Michael dives in for a weekly monologue. Listen at your own peril.
Richard Clarke is co-author of “Warnings: Finding Cassandras to Stop Catastrophes.” Richard was also the former National Coordinator for Security, Infrastructure Protection and Counter-terrorism for the United States. He worked for the government starting with Ronald Reagan’s Presidency and continued to move up the ladder until he resigned in 2003 under President George W. Bush’s presidency.
Was there a starting point to Islamist terrorism? Were American’s affected much by the Gulf War? What was some red flags raised about the World Trade Center bombing? What are Cassandras? What did we know, and what were some warning signs at the time of 9-11? Why did we still go to war after 9-11 when the evidence was so lacking to go into Iraq? Michael and Richard go through these questions and many more throughout the podcast. Michael ends the interview asking Richard, “How can you see the next 10 to 20 years unfolding?”
In this episode of Trend Following Radio:
Peter Borish is chief strategist of Quad Capital. He works as a trading coach and helps recruit new traders and develop the company’s trading strategy. He also is a founding member of the Robin Hood Foundation. The Robin Hood Foundation has made great strides in their charity work and are continuing to do bigger and better things. Peter believes that the quality of life for those around you is much more important than the material possessions that can be accumulated.
Michael and Peter change gears from charity work, to trading and Quad Capital. Quad Capital has had only 5 or 6 down months since inception about 42 months ago. What does their multi-strategy approach consist of? They look at alpha generating, capacity constrained strategies. They also believe investors are looking at liquidity, therefore that is exactly what they provide in their funds.
Peter is the business of managing risk, not just being right. Another way of putting it is, “Are you interested in making money or are you interested in being right?” We should all be in the business of making money, over being right. That being said, is Quad Capital open to other strategies that could make them money? As long as the strategy fits within their trading philosophy, then they are always open to new talent. Michael and Peter finish the conversation talking sports analogies. A lot of traders think they are Michael Jordon, but are they Michael Jordon on the Bulls? Or are they Michael Jordon on the White Sox?
In this episode of Trend Following Radio:
Collin Seow is author of “The Systematic Trader: How I turned a $250,000 debt into profits through stock trading.” He also is a qualified Chartered Portfolio Manager with a Certified Financial Technician qualification, and a member of MENSA Singapore and Technical Analysts Society Singapore.
Michael and Collin switch discuss the “Singaporean perspective.” What is the Singaporean perspective and what helped lay the foundation for their success? The founding fathers of Singapore set forth strict rules and regulations so people knew what they could and could not do. The system was laid out clear and concise. Citizens knew what their boundaries were down to the last detail. For example, there are rules defined ranging from whether or not you can chew gum to how for trees are allowed to be planted apart from one another.
Collin moves from the Singaporean perspective socially, to their perspective on trading. More traders in Asia seem to be open to the idea of systematic trading. When he back tests a system, he doesn’t just look at making money, he tries to figure out how to filter out the losses. He wants to protect what he has so the returns will take care of themselves. Picking a certain percent that you’re willing to risk on a trade is not necessarily intuitive. Collin also looks at both position trading and swing trading, and adjusts his risk according to trading style. Although there are many different styles, and factors that play into how one will trade, Collin still attributes over 50% of trading success to having the right psychology.
In this episode of Trend Following Radio:
Michael Covel’s take for the week.
Mihir Desai is author of “The Wisdom of Finance: Discovering Humanity in the World of Risk and Return.” Mihir is currently the Mizuho Financial Group Professor of Finance at Harvard Business School and a Professor of Law at Harvard Law School.
He wrote his new book with two goals in mind: 1. Demystifying finance and 2. Have people look at finance in a more inspirational way. After each financial bubble bursts, the public repeatedly retreats to stereotypical ideas of finance. Mihir doesn’t want to wait for a generational shift to take place for finance to be looked at in a positive light. Financial literacy has gone by the way side in schools. How do you get children to think about basic risk taking? How do you think about protecting yourself? How do you buy insurance? How do you pool your money as a family? He hopes his book may help change some views and enlighten.
Mihir explains why diversification isn’t important just in the markets, it is important to diversify in all aspects of life. As an athlete you should workout all your muscles not just pinpoint one area. Or if you are looking at your health, you should look at all aspects of your health, not just what you are eating or how you are sleeping. Broaden your outlook and diversify your time and energy accordingly.
What is Agency theory? If you give someone money to invest, why do you get the money back? Arguably this is the biggest problem in modern finance. 150 years ago most people were self employed. Nowadays we appoint people as our “agents”. We have a system where we give money to people we don’t know and expect them to take care of it. Michael and Mihir end the conversation talking about people finding their path and true happiness in life rather than doing what their parents or society has told them to do.
In this episode of Trend Following Radio:
You won’t expect or see this episode coming… First, consider a truism: Asian American students dominate in academia. Asian Americans know that if they get the right scores, and check off all the boxes, they get the good school. However, this is not how it works at Harvard and other Ivy League institutions. They don’t operate based on who has the best test scores.
Michael reads a passage from a New York Times article illustrating the injustices in Harvard’s admission processes. Once one ethnic quota has been filled, that’s it. No more students can me admitted. Public universities handle their admission process differently. Asian Americans make up 34% of The University of California’s student body as apposed to about 15% of Asian Americans allowed to attend the Ivy schools due to diversity regulations.
“America, the home of equality?” This catch phrase has gone by the way side. When students work hard, but then are slapped down because of their race, this goes against the American dream. And when the system turns against you its time to make a choice: Fight against it or walk away? Michael’s answer is counter-intuitive and dovetails with trend following.
In this episode of Trend Following Radio:
Art Collins is author of “Beating the Financial Futures Market: Combining Small Biases Into Powerful Money Making Strategies”, “When Supertraders Meet Kryptonite”, “Market Rap: The Odyssey of a Still-Struggling Commodity Trader” and “Market Beaters.” He has been trading systematically for the past 30 years.
How was Art Collins able to get Richard Dennis, Bill Dunn, Bob Pardo, Mike Dever and Larry Williams (to name a few) to talk? He made the interviews more like a partnership, than an interview. He made an impressive name for himself which led to positive word of mouth spreading.
What does robustness mean to Art? He uses four rules for prudent testing: 1. Don’t settle on your best result if it is a “diamond in the rough”. 2. Strategies should test well in various markets, particularly similar ones. 3. You don’t want your results to be bunched up in limited time frames. 4. Stay focused on testing concepts you understand in the markets.
Throughout the years Art wasn’t only focused on trading markets. He also studied how to beat the blackjack table and how to skew the odds in his favor when betting on sports. Trading football lines, and trading the price of stocks – what’s the difference? There isn’t much of a difference when you take a technical and systematic approach to them. It’s about keeping emotions out of it. He never wanted to be a cowboy trader or thought of as a “genius”, he just wanted his systems to work. Michael and Art spend the rest of this episode diving into card counting, mechanical systems, gambling on football, data mining and the fools errand of making $1,000 a day.
In this episode of Trend Following Radio: