a listener of his podcast seguing him into the current blowup of the pharmaceutical company, Valeant. Valeant’s share prices went from $250 to $30 in short order. Even as the stock was crashing people were buying the hype and false fundamental information. Michael reads from sources such as Jim Cramer, Morgan Stanley, and Valeant themselves. He then connects articles from Enron’s press releases back in 2001 before their crash and press releases from Valeant in 2016. Quotes from both companies CEO’s have strikingly similar comments on their companies as events led up to their falling apart.

Bottom line, if you are in a stock that goes from $250 to $30…You screwed up. There is no reason for that except you. When the numbers say exit, you exit. Ego must be left out of your trading. Michael ends with excerpts by Steve Sjuggerud. Check your ego at the door, have a stop loss, and stick to your plan.

In this episode of Trend Following Radio:

  • Ponzi schemes and scams
  • The Enron scandal
  • Valeant meltdown
  • Ego in trading
Direct download: 438.mp3
Category:general -- posted at: 10:00pm EST

Michael Covel interviews Anders Ericsson. His new book is “Peak: Secrets from the New Science of Expertise.” Starting around high school, Anders became interested in how he could best improve himself. When he got to college he studied how people could achieve above average performance. He did a study showing the number of digits average people could repeat back correctly. The average number was about 5-7 digits. After an hour of practice they were able to repeat about 20 digits correctly. With even more training one student was able to get 70 digits in a row. This showed Anders that the mind can improve with the right kind of practice. Performance is trainable and purposeful practice is key. One major component of successful practice is immediate feedback on whether you are accurate or not.

Michael moves onto a study Anders did on taxi drivers in London. They have to go through extensive training to drive the streets of London. They are average people, but train for many years to be able to pass this taxi driving test. After learning over 10,000 streets and different connections there brains actually changed. He compared bus drivers in London, who did not have to go through the same training, to the taxi drivers. The same changes did not occur in bus drivers brains like the taxi drivers. They did not have to master all the streets but rather just master certain routes. Michael asks, “If they stop their taxi driving profession, does the brain regress?” Anders says that yes, without practice your mind will revert back to the old state.

Next, Michael and Anders use Mozart as an example of nature vs. nurture. His father was a musician and taught young children how to play instruments. Mozart was able to learn many of the musical distinctions that he was famed for because he started so early, around age 3-4. Any child at that age is able to learn the things Mozart learned, however it is virtually impossible as an adult. This moves into the idea of brain plasticity. It is important to realize that you can’t push your child to learn longer than they want to learn for. About 30 minutes is their limit. Beyond that, they lose their capability for deliberate practice. Deliberate practice helps raise the bar and get you better than you were before.

The next example of extraordinary talent brought up are master chess players. They don’t look at pieces individually, but rather base their actions on pattern recognition. They see structure and see where attacks may be successful. Grandmaster chess players are able to play blindfolded and against 25 or so people simultaneously. These are skills that are acquired and practiced. Stephan Curry is also used as another great example of an extraordinary achiever. If you understand the practice an individual does then you can see their improvement over time. Michael asks, “Has anyone said that their improvement was easy?” Anders said that he has been studying this subject for over 30 years and about 50 people have said that improvement came easy, but after talking for a few hours, their answers change. Michael then asks about the validity of the idea that 10,000 hours makes you an expert. Anders says he hasn’t seen that 10,000 hours is a magical number. You need a lot of practice, but there are no magical boundaries. When people count the number of hours that they have done something, and it happens to add up to 10,000 hours, then that doesn’t make you an expert. For example, if you have driven 10,000 hours, that doesn’t make you an expert.

Lastly, Michael circles back to the importance of deliberate practice asking about the difference between youngsters and older people seeing the benefits of deliberate practice. Anders says that unfortunately most younger people that are so focused as a child in their performance don’t go on to have careers in the field they were pushed into. Those who chose and want to be in the sport they are in usually go on to continued success. Deliberate practice alone doesn’t make you successful. You need to have a sincere desire for what you are doing.

In this episode of Trend Following Radio:

  • Discipline and practice
  • Solo and group practice
  • Flow state
  • Social Motivation
  • The late birthday rule
  • 10,000 hours of practice
  • Nature vs. nurture
  • Brain plasticity
Direct download: 437.mp3
Category:general -- posted at: 10:00pm EST

Michael Covel interviews Tom Bilyeu. Tom is the co-founder and president of Quest Nutrition. He is the consummate entrepreneur who went from running a successful tech company to starting all over and developing Quest Nutrition. He has created his own narrative for entrepreneurial greatness.

Tom started out as what he would describe as a “good employee,” with never questioning the system. He didn’t take high school seriously but when he started college he buckled down. He heard that the brain doesn’t stop developing until the age of 25 and that helped shape a large part of his 20’s. Watching ‘The Matrix” at age 22, he realize that he wanted to be in control of his own life. Around age 26 he met his business partners with whom he would start his first company.

In 2012 his tech company was named the 42nd fastest growing tech company in North America. Soon after that, he had a talk with his partners letting them know he wasn’t happy, wasn’t having fun anymore, and wanted out. His partners felt the same way, and they proceeded to sell their company at the height of their success. Quest Nutrition came out of the folding of their prior company. They chose to go into the nutrition business by asking themselves “How can we deliver value to people.” Tom and his partners were told over and over again by factories that they were not able to produce the product they wanted to make, and the factories were right. They ended up buying their own equipment and re-engineering it to produce a nutrition bar unlike any other on the market.

Tom says that the combination of unbelievably good tasting food coupled with horrific ingredients makes for the worst kind of drug. Sugar affects the brain just like dopamine. Evolution has instilled a need for sugar in our brains and has brought us where we are now. Tom spent a long time learning about, from a metabolic state, what is nutritious for your body. The “auto pilot thought process” is one thing that Tom really works with people on. He works with people to focus on what their subconscious is telling them to do, and decipher what is right from wrong.

