Michael Covel talks about the importance of entrepreneurism today. We're not in a world that rewards doing what you're told anymore. Covel discusses Fairfax County, VA (where he grew up), home to one of the highest median incomes in the United States of America. Covel discusses why this area you might never have heard of has this status, and why this simply isn't a sustainable way of life for the rest of us. People seem to think that there's a job out there waiting to fall into their laps that will give them easy access to the American Dream. In today's world, you need the vision of an entrepreneur to successfully get to where you want to go. With all of the technology at our disposal, the road to this success is more open than ever before. Even going down the path of being a trend following trader requires the skills of an entrepreneur. Covel relates the story of Boone Pickens, one of the entrepreneurs he's had the good fortune of learning from. Pickens has the attitude that today's entrepreneurs need; when he got started, it was about taking a risk and making something happen, i.e. a "wildcatter". Covel invites you to take a look at your own motivations. When you get up in the morning, are you going in a direction that you control, or are you following someone else's plan? Special Offer: receive free DVD delivered to your home or office: www.trendfollowing.com/win.
Michael Covel interviews author and reporter Scott Patterson. Patterson has made a career of reporting the subterranean inner-workings of the markets, writing for the Wall Street Journal, Rolling Stone, and Mother Earth News. His first book, The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It, was released in 2010. Patterson talks to Covel about his newest book, Dark Pools: High-Speed Traders, A.I. Bandits, and the Threat to the Global Financial System. Covel and Patterson trace the history of high speed trading and electronic communication networks (ECNs) back to Josh Levine, who founded Island, the computer system that led to the high frequency trading we see today. Patterson discusses the technological revolution behind Island, and how its transparency led to dark pools - opaque markets where bids and offers are not made public. Dark pools have the benefit of operating in the shadows, helping institutions do what they do without anyone checking in on them. Today, Patterson goes on to propose that the entire market has gone dark. Covel and Patterson discuss the relation of dark pools to the flash crash; the regulation of dark pools; and how the real New York Stock Exchange is in a data center in the countryside of New Jersey. Not a trend following podcast, but an episode every investor should absorb. Special Offer: receive free DVD delivered to your home or office: www.trendfollowing.com/win.
Michael Covel speaks with Mebane Faber. Faber is a a noted author (The Ivy Portfolio), blogger, and portfolio manager with Cambria Investment Management. If you're into quantitative style investing, trend following, and systematic strategies, Mebane is right there with you. Faber grew up in a family full of engineers, and he started off studying biomedical engineering in college. Despite his scientific background, he's always had a strong interest in finance. Faber discusses how coming into finance with his unique background helped to give him the ability to look at the data without getting distracted by investment dogma. He spent the majority of his youth in a raging bull market during the internet bubble; however, when he realized his mother's style of buy and hold investing didn't cut it anymore, he was forced to find new methods. Covel talks to Faber about his white paper, "A Quantitative Approach to Tactical Asset Allocation"; his book, The Ivy Portfolio; the differences between "market timing" and "quant"; behavioral finance; the benefits of trend following systems in reducing volatility and drawdowns over enhancing returns; and the idea of macropessimism/microoptimism. Professor Faber! Special Offer: receive free DVD delivered to your home or office: www.trendfollowing.com/win.
Michael Covel lays out 25 selected Trend Commandments. While these principles aren't all-inclusive, they're guidelines to help get you to understand the trend following mindset. Covel also brings up a recent review of "The Little Book of Trading" in the Financial Times and offers a response. This critic has a hard time wrapping her arms around the benefits of trend following; however, if you don't "get" trend following, you can't be beaten over the head with it. Covel disputes the criticism that, if you teach something, the sheer act of being compensated to provide information to people disqualifies you from having a valid opinion. If Nobel prize winner Daniel Kahneman gets paid to teach at Princeton, does that invalidate his work? The company Covel keeps with other traders might give a clue that he's speaking the truth. Covel also plays a clip from Nigel Farage on the genius of mutual indebtedness, the bailout of Spain, and the failure of the Euro. In a clearly volatile market, what are you going to do to prepare? How do you prepare for uncertainty when you can't trust just about anything? Trend following is the only trading strategy that has rational basis to it; it allows you to participate in the profits and protect yourself on the downside. Isn't that the goal? Special Offer: receive free DVD delivered to your home or office: www.trendfollowing.com/win.
