Michael Covel talks to Jim Woods. Woods is a financial journalist with Trader's Reserve. His book "The Wealth Shield, A Wealth Management Guide: How to Invest and Protect Your Money from Stock Market Crashes, Financial Crisis and Global Economic Collapses" is available now. His aim is to make sure you're prepared for whatever black swan might come your way. Covel talks to Woods not to discuss how to find absolute returns, but to talk about the market, the economy, and uncertainty; to talk about the idea that things don't always don't go up. How do you think about the options and the possibilities of the market, and how do you think about what might go wrong? Covel and Woods talk about zero interest rate policy, or "ZIRP", and why normal people are taking on more risk to get the same returns; if another 50% meltdown happened in the S&P while rates were at zero, what might the chain reaction be? Would you be prepared trading wise for that?; technology taking away the need for human capital; the power structure in Washington; the societal implications of ZIRP; what the stock market might do if interests rates went up; the concept of "blowback"; the importance of having a plan; protecting yourself, and the eventuality mindset; the US as a "prison" banking system; and the importance of investing in other currencies for beyond trading reasons. Want a free trend following DVD? Go to trendfollowing.com/win.

Michael Covel speaks with Jason Russell, the President and CIO of Acorn Global Investments in Canada. Russell brings a unique perspective to the show with a very clear strategy on how his firm makes money for their clients. Covel and Russell discuss Russell's background and how he came to form Acorn Global Investments; Russell's strategy for Acorn and "the baker analogy"; the idea of "winners stay, losers go"; showing his investors every position that Russell has; how the terms "commodity trading adviser", "trend follower", "quantitative trading" don't exactly describe what many traders do; Ed Seykota and the "trading tribe"; letting go of "why" and simply riding out trends; where strategies like Russell's fit in the context of a portfolio; the importance of delivering uncorrelated results to the S&P 500; drawdowns and the psychological effect of going through one alone, uncorrelated to other markets; and how there's nothing more important than risk management. More info on trend following? Receive the free DVD: www.trendfollowing.com/win.

There's no better lyric than "Life of Illusion" by Joe Walsh to describe the most recent trading performance that was reported by J.P. Morgan. In the first quarter they were profitable on 63 out of 63 trading days. Think you can develop a trading strategy that can compete with J.P. Morgan? You can't. What J.P. Morgan has done is not trading performance; it's an incestuous union between them, the United States government and the Federal Reserve. You don't make money 63 out of 63 days trading. That's not trading; it's a gift. Of course, if you have a position in J.P. Morgan, that's great; ride the trend. But what's unfortunate is that we're in the middle of a societal tsunami on Wall Street that makes it very difficult for the average person to know what's real. To the average person that wants to learn about trading, J.P. Morgan's performance looks like a noble goal. Unfortunately, this level of making money has nothing to do with a trading strategy. It has everything to do with being in a symbiotic union with the government and the Federal Reserve. It's not trading, it's taking. Can you replicate a trading strategy where you get the same advantages that J.P. Morgan does? And what happens when the black swan flies in? Covel goes on to explain comparing the performance records of Bill Dunn to J.P. Morgan. When these black swan events happen, strategies like Bill Dunn's excel, and fundamental strategies don't. It's that simple. You're left with the idea of worshiping a false idol (JP Morgan) or the Bill Dunn strategy that doesn't make money every day, but in the long haul makes more money and protects you when the tsunami hits. Covel closes by talking about the high priest himself, "Venus", the man from Omaha. Even though his fourth quarter profit rose 49% on gains tied to derivatives--derivatives that he once called "weapons of mass destruction"--it's no matter to his worshipers. Covel gives him all the credit in the world for amassing his great fortune; he's one of the greatest capitalists of all time. However, it's the disingenuous, manipulative nonsense of telling people not to trade derivatives but then doing it himself that really gets to Covel. Venus pretends that his words don't matter. Want a free trend following DVD? Go to trendfollowing.com/win.

Michael Covel talks about getting "picked" on today's episode of the podcast. Starting off with Blind Melon's "No Rain" Covel sets the groundwork for what's inspiring him today. This isn't a trading specific podcast today, at least for those of you out there that think that trading psychology and trading philosophy are irrelevant. Covel meets people all the time looking for the "secret sauce". Today, you aren't going to get the secret sauce; or at least the secret as you perceive it to be. Inspired by Seth Godin's recent thoughts on being picked Covel talks about Marc Maron, a comedian who recently has found success through his own podcast. Covel talks about how Maron wasn't picked through traditional means: Meeting with Lorne Michaels of Saturday Night Live, Maron's meeting went sideways, he was rejected, and he ultimately had to carve out his own path. Maron started a podcast which became viral, and now even though Lorne Michaels did not pick Marc Maron, Maron sits with his own destiny in front of him, chosen by him. All because he looked at the world slightly differently. Today, he enjoys massive success through an IFC television show, a new book, and a top rated podcast all because of setting out on his own path. Circumstances forced him to do this, but he learned that being picked was not the end all be all. Covel relates this back to his audience: you weren't picked for the trading job, you weren't picked for the investment banking team, and you're already psyching yourself out. A lot of people do this: they don't get picked and then complain for the rest of their lives and essentially quit. If you don't see the relevance in picking yourself to success in trading, you might not ever see it. Godin received complaints through his article on Marc Maron and Covel has received similar complaints which he retells here in the podcast. Some people want to do specific things. Doing "this" requires being picked: "I want to play the flute in this particular orchestra", "I want to trade for Goldman Sachs". At the end of it all, there is a great Buddhist thought: "Live like a mighty river". A mighty river flows. A mighty river does not complain. A mighty river gets it done. Covel talks about his own experience of not being "picked" for CNBC. They were looking for Jim Cramer, Jr. Covel went into the meeting with his eyes wide open and was looking to get the experience to pass along to you today that CNBC, behind the scenes, is a farce. Covel wanted to see behind the scenes for himself, and he got that opportunity being interviewed for CNBC. Covel wasn't picked by CNBC, but they weren't picked by Covel either. That's the attitude to have. Covel concludes with a recent story about being picked that he experienced himself in Thailand, and with what Godin says in his blog post: The problem is that it's frightening to pick yourself, Godin says. "It's far easier to put your future into someone else's hands than it is to slog your way forward, owning the results as you go." Free trend following DVD? Go to http://www.trendfollowing.com/win.

In his first podcast back from China Michael Covel talks about trend following in the context of The Middle Kingdom. Through five flights, four cities, untold hotel rooms, two speeches before crowds of 500 people, and over a dozen presentations in front of some of China's largest hedge funds, Covel brings the wisdom gained through his excursion back to his podcast audience. First, he responds to a reader from China who heard about one of Covel's presentations, and the criticism that Covel didn't give the "secret sauce" to win at trend following. Richard Dennis was famous for saying that he could publish his rules in the newspaper and nobody would follow them, and Covel could explain exactly how to be a trend follower and it'd go over many heads. So it's not surprising that in a crowd of 500 some would have their expectations of learning about some kind of "secret sauce" not met. Covel isn't trying to impress that person, and they aren't the type of person that would ever get it anyway. They're looking for the shortcut-- the angle, the quick fix. If you have Covel speak to your group, after fifteen years of his life spent researching the topic and putting together the best educational materials for new and experienced traders alike, if your first thought is "you didn't give me the secret sauce", it might not be for you. But Covel did reach a great many people, and he got a great deal of excellent feedback. He discusses the typical Chinese investor mindset and what got them to take a second look at trend following. Covel also waxes on the idea of trust in China, the parallels to America, and how the acceptance of "the new" in China might go down easier than elsewhere. Next, Covel adds some lessons to the overall trend following education. Covel's journey shows that an outsider can get to be an insider. Unfortunately, one of the common questions posed to Covel by the media in China was to ask if any average person could succeed in trend following. Covel discusses how this is a defeatist question. If you consider yourself average: quit now. Suitability, however, is something different. Is trend following, or investing in general, suitable for everyone? If you don't have the education, it might not be. Covel also gives some examples from his journey that help to put trend following in context. Covel notes a bit of censorship in his presentations via the Chinese regulatory committees. One slide was not allowed in his presentation. What was that slide? Covel explains. Also, Covel recently discussed Ray Dalio at Bridgewater, the biggest hedge fund on the planet. Covel reads a letter from a listener that gives anecdotal evidence about how Dalio could be a closet trend follower. Want a free trend following DVD? Go to trendfollowing.com/win.

Charles Faulkner visits the podcast for his third on-air conversation with Michael Covel--a conversation that started while Covel was recently in Malaysia and finished while he was in Vietnam. Faulkner is an author, trader, and international expert on modeling the knowledge and performance of exceptional individuals. He was originally featured in "The New Market Wizards" by Jack Schwager. Faulkner has a new book coming out this fall called "Higher Level Trading: The Five Stages To Trading and Investor Mastery". In their free-flowing conversation Faulkner and Covel cover wide territory. Covel and Faulkner discuss Faulkner's thoughts about human behavior and the investor's psyche. This brings the conversation to the idea that the world is getting more complex, and the increase of "magical thinking" in response. Covel and Faulkner move on to discuss further topics such as how Faulkner came to put together his newest book, "Higher Level Trading", and the qualitative differences between the five levels of experience, knowledge, and understanding; developing the different levels of thinking that lead to expertise, and the correct path to take to developing these skills; preparation, effort, "doing the work", and the right way to jump into investing; some of the commonalities between those profiled in the "New Market Wizards" book; Ed Seykota's recent statements on day trading; behavioral economics; the idea that the less you know about something the more convinced you are that it is true--and how a little knowledge can be a dangerous thing; "perfection seekers", variation, and letting perfection slow you down; outliers and the potential to make a change in your thinking; efficient markets, Vernon Smith, and bubbles; imagery, stories, prediction, and the skill of conceiving multiple scenarios; reducing information, and vetting your inputs to find out what information is important and what isn't; and why we are most influenced by parts of our environment that we are unaware of. Free DVD? Go to www.trendfollowing.com/win.

Michael Covel interviews trader and original student of the first Turtle class, Jerry Parker. In 1983, Parker was accepted into the Turtle Program, a select investment training program developed by successful Chicago portfolio manager Richard Dennis. He appears in Covel's "The Complete TurtleTrader" and has been the most successful TurtleTrader. Parker founded Chesapeake Capital Corporation, a global investment manager headquartered in Richmond, Virginia, in 1988. Chesapeake provides investment and portfolio management services to both private and institutional investors worldwide. Covel talks to Parker about the mistake of combining different strategies with trend following, and the importance of having a concentrated strategy that you can rely on; how discretionary moves can get in the way of your system, and "systematized discretion"; the psychological effect of following a trend following strategy for decades; the idea of going for positive expected value over what's least risky; why Parker doesn't like to use the term "managed futures", and why it doesn't really tell the story of trend followers; trend followers performing well at different points in time compared to long-only; using trend following as another strategy for investors who only invest through a long-only value-based system; the importance of not letting your views on politics and society influence your trading, and maintaining a systematic and disciplined approach; the growth of news media since 1984, information overflow, limiting your variables, and using price as your primary indicator; how Parker has learned over the years to deal with drawdowns, loving your losses, and the importance the Turtle program played in his education on drawdowns; why governments are the ultimate counter-trend traders; why buy and hold is not a good place to be even if people are saying it's turned around; Parker's stock-only trend following program, and why the diversified program will do better than the stock-only system; and leverage as a tool. Enjoy! Free DVD: www.trendfollowing.com/win.

Is Michael Covel on vacation or a journey? Covel opens up today's monologue distinguishing between the two by answering a piece of listener mail. Covel gives credit to Tim Ferris and the four hour work week mentality, and discusses his ability to work from abroad and travel to a different country every two weeks. Next, Covel answers a piece of listener mail regarding his recent comments on day traders. Covel just gives his view. He's done his homework, done the research, and put the proof out there. It's not just Covel pontificating only about how the world should be, but trying to be objective. Day trading track records don't appear to exist, while trend following has a track record that's available for anyone to see in the back of Covel's books. Tons of people out there imagine that day trading is a legitimate way to operate, but there's just no proof that it works. Next, Covel reads another piece of mail talking about poor returns of hedge funds in the first quarter, and how certain hedge fund managers had picked the wrong direction. Covel gives another Seykota quote on the matter: "Artful politicians and religious leaders carefully keep their promises in the future, and their tithing and taxation in the now." Covel adds: Investing gurus are part of that list because investing gurus all want to be paid right now. Covel also talks about outlier events. Are you prepared for an outlier event? Whether a crazy North Korean dictator drops a nuke, whether one of the central bank policies across the world don't work as expected, or something else? What if the prescribed plan doesn't work? That's where fundamentals break down and when they do you need a plan. There's a great video that Covel posted recently by Dr. Vernon Smith stating that standard econometric models were not explaining what was happening in the real world. They weren't explaining bubbles, and not until Dr. Smith started studying the psychology of how people behave did he finally start to understand what was going on. Are you going to believe that Vernon Smith and Daniel Kahneman had figured something out about the human psyche when it comes to markets and money, or are you going to trust that government agencies have figured it out and are going to manage it all for you perfectly? If you do trust Dr. Smith, as Covel highly recommends, how are you going to prepare for the next event? Do you really think there's a chance that the S&P will only go up, and will never drop by 50% again? Get a strategy to help you out when there's an outlier move. That's the key. Covel moves on and talks about his time so far in Vietnam, including an all female motorbike tour, avoiding getting run over crossing busy traffic circles, and an incredible Vietnamese dancer. Are the communists doing better capitalism better? The question of the day! Free DVD: www.trendfollowing.com/win.