Michael asks Tom to go into international regulations. He says that dealing with all the different regulations can make a person go crazy. He doesn’t think that we should legislate sugar or saturated fat out of people’s diets. People should be able to have free choice. Tom’s life has been based on mastering one baby step after another and accomplishing everything with discipline and practice. Whether you are trying to get better in leadership, finance, or in relationships, everything is a learning experience. The more you attack something the more it continues to get better.

Lastly, Tom talks about letting go of the need to be right. He got to a point where he built his self esteem around being right. He soon realized that, that was actually helping him move further away from his goals. He switched his belief system over to focusing on identifying the right answer faster than anyone. There are so many that just want to protect their ego with being right, but as soon as they learn to let that go, a whole world opens up.

In this episode of Trend Following Radio:

  • Discipline and practice
  • The Quest belief system
  • Escaping the Matrix
  • Tom Bilyeu’s ultimate reading list
  • Being authentic
  • Obesity
  • Autopilot thought process
  • Letting go of being right
  • Reaching your true fans
Direct download: 436.mp3
Category:general -- posted at: 10:00pm EST

Michael Covel interviews Steven Pinker. Steven is a Canadian-born American cognitive scientist, psychologist, linguist, and popular science author. He is Johnstone Family Professor in the Department of Psychology at Harvard University, and is known for his advocacy of evolutionary psychology and the computational theory of mind. He covers phenomena that have traditionally not been looked at scientifically such as: visual perception, war and peace, and differences in writing styles. He has authored numerous books with his most recent being, “The Sense of Style.”

Steven knew he was an atheist from the age of 13. He never had a big revelation because God was never a real part of his consciousness. However, his religious awareness as a young man helped to guide his career into using science, and science only in his research. He puts science as the decider of “what is.”

Michael asks, “How has human behavior been shaped by evolution.” Steven based his book, “The Blank Slate” around the idea that humans aren’t born with a blank slate. He says that to have the ability to analyze speech and comprehend speech you have to have something there at birth. If the mind has a built in structure, where did it come from? Steven argues it comes from evolution and natural selection. He uses a combination of cognitive science and evolutionary psychology to back up his theories. He also covers why there has been so much controversy surrounding the idea that we are not born with a blank slate and why our common sense so often clashes with our political conviction. One reason he offers is because many think the idea of equality means that we should be indistinguishable, essentially like clones. He argues that fairness should not be based on sameness.

Michael goes back to the blank slate concept and asks, “Are we born good or bad? And explain what you have learned throughout your career about the evolution of language.” Steven says we have some good and some bad. The brain is massively complex and layered. There is so much going on in the brain when someone speaks and when someone listens and retains the information. Eggs and sperm have about 70 mutations. That is how we have natural selection that makes someone run faster, see better, think faster, etc.

Next, Michael and Steven dive into the history of violence, where it came from and where we stand today. Steven says you can’t get an accurate view of violence from the news. They find the worst violence and promote it. The rate of homicides have plummeted over the years. There are far less wars going on now than in the 60’s, 70’s, 80’s and so on. Since the end of WWII there has been a steady decline. Civil wars have still occurred but they are far less plentiful than they use to be and death rates are also less than they use to be. Steven’s next book, due to be published in 2017, is a defense of science, reason and humanism as a source of aiding in morality.

In this episode of Trend Following Radio:

  • Evolution
  • Natural selection
  • War statistics
  • Cognitive science
  • Evolutionary psychology
Direct download: 435.mp3
Category:general -- posted at: 10:00pm EST

Michael Covel brings a different perspective to countries and cultures. He starts off reading an article by Simon Black, “Việt Nam will become one of the top expat destinations in the world.” Due to China’s growth in the last 10 years they can’t compete making cheap goods like they have in the past. That business is moving to Việt Nam. The lifestyle that you can achieve in Việt Nam for a moderate amount of money is amazing. They have high quality at an inexpensive price. They are making it easier for locals to earn more money and thrive. Things began changing in the late 1980’s when the communist government opened up and encouraged private business.

Michael moves on to talk about his recent trip to Myanmar (formerly Burma). It was colonized by the British, but in 1948 Myanmar declared their independence. Their borders were closed off for about 50 years after that. Around 2011 they opened the borders to foreigners again, and in 2015 they held their first elections. There are 50 million people currently living in Myanmar. Now, there is a buzz about the country that shows they are clearly moving forward. The ethnic diversity is immediately apparent, and the hustle for commerce is everywhere. People there are beautiful, friendly and energized. The lessons for all of us are there staring back at us.

Michael encourages everyone listening to get on a plane and go. Go travel. Capitalization in America has made starting anything nearly impossible. People and commerce in other countries have more drive and ambition to make something happen. Don’t let the system control you. The system is rigged. Michael ends with a clip from comedian George Carlin on government control.

In this episode of Trend Following Radio:

  • Capitalization
  • George Carlin clip on “The American Dream”
  • History of Myanmar
  • Growth of Việt Nam
Direct download: 434.mp3
Category:general -- posted at: 10:00pm EST

Michael Covel interviews Catherine Stott. Catherine is author of, “Hypnotrading: A practical guide to using hypnosis and NLP to improve your trading performance: Self-hypnosis and psychotherapeutic techniques for traders.” Catherine believes that hypnotherapy and neuro-lingustic programing can help traders defeat inner challenges and become more successful. She got started working with traders after helping a friend, who happened to be a trader. He helped her understand the world of trading a bit more throughout their sessions and this ignited her interest deeper. She has been helping traders for years but didn’t start HypnoTrading until 2014.

Catherine was working as a psychologist when a friend referred her to see a hypnotherapist. She started to see the hypnotherapist for stress relief in her work and personal life. She was intrigued by the therapy so much that she switched career paths and sought training as a hypnotherapist. Hypnosis is essentially being in a deeply relaxed state of mind. It is an open state of consciousness, but you are fully in control of your thoughts. The first time Catherine experienced hypnosis she found it incredibly relaxing, and thought “I can’t believe that just happened, why haven’t I done this before?” Catherine dives deeper in the different steps she goes through in her sessions to get people in that relaxed state.