Tony Bazile of Intrinsic Capital Management is a trend following trader specializing in stocks. Michael Covel talks to Bazile about his background, which is unlike anybody profiled on the podcast so far: He was a professional water skier into his 20s. After observing another water skier trading on the sidelines and making a ton of money, Bazile decided to look into trading for himself. He made quite a bit before the tech bubble burst; when it popped, he was left with the feeling that there was still plenty of opportunity, and he forged forward. He moved to New York with his then-girlfriend and wound up living directly behind the American Stock Exchange, where he spent six or seven months handing out his resume (litetrally on the streets to Wall Street warriors). Eventually, he found himself working for John Mulheren. Bazile relates a story where Mulheren went on vacation after taking a large position. When Mulheren's team sold 80% on the second day of what would become a three week rally, Mulheren returned from his vacation furious, and Bazile learned one of his most valuable trend following lessons. This sent him down a path where he visited Bill Dunn in Stewart, Florida, and eventually ended up working for Ken Tropin at Graham Capital. Tropin told Bazile: "I'm good because I know that I don't know which way the markets are headed." After managing money for Graham Capital, Bazile left and partnered up with David Frakes, and formed Intrinsic Capital Management. ICM uses a trend following strategy to trade stocks, and Bazile and Covel discuss dealing with the sheer volume of information on individual stocks; and how trend following is the strategy, not the instrument. Covel also traces the lineage from Richard Dennis to Jerry Parker to Salem Abraham, and from John W. Henry to Ken Tropin to Tony Bazile. Only time will tell! Special Offer: receive free DVD delivered to your home or office: www.trendfollowing.com/win.
The Fed has said they will keep rates at 0 for years. That means bubbles, pops, bubbles, pops, etc. So, if that is the case how can you generate a return? Covel offers a down to earth perspective for dealing with this chaos to make money. Special Offer: receive free DVD delivered to your home or office: www.trendfollowing.com/win.
Michael Covel talks to Mike Aponte, professional blackjack player and a former member of the MIT Blackjack Team. Aponte was featured in the bestselling book "Bringing Down The House" as the player Jason Fisher, which was adapted into the movie "21". Covel makes this point about Aponte: Due to his systematic approach, he's definitely not a gambler; he's an investor. The similarities between successfully playing blackjack and trend trading are off the charts, including two of the key linchpins between them: Ed Thorp and the Kelly criteria. Aponte never really played blackjack before the MIT team, but when he learned to approach card counting as a science, he was hooked. Covel and Aponte go in depth about Aponte's beginnings; the similarities between systematic card counting and trend trading; the psychology behind the two; and how even some of the more advanced mathematicians at MIT didn't have the risk-taking constitution it took to make the cut. Aponte tells some revealing anecdotes along the way, including a run in with casino security that ended with them actually asking for his autograph. A must listen for any investor--blackjack player or not.
Michael Covel plays a musical clip to illustrate where we are today - something you might not expect, but particularly relevant to our current climate. Covel also talks about an article called "Spotting Bulls*** in Financial News in a Few Easy Steps". He profiles one young writer in particular, and how anybody right out of college with a journalism degree can reach millions of people in the financial markets, yet still not have any idea what they're talking about. Not to pick on this young writer, Covel discusses how dangerous articles like this can be for an inexperienced trader. Staying in the world of media, he discusses two videos on CNBC in the last week. One interview with Jason Gerlach of Sunrise Capital had CNBC, in typical style, asking for specific picks; Gerlach explained that this is not in line with a trend following approach, to complete confusion from CNBC on air types. Another CNBC piece with Jeff Applegate from Morgan Stanley had him explaining managed futures as a relative safe haven. Of course, CNBC's reply left Covel shaking his head. Covel also discusses the Facebook IPO craze, puts it in context of the last tech bubble, and takes a look at how you can't trade it from a trend following perspective - yet. He also previews an upcoming podcast with a member of the MIT Blackjack Card Counting team, as discussed in the book Bringing Down The House. As shown in the chapter on Ed Thorpe in Jack Schwager's new book, blackjack has particular relevance to the trading world. In fact, two of the original turtles were on competing blackjack teams. Covel waxes that wisdom can be gained from people from other walks of life, especially those closely related to the trading world. Special Offer: receive free DVD delivered to your home or office: www.trendfollowing.com/win.