Michael Covel comes to today from Ho Chi Minh City, Vietnam after spending several weeks in Kuala Lumpur, Malaysia, and a few days in Singapore. Covel talks about some of his experiences is Singapore and Vietnam, but first he shares a quote from legendary trend following trader Ed Seykota regarding day trading: "Traders use it medicinally as distraction from deeper issues." Seykota has a remarkable ability to take complicated thoughts and reduce them down to only a few words, holding a mirror up to you and your life in the process. Covel talks about the "screen watchers" who have to look at their trades all day long and questions their performance. Where are all the day traders' performance data? They simply don't exist with only a few exceptions for big traders like Steve Cohen. Take that and compare it to trend following which has the performance data to prove its success. Without that data Covel's "Trend Following" book would have simply been opinion with no foundation. Covel digs deeper into the Seykota quote and discusses the core issues of what he's really talking about: is day trading simply the answer to your other problems? It's very similar to the lottery mentality regardless of how people try and talk it up: there's a very small chance of you winning big in the end. Covel also recounts some of his experiences abroad and compares it to the situation in America today. Compared to Singapore America simply can't compete with what they are able to get done. Singapore has great economic freedom and there's a wide desire there to make money--not just live off the State nipple. Economic freedom and the desire to make money, however crass, leads to a better life. Covel mentions a book he's currently reading about how the Russian oligarchs came to power and made their billions. It's really rooted in the system that was the old Soviet Union system: the state-run economy and taking advatnage of that. Everything was run by the state: the banks, the delivery of bread, the production of produce, etc. Covel brings it up because he's currently in Ho Chi Minh City (formerly Saigon). Today, there's nothing that feels remotely communist to Covel. He saw a couple of flags on some government buildings, but that's about it. Instead, it's mostly commerce and entrepreneurs. There's an energy there and people are clearly ready to make something happen. Ultimately, this brings Covel back to America. America does not have the ability to build a Singapore right now. Covel discusses the voting process and whether it's better to have a system where you know you don't have certain rights and freedoms (like Vietnam) or to have a system that gives you those rights and freedoms, but it's more akin to a fantasy. He's not some angry ex-pat: Covel simply wants to point out that the American system was founded on pure and noble ideals, but the bureaucracy has gotten so big and so unwieldy that the average vote makes no difference. Even a change in political leadership doesn't make a difference, and those on the right and left have more in common than not in common. Want a free trend following DVD? Go to http://www.trendfollowing.com/win.

Michael Covel presents a series of great audio clips rather than his normal monologue or interview today on the podcast. Most of these are clips that Covel hasn't played on a podcast before, and they all loosely connect around the idea of risk, the unexpected, and black swans. First up, Covel plays a clip from Warren Buffett talking about Long Term Capital Management, the hedge fund that almost took the system down in the summer of 1998 (a huge winning time for trend followers). Covel follows it up with two clips from David Harding of Winton Capital Management--one of the top trend following traders of all time--talking about the lack of data on history's greatest manias, crashes and panics; a second clip of Harding talking about the difference between today's crashes and panics and ones that have happened over the past century; author Peter Bernstein (whose book, "Against the Gods", Covel calls a must-read book on risk); Dr. Vernon Smith, who appeared in Covel's film, "Broke: The New American Dream", talking to ReasonTV; Nassim Taleb, author of "The Black Swan". Finally, Covel ends with a clip of Ben Bernanke walking down the street. Somebody asks him about Nassim Taleb, the author of "The Black Swan". You would think that after we've just listened to all of these pragmatic voices lay the foundation for why you have to know there's always going to be another black swan to arrive, Bernanke completely dismisses it and says he doesn't read Taleb's work. Isn't it good to know that Bernanke, the man who is control of the Fed, doesn't even pay attention? All of these great voices that Covel has played today show how imperitive it is to prepare yourself for the next black swan; the next unknown event. Want a free trend following DVD? Go to http://www.trendfollowing.com/win