When Catherine trained as a hypnotherapist, part of the training was in NLP. Hypnotherapy and NLP are two different practices buy when used together they can be very powerful. An example of using the two fields together would be to associate pain with a color or a shape. It gives the client a way to view pain in a tangible way. They are able to think about that pain as an object that can be picked up and taken out of their body.

Michael moves on to asking, “How do different trading styles play into how you treat patients?” Catherine explains that there are certain universal techniques in hypnotherapy. When it comes to traders, the goal is to find the right trading style that works for them. There are many methods of trading and people should find the one that fits their personality. For example, some people are not built to use a strategy with precise rules and vice versa, some are not cut out for the fast pace of day trading.

Lastly, Michael and Catherine dive into the idea of modeling and goal setting. Modeling is a process of looking at other people and what they do, and essentially modeling that. One way to change yourself for the better is to mimic others who are successful in the field you are trying to master. It is a way of seeing what your results will look like. Modeling helps refocus. The majority of people may not have the chance to get next to a great trader, but everybody can get close to those insights through the written word or videos online. Find people that reflect your values and the style of trading that you want to achieve. There are thousands of trading books out there; you need to weed out what will work for you. Break down what you want to achieve and how you are going to achieve it. Defining your goals and how you want to achieve them is key.

In this episode of Trend Following Radio:

  • Stress vs. anxiety
  • Meditation vs. hypnosis
  • Being in a relaxed state
  • Negative self talk
  • Fear of success
  • Modeling
  • P-A-C-E-R
  • Luck and expectation
  • Defining goal setting
Direct download: 433.mp3
Category:general -- posted at: 10:00pm EST

Michael Covel talks about shaking up the establishment, referring to Trump and the presidential race. He sees hope that the political establishment could take a hit and just maybe a dent in the political health of America could happen. He isn’t saying that he would get great legislation through, or solve world peace, but he might shake up the political arena and detour the agendas of some special interest groups.

Next, Michael leads into discussion of the lottery, banks, and government. The lottery has become one of the biggest cons by government directed at the lower to middle class. They have convinced people that playing the lottery is a form of investing for their retirement. Michael plays a clip from the Virginia state lottery. They found a Jim Cramer look alike to get people to think of investing as they talk about playing the lottery and saving for the future.

Michael moves into reading an article by Barry Ritholtz that was written in January of 2016 when the Powerball prize was around 1.5 billion dollars. He makes the point that Americans spend 70 billion dollars a year on the lottery which is more than they spent on sports tickets, books, video games, movie tickets, and music plus all types of apps, games and programs bought from Apple’s iTunes app store combined last year. Barry then asks the question, “Is investing gambling?” His short answer, “Your goal as an investor should be to eliminate as much of the element of chance from your process and like the house, stack the odds in your favor… How do you become the house? You understand the nature of risk, are comfortable with the idea of uncertainty, rely on long-term measures of valuation, use mean reversion as a guideline to unknown future outcomes, allow time to work in your favor, understand the impact of leverage, recognize the folly of relying on forecasts, consider all possible outcomes; including extremely rare black-swan events, and accept that some losses are inevitable.” Above all, he makes the point that even though you have full control over how you invest, you do not have complete control over the outcome.

Michael ends with the nonsensical idea of government achievement. He says that we need someone who leads by example rather than telling us what the next government hand out will be.

In this episode of Trend Following Radio:

  • Trump as President
  • Lottery and Powerball
  • Changing American politics
  • Getting something for nothing
Direct download: 432.mp3
Category:general -- posted at: 10:00pm EST

Michael Covel interviews Bill Bonner. Bill is author of “Hormegeddon: How Too Much Of A Good Thing Leads To Disaster.” He has made a career out of skepticism. That skepticism started right out of college as he helped a friend start a grassroots organization, The National Tax Payers Union. There, he was able to get an inside look at government. It was during his lobbying for this grassroots organization that he saw the true motivations of politicians.

Bill and Michael start the conversation off talking about having too much of something, good or bad. Everything in the world, when you get too much of it, it is bad. Bill uses Germany as an example: When Hitler first got into power, his message to the people was more security. As Hitler kept gaining more power, the government took more control and things began to fall apart rapidly from there.

Next they talk about negative interest rates. There is a social contract being broken by the use of negative interest rates. Bill says the whole idea of work leading to output, leading to money, leading to investment, which leads to further output all falls apart with negative interest rates. Negative interest rates don’t stimulate the economy, they actually lead to people hunkering down and saving more money. This segues into the next topic of myth and reality. Myth plays a large part in society. Our conception of government is based on myth, and our idea of how government operates is far different than the reality of how it is actually run.

Michael and Bill move into discussing how internet has connected people and put information at everyone’s fingertips. However, it has proven too difficult for people to sift through all the information and find the wisdom inside it rather than the noise. Bill brings up a poll that was done by the National Constitution Center. The poll said that 41% of Americans are not aware that there are three branches of government. 62% of them cannot name what the three branches of government are, and 33% of them cannot name a single one of the branches. Americans can’t be shocked that a government doesn’t work the way it “should” work when they don’t even know how it “should” work in the first place.

Lastly, Michael and Bill talk about prediction and crashes. Since 1970 there has been seven recessions. Economists were able to predict none of them. Even in early 2008 when everything was crashing, not a single economist thought we were heading into a recession. This just shows how little the government basis their studies on facts but rather on human judgement. Bill says that unemployment is a great example. Unemployment rates aren’t subject to scientific analysis, they are subject to human analysis. The GDP growth rate is made up of the same kind of fictitious numbers and based on human judgment. It is more a measure of how quick people are going into debt not if they are better off in life.

In this episode of Trend Following Radio:

  • Declining marginal utility
  • Unemployment
  • Negative interest rates
  • Myth vs. Reality
  • Government polling
Direct download: 431.mp3
Category:general -- posted at: 10:00pm EST

Michael Covel starts the discussion off with Mark Zuckerberg and the virtual reality realm we are entering. There is now an infamous picture of Mark Zuckerberg walking down an aisle with a huge audience behind him hooked up to helmets. All audience members are in a virtual reality. Michael bridges the gap between speculative follies of the past, with the virtual reality bubble we are about to embark on.

David Harding and James Holmes wrote a book titled, “The Pit and the Pendulum: A Menagerie of Speculative Follies.” Michael reads an excerpt from the book, giving a historical narrative about how people have behaved over the centuries. People always get excited about something new, and that “something new” historically always seems to crater and crash. The chapter Michael reads from is titled “Basking in an Indian Summer: The Bombay Share Mania of 1865.” The excerpt relates to cotton exports during the American Civil War. Bombay saw massive profits in cotton and silver due to cotton exports being halted in America during the war. Due to the boom in the economy Bombay saw huge expansion in their commercial sectors. Investors were only focused on the short term rather than long term.

When the American Civil War ended the Indian economy hit depression. Banks went bankrupt and the housing market crashed. The Bombay commercial world went totally bust. This is only one of many speculative examples that are in “The Pit and The Pendulum.” History always repeats itself. All speculative follies go down the same path. The only difference is the name or market caught up in the mania. Whether it be technology, cotton, or tulips, it’s all the same. How do you protect yourself from the next big mania? Educate yourself and have a strategy in place.

In this episode of Trend Following Radio:

  • Bombay cotton market 1865
  • Bubbles and mania
  • Profiting from the speculation
  • Having a plan in place
Direct download: 430.mp3
Category:general -- posted at: 10:00pm EST

Today on Trend Following Radio Michael Covel interviews Jim Rogers. Jim is a famed American investor based in Singapore. He was co-founder of the Quantum Fund, and has authored numerous books. Today’s conversation is geared toward the central banking system and the direction Michael and Jim think the world’s economy is headed.

Michael starts the podcast off talking about negative interest rates and if that is a possibility in the U.S. Jim brings up a study published in 2007 that said, “We have the Federal Reserve, we have 1,000 of the most brilliant economists in the world how can we be wrong? How can people say that we are wrong?” Jim says that for the last 30 years the Fed has done just that. They have gotten just about everything wrong. Janet Yellen has been getting everything wrong since before she was even head of the Fed. She blames her blunders on the market being wrong or the public being wrong. According to Jim, every head of the Fed has been an academic and political hack.

Michael posits, “Everyone should be able to imagine another stock crash, we have had enough of them.” Jim says that the debt is staggering right now so when we have a crash it is going to be utter chaos. When we have extreme economic problems a war usually follows as well as someone coming in on a white horse to save the day. That white horse person will also cause more debt and make things even worse. This is the first time in history that government is actually out to destroy the people who have saved and set away for retirement. The middle and saving class has been destroyed before, but that was because of war or inflation. Jim says that it is mind boggling that the government’s solution to clearing up debt is to create more debt.

Next, Michael asks, “How do you see China right now?” Jim says that when they had their big market crash they chose to invest in the future with money they had saved. In America, we did the opposite. We chose to bail out the bureaucrats and make sure the rich didn’t go poor. The European and Japanese central banks have come out saying that they will practice unlimited QE funding. They will print unlimited amounts of money to solve their economic problems. Most do not question this because most people have no idea who or want the central bank is.

Lastly, Michael asks Jim what the best way is to prepare for potential problems that may unfold in the future. Jim says the first thing is to not listen to the news or what you may read on the internet. Stay with what you know and if you don’t think you know something, do nothing..

In this episode of Trend Following Radio:

  • Negative interest rates
  • Central banking systems
  • Market crashes
  • The impact of unintended consequences
  • Preparing for the future
Direct download: 429.mp3
Category:general -- posted at: 10:00pm EST

Michael Covel speaks to the timelessness of being a contrarian. He starts off sharing a recent email received. The email suggested Michael tone down the trend following talk and work with people to help find their calling in life. This email dovetails into an excerpt Michael plays of high school football coach, Kevin Kelley.

Coach Kelley is a contrarian thinking football coach. He is known for never punting and onside kicks after every touchdown. Coach Kelley ran the numbers and figured out the probability of winning with punting as opposed to going for it. He has had tremendous success from doing things differently and creating his own answers on the field.

Next Michael reads an article from Andy Staples, “The power of not punting: Why a college coach should adopt Kevin Kelley’s unconventional philosophy.” Andy Staples, a writer for Sports Illustrated, was curious about Coach Kelly and his unconventional coaching, so he visited one of Coach Kelley’s games. During that game, Coach Kelley had to give in and punt on one of his fourth downs. Andy asked, “How hard was it for you to do that?” Coach Kelley replied, “I didn’t really hate it at all. It is what it is if the situation dictates it is something that we have to do. It’s all about winning. It’s never been about anything else.” Coach Kelley’s players don’t win because they never punt and always onside kick, they win because the offense plays as if they are always going to lose. He turns the psychological tables on his opponents, and bases everything off of mathematical statistics. The math indicates that punting is actually the riskier choice.

Michael stresses that no matter how much fundamental information you think you may have, you are lying to yourself. The only thing that you can rely on in the markets is the price data. The only way to get ahead is to be a contrarian. Michael ends paraphrasing Ed Seykota, “Everyone gets what they want, win or lose. If you lose a lot you got exactly what you wanted, to lose.”

In this episode of Trend Following Radio:

  • Math in football
  • Thinking like a contrarian
  • Risk management
  • Fundamentals
Direct download: 428.mp3
Category:general -- posted at: 10:00pm EST

Today on Trend Following Radio Michael Covel interviews Michael Ellsberg. Michael is an American author, blogger and public speaker. Michael Covel and Michael Ellsberg met for the first time in Napa Valley at a Tim Ferris conference. Today they talk about Michael’s newest work, “The Last Safe Investment: Spending Now to Increase Your True Wealth Forever.” The book is about making money, being an entrepreneur, and giving insights that can applied today.

The two start off talking about entrepreneurism and dive deep into how people think about money. Michael, and his co-author Bryan Franklin, wanted to completely rewrite the script for how people think about making and spending money. Michael says the bottom line is to try and make your life as awesome as possible in every aspect. Most people want money for one reason or another. He has found that the three most popular reasons people want money is: happiness, freedom, and security. Michael always wanted to be a writer growing up. He used his savings to help pay his way to become a writer. Most save their money and figure that what they love can come later when they have enough saved up. The question is, “When do you want to start your passion?” When you retire? Or do you want to invest in those things you are passionate about now?

Michael E. then goes into how important the presence of meaningful friends are, otherwise known as your “tribe.” He says that it is important to travel and figure out where you want to settle down and live. When you nail that down you can start investing in learning about the place, people that live there and invest your time in making friends. Traveling and learning where you want to settle down has a lot to do with gaining critical self knowledge which, according to Michael E., is the greatest investment a person could make. When you are self aware you get far more happiness out of the money and time you invest in things. You aren’t wasting as much time and money experimenting, trying to figure out what you like.

Next, Michael E. answers the question, “What is the difference between a market skill and a super skill?” A market skill is any skill that you can sell directly, such as plumbing or marketing. Super skills are skills that can be taken across any job platform and are essential in any marketplace regardless of economic circumstances. Michael E. categorizes them into four categories: interpersonal, creative, technical and physical super skills. Different skills have different levels of entry. Public speaking is one super skill that they go into depth about. Michael E. says that if you learn how to speak publicly even semi well, you will be far above the rest of your competition.

One of the last topics discussed are the areas in your life that create happiness. Relationships, health and money are the three big contributors to happiness. Each time you spend money you should look at how that purchase will impact every area in your life. If you go to buy a meal you should look at how that will affect your health and if that bleeds into happiness in your relationships. Michael has found that all of these things are interconnected. When you look at things as a whole, spending money can be looked at as investing rather than spending frivolously.

In this episode of Trend Following Radio:

  • Super skill vs. Market skill
  • Systemic spending
  • Cultivating meaningful relationships
  • Thinking three dimensional
  • Creating happiness in your life
Direct download: 427.mp3
Category:general -- posted at: 10:00pm EST

Today on Trend Following Radio Michael Covel speaks with Vineer Bhansali. It is Vineer’s second appearance on the show. He brings a world of experience to the subjects of behavioral finance and tail investing strategies. He believes strongly that sustained portfolio performance comes from expecting the unexpected and hedging both left and right sides of tail risks. Vineer’s firm, Long Tail Alpha, is based on exploiting values from the tails of the probability distribution and also exploiting how human behavior distorts the markets.

Michael starts the podcast off breaking apart Vineer’s white paper, “A Behavioral Perspective on Tail Risk Hedging.” Vineer says the way markets actually trade have very little to do with the idealized models that have been presented in the academic community. Those models are presented because they are easy to solve. All interesting things that go on in the markets are beyond the idealized scenarios. Vineer talks Michael through the idea of the “Three Investors.” His study is based on how people account for gains and losses. The study concluded that people are more adverse to losses than they are to gains, also people like security. Next, Vineer speaks to work done by Kahneman and Tversky that dovetails into his own studies. This work allows him to rationally explain the existence of tails in terms of very persistent behavioral biases.

Michael and Vineer comment on oil and how significant the price of oil has been in the last few years. Where does the behavioral aspects come into play? He says that both kinds of investors, rational and irrational, create market dynamics. He gives an example of a gambler that leaves the casino while he is up a lot, as opposed to the gambler that is down and keeps gambling trying to get it back. “You have people in this commodity market casino who are going in with a certain plan, but they can not execute on that plan.” He goes on to say that people who have a trend following plan are going to do very well. They can go short or long. Their portfolio’s tend to be more dynamic, and unless you know a whole portfolio you cannot make a rational decision. Michael says aggregation is the key word. You can’t look at a price for a hedge in isolation. That doesn’t do anything for anyone.

Michael then asks “What about the timing in Tail Risk?” Vineer says you have to be very open minded in how you construct a portfolio, and the timing relates back to the valuation. These concepts are well known in the finance world, they are just not widely practiced. Tail risk, hedging or insurance is what investing is all about. Michael ends with asking, “We all know everything we know about Oil, China and Rates could go in another direction. What will happen if your thesis doesn’t materialize? If things bounce back to the way they were?” Vineer says that at some point markets overshoot and his firm is set up for when that happens. He is always asking himself, “Where is the valuation? What signals are you getting? What objective framework and model can you build?”

In this episode of Trend Following Radio:

  • Is trend following mean reverting?
  • Tail risks
  • Tail hedges
  • Human behavior and biases
  • Importance of a dynamic portfolio
Direct download: 426.mp3
Category:general -- posted at: 10:00pm EST

Today on Trend Following Radio Michael Covel interviews Philip Tetlock. Phil is a Canadian American political science writer currently at The Wharton School of the University of Pennsylvania. He is right at the intersection of psychology, political science and organizational behavior. His book, “Superforecasting: The Art and Science of Prediction,” is about probabilistic thinking defined. Phil is also a co-principle investigator of The Good Judgment Project, a study on the art and science of prediction and forecasting.

Michael starts off asking, “Regular folks can beat the experts at their own game?” Phil says essentially that is correct. He started The Good Judgment Project in 2011. It was based around forecasting and was funded by the government. He was shocked by the amount of “regular” people he recruited for his study that were able to compete with, or do a better job predicting than professionals working for agencies such as the NSA.

Michael and Phil move onto discussing the Iraq war. They discuss what the actual probability may have been of Saddam Hussein having weapons of mass destruction. George Bush claimed that it was a “slam dunk” when clearly there was not a 100% probability of weapons of mass destruction being there. Michael asks, “When is society going to adopt more of a probability mindset?” Phil says that soft subjective human judgment is going by the way side. Pundits saying, “Someday this will happen” without any real substance, will come to a stop. As long as a forecaster can say, “This may happen in the future” then they can never really be held accountable for being wrong. Michael brings up the example of Robert Rubin. Robert worked for Goldman Sachs and was under Bill Clinton during his presidency. He was a great probabilistic thinker. Everyone loved him until the 2008 crash. Phil uses him as an example of even the best prediction people getting it wrong.

Bottom line, superforecasters look for aggregated data. They know there is interesting data laying around and they tend to look at crowd indicators heavily. The distinction between superforecasters and regular forecasters is their ability to start with the outside view and move to the inside slowly. Regular forecasters start with the inside view and rarely look at the outside view. Superforecasters also believe in fate less than regular forecasters do. When you highlight all the low probability events surrounding outcomes, such as the lottery, many chose to think the event was decided by “fate” or just “meant to be.” Superforecasters think in a way of “well someone had to win, and they did.”

In this episode of Trend Following Radio:

  • What are superforecasters?
  • Probabilistic thinking
  • Looking at aggregate data
Direct download: 425.mp3
Category:general -- posted at: 10:00pm EST

Today on Trend Following Radio Michael Covel profiles Jeremy Siegel. Jeremy describes himself as “The Wizard of Wharton.” His website claims that he is credited with contributing and expanding the great bull market of the last two decades. Jeremy is also bestselling author of “Stocks for the Long Run.”

Michael moves right into playing a few clips from appearances Jeremy has made on CNBC. The first clip has Jeremy outlining his predictions in early November 2015: The Dow will surpass 20,000, oil can’t go much lower, and the dollar can’t go much higher. His predictions are perfect examples of predictions without any substance. They have no timelines, or data to backup why he feels the way he does.

Excerpt #2 was filmed around December 13th. The Dow at that time was at 17,300. The S&P was at 2020. Jeremy moves right into more predictions and generalizations. He doesn’t say “buy at this time” and “sell at this time.” Jeremy proceeds to use words like “tremor” and “relief rally.” It is hard to have wrong predictions and forecasts when you use words that have generalized meaning.

Excerpt #3 is from February 8th, 2016. Jeremy had to back peddle because his November and December forecasts had not come to fruition. He admits to being too bullish…sort of. He blames his wrong predictions on the market not doing what the market was suppose to do. Michael weaves in his commentary throughout the clips. The podcast ends with one of Michael’s favorite classic songs from the 1920’s.

In this episode of Trend Following Radio:

  • Predictions
  • CNBC Analysts
  • What is a bull and bear market?
Direct download: 424.mp3
Category:general -- posted at: 10:00pm EST

Today on Trend Following Radio Michael Covel interviews Angus Deaton. Angus is a British American economist. In 2015 he was awarded the Nobel Memorial Prize for his work in economic sciences on his analysis on consumption, poverty and welfare. Those topics go into one of the most hotly discussed issues in America right now, inequality. He brings some great data driven insights and angles to the discussion.

Michael starts the podcast off discussing the benefits of winning a Nobel Prize and how it opens up debate and reshapes topics. Angus agrees that the Nobel Prize does get conversations going and as an academic, it allows him able to reach a broader audience. Michael and Angus move right into discussing inequality. Angus says that in periods where there has been the most innovation, this is typically when there is the most inequality. Angus also quotes a famed economist saying, “Data is like meatballs. I won’t eat them when I’m out because I don’t know what is in them and I won’t eat them when I’m home because I do know what is in them.” When going through data from places like India, where about 1/3 of all global poverty resides, it is hard to tell whether the data is correct. For example, although there is a rapid rate of growth, the poverty level has not raised. Are poverty levels not moving because the aid money is going straight to the 1% or is it because the data is not correct? Angus says the data is easily skewed so it is hard to really get a read on what is going on.

Next, Michael and Angus discuss how arbitrary the idea of “the poverty line” is. It is hard to classify what poverty truly is. Angus likes to look at the subject as if everybody is poor, but some are just much poorer than others. Measuring poverty across time and place is an impossible thing to do. Poverty data can be skewed by various factors such as if the area being studied has government healthcare or public school systems. Michael brings up the emotional side of poverty next. Angus says that it is very possible to be happy and sad at the same time. Emotion isn’t cut and dry. He has found that not having enough money does have a large impact on your happiness. However, most day-to-day emotional happiness comes from having contact with other people and friends, not money. Money starts to affect your day-to-day interactions if you are so poor that you are not able to do certain things that allow you to spend time with friends and family.

In this episode of Trend Following Radio:

  • Unemployment
  • Minimum Wage
  • Poverty
  • Economics
  • Money and happiness
  • The birth lottery
Direct download: 423.mp3
Category:general -- posted at: 10:00pm EST

Today on Trend Following Radio Michael Covel starts off giving listeners perspective on the feedback he receives. Over the years Michael has received thousands of emails that have created insightful and thought provoking give and take discussions. He reads an email that came in recently on a fairly controversial topic. The listener talked about his disagreement with Yaron Brook in episode 183. He disagreed on the shared viewpoint between Yaron and Michael. The listener’s email also touches on unemployment, minimum wage, and government regulations. The email was extensive and Michael gives his feedback as he makes his way through reading it.

Michael furthers the discussion by moving into reading from an article titled, “The Case Against the Minimum Wage” by Daniel Bier. Daniel says that there is much we may not agree on, but when there are topics that economic professionals do agree on, we should take notice. Economists across the board agree that by raising the minimum wage we will actually increase unemployment. The article’s main premise is that the core value a young person gets from their first job is the life experience rather than the monetary gain. Working with a team, punctuality, and taking direction are just a few fundamental skills that can be taken away from a minimum wage job. These jobs create a track record for an individual that lets them move on to other higher paying jobs.

So many people miss the point: It isn’t about the money, it’s about the experience. Having exposure to minimum wage jobs at a early age has long term effects. Daniel Bier says that it is actually more about politicians trying to feel good than actually doing good. Michael finishes with a quote from Nobel laureate James Buchanan further touching on the ramifications of raising minimum wage.

In this episode of Trend Following Radio:

  • Unemployment
  • Minimum Wage
  • Ayn Rand
  • American economics
  • The seen and unseen consequences of a law
  • Libertarianism
Direct download: 422.mp3
Category:general -- posted at: 10:00pm EST

Today on Trend Following Radio Michael Covel speaks with Steve Kamb. Steve is the author of “Level Up Your Life: How to Unlock Adventure and Happiness by Becoming the Hero of Your Own Story” and has built a career in the niche of Nerd Fitness. He gives great insight on how to reach a specific audience and gain a loyal following. He knew he was horribly mismatched in his career and had to make a drastic change. Not wasting much time, Steve moved to Atlanta and took a job making half the money and loved it. It was at this job where he started getting into fitness and creating a website to help others. His company, Nerd Fitness, soon turned into a full time job.

Michael starts the podcast asking, “What is your definition of a nerd?” Steve quotes Wil Wheaton, “A nerd is not what you love but how you love it.” He elaborates saying that you could be a comic book nerd, medical school nerd, Star Wars nerd, etc. Steve’s outlook on fitness is about keeping a healthy lifestyle while keeping your other passions alive. It took Steve years to get his fitness regime down. He knew there had to be more people that were struggling to find the right information when it came to fitness. Steve started writing about sound strategies to build solid plans to get on the right fitness path. He uses movie and comic book references to help get his clients motivated and relate more to what he is teaching.

Steve also started looking at his life, and his clients lives as if they were on their own “hero’s journey.” He calls it the “hero’s call to action.” This journey is cyclical. You go out and come back and it is never ending. He shares stories of superhero’s like Clark Kent/Superman or Indiana Joans/archeology professor. Regular men that go out time and time again on their hero’s journey, only to return back to reality after accomplishing what they set out to do. His book, “Level Up Your Life,” is about re-framing ones life in a hero’s journey type of way. Strength training, yoga, live action role playing, etc. could all be things that motivate you to get off the couch and start your own hero’s journey.

Michael and Steve finish up sharing tips on how to travel smarter. Steve says that when it comes to jet lag, what works best for him is exercising immediately after traveling. Also, buying the cheapest ticket can ruin the first few days of a trip by adding to your jet lag.

In this episode of Trend Following Radio:

  • Traveling domestic and internationally
  • The hero’s journey
  • Marketing yourself
  • Marketing to a niche
  • What is a nerd?
  • Tailoring your fitness needs
Direct download: 421.mp3
Category:general -- posted at: 10:00pm EST

Today on Trend Following Radio Michael Covel discusses three topics: the idea of two Americas, crowds, and his recent Barry Ritholtz interview. Michael starts off reading from an article titled “Two Americas.” The article focuses on people who contribute, and those who do not. People who work and those who do not. The article disagrees with the notion that all incomes should be equal. Different choices lead to different consequences. Those who choose wisely have a greater degree of success and should not have their success taken from them because others chose unwisely. The article goes on to say, “Entitlement has replaced effort in American society.” Just because you went to college doesn’t mean you are entitled to a certain level of income. On the other hand, those that do not have an education or work hard to make something happen are also not entitled to a certain level of income. Achievers do not want a pat on the head or a fake handout. Free money doesn’t work. You need passionate effort for there to be a desirable end result. If the drive is not there then the result is there.

Michael then reads from a blog post by Seth Godin titled “The crowd, your work, and a choice.” Seth dives into crowd mentality. He says that the public would rather, “Watch a movie than read a book, stand in lines for the popular attractions…likes explosions, resolved plots and ample lighting…Crowds only care about fast, easy, cheap, fun, now and simple.” Crowds demand that they are told how much they will make and in what markets. When it comes to investing and trading there are no deadlines. Trends come and go, there is no timeline.

Michael moves on to discuss his recent interview in New York with Barry Ritholtz. He talks about himself and Barry as a piece of media and how media is becoming more individualized with the help of social media. There are so many outlets to get your name out whether it be your blog, podcast, or news column. All these places are just distribution outlets. Places like twitter and Instagram give you a platform to contribute value and feedback to people. It is now easier than ever to build a one man media conglomerate.

In this episode of Trend Following Radio:

  • Two Americas
  • Crowd behavior
  • Marketing yourself
Direct download: 420.mp3
Category:general -- posted at: 10:00pm EST

Today on Trend Following Radio Michael Covel interviews Mebane Faber. Mebane is a noted author, blogger, and portfolio manager with Cambria Investment Management. His new book, “Invest with the House: Hacking the Top Hedge Funds” is out now. This is Mebane’s 4th appearance on Trend Following Radio. Michael and Mebane have a slightly different outlook on trading but they do align. The biggest similarity is that they both come at the markets from a quant way of thinking.

Michael starts the podcast off asking, “Why do some of the big name guys motivate you so much.” Mebane says he always loved investing. In his spare time during college he would explore finance. A fund manager named John Griffin, who was Julian Robertson’s right hand man, taught at Mebane’s school UVA. It was in this class that many famed hedge fund managers provided his first initiation. The managers would give examples of different kinds of research they would do. Mebane knew he would never have the resources to do that type of research, so he turned to studying the numbers instead.

Mebane’s new book is based on mimicking the trades of some of the most successful hedge funds. He says it isn’t too hard to identify the “Michael Jordan’s” of the finance world. The key, however, is to figure out who’s trades you could piggy back off of and be successful. You have to go into this believing markets aren’t efficient. Where do you find the best players? Mebane studied 10-12 managers that friends and colleagues suggested. The most obvious was Warren Buffett. Turns out, you still make amazing returns piggy backing off of Warren Buffett’s trades. You cannot trade futures in this way or trade shorts, you must be long only. Trading with this strategy, as opposed to buying straight into these big hedge funds, gets you away from paying huge fees and large taxes. In Mebane’s latest book he goes much more in depth into this topic.

Michael then goes into Twitter questions posted by listeners. The first question, “My market is too small? What should I do?” Mebane says there is a “home country bias” among people. People like to invest in their own markets. The Asian countries happen to have the worst of this bias. It is a terrible habit to have if you need proper asset allocation in your portfolio. You must look beyond your own country, be agnostic in your trading. Don’t let your emotions or irrationality rule.

In this episode of Trend Following Radio:

  • Home country bias
  • Diversification
  • Different trading strategies
  • Finding the most successful hedge funds
  • Margin of safety
Direct download: 419.mp3
Category:general -- posted at: 10:00pm EST

Today on Trend Following Radio Michael Covel starts off quoting famed trader Stanley Druckenmiller. Stanley shares his views on betting big and diversification. Michael expands on Stanley’s views by stressing how crucial diversification is to a portfolio’s success. You must be open to many markets to handle your risk management. And when markets start to go your way, you have to “bet the ranch.” When one market in your portfolio takes off you need to go big and make the most of it. This is where your profits will come from. Note: Stanley Druckenmiller had two big mentors in his life. One of the two influences was George Soros. The two have been business partners for years now and have made a fortune trading trends. These men do not tout themselves as trend following traders but Michael describes them as “kissing cousins” to trend following.

Michael then reads an article from Josh Brown titled, “Everyone is a closet technician.” In the article, Josh claims everyone is a technician. What is a technician? Josh defines them as, “Someone who cuts right to the chase and studies actual prices and behavior instead of puzzling over the causes of prices and behavior like everyone else.” He says that investors only pay lip service to fundamentals. Technicians find truth and meaning in price and the action that is currently happening. They respect the idea of sentiment. Sentiment is how valuations come to be. Prices change and with that the truth is constantly changing. Technicians do not waste their time with the “Why” question. Hindsight bias is a slippery slope. Josh says, “Fundamentalists will share their reasons with anyone willing to listen. The technicians will take these reasons with stride and focus on what is happening, not ‘why.’ The ‘why’ will always be much more apparent after the fact. After it doesn’t matter.” Price will do its thing regardless of what people predict. Michael doesn’t believe the people on CNBC throwing out predictions are technicians. Trend followers are the only people who fit the mold of what Josh describes in the article.

In this episode of Trend Following Radio:

  • What is a technician?
  • Diversification
  • Risk management
  • Trading off price
Direct download: 418.mp3
Category:general -- posted at: 10:00pm EST

Today on Trend Following Radio Michael Covel interviews Robert Carver. Robert is author of “Systematic Trading: A unique new method for designing trading and investing systems.” He got his start in finance working at AHL. Robert started with AHL in 2001 during his final year of college. It was at this time that he was introduced to quantitative trading and began thinking of finance in a systematic way. He later went back to AHL, working there from 2006-2013.

Robert doesn’t tout systematic trading as the only way to trade. He says there are some great traders out there that aren’t systematic traders. However, the majority of people need a system to be successful. So how does Robert define a system? He says a system must be objective, repeatable, and transferable. If you can’t get the same results using a different person then it is not a true system. The rules must be transferable from one person to another and the results must be objective and repeatable. Most do not have a good understanding of statistics, and they get confused in thinking that the more complicated a system is, the better it must be.

Robert and Michael move on to discuss behavioral finance, prospect theory and the difference between trend following and high frequency trading. A high frequency trading system is harder for traders to meddle with than trend following systems. The trading time frames are much shorter in high frequency trading which lessens the opportunity for human intervention. Most traders fail because of their own meddling. If you can avoid the temptation to change your system then you will be more profitable in the long run.

Working for a company like AHL would have been interesting to see from the inside during 2008. Michael asks, “What were you seeing from the ground in 2008? How did that change you and how you viewed systems?” Robert says it showed him that people truly don’t know what is happening or going to happen. Systematic traders, including himself, were able to make money because their systems saved them. When their systems saw markets going down, stops helped them exit trades and even go short in some cases. This is where all the money was made. Robert does say there are rare times you should intervene with your trading system. For example, he was forced to modify one of his systems when he found out there was going to be a coup in Thailand and the currency was going to be suspended. It’s not that he thought he could forecast what the price was going to do better than the system, but he did know trading that market was going to be impossible. Robert says there has been maybe three other times when he has had to intervene with his system. They are rare and extreme circumstances.

In this episode of Trend Following Radio:

  • Unpredictable risk vs. Predictable risk
  • Systematic trading
  • High frequency trading vs. Trend following trading
  • Black swans
  • When to intervene with your system
  • 2008 crash
Direct download: 417.mp3
Category:general -- posted at: 10:00pm EST

Today on Trend Following Radio Michael Covel talks prediction. He opens with an excerpt from Seth Godin on how he thinks 2016 will unfold. His predictions are based on events that have always happened and will always happen, poking fun at the idea of having a “crystal ball look” into the future.

Michael moves on to market timing and reads an excerpt from The Institutional Investor titled, “Market Timing is Back in the Hunt for Investors.” The article states that market timing can be done correctly if you use a combination of trend following and contrarian views. Michael disagrees with the article stating that you need diversification. You can’t pick one stock and try and predict the top or bottom. Making that kind of bet on one market will bankrupt you. You need a portfolio of diverse markets so your winners can pay for your losses.

Michael then plays three clips from Daniel Kahneman on overconfidence, playing odds, and why we make the choices we do when spending money. Most of what we read in the paper is about overconfidence. People put a lot more weight on negative events then on positive ones. However, many decisions people make are optimistic. Kahneman says it is good that we have a lot of optimism in society. Unfortunately, over confidence and loss aversion seem to work in opposite directions. Most do not know the odds when they take risks. People save and borrow at the same time. Investors tend to view each stock they buy as an individual account rather than part of a bigger picture. These are just a few examples of how society as a whole is generally narrow-minded. Kahneman shows how intricately trading and psychology are linked together throughout the three clips. Michael finishes up the podcast with Ed Seykota singing.

In this episode of Trend Following Radio:

  • Diversification
  • Seth Godin’s 2016 predictions
  • Market timing
  • Understanding psychology in trading
  • Pitfalls of overconfidence
Direct download: 416.mp3
Category:general -- posted at: 10:00pm EST