Jeff Goins is author of “Real Artists Don’t Starve: Timeless Strategies for Thriving in the New Creative Age.” Jeff dismantles the myth that being creative is a hindrance to success and reveals how an artistic temperament is an advantage in the competitive marketplace. Mindset, technique and understanding the right perspective is key, and Jeff helps get you there.
We all know there are staving artists in the world. We have told ourselves long enough that artists need to be struggling – that’s a myth. You can be creative and make money. Jeff uses an example of Michelangelo and how he was actually wealthy to the tune of about 47 million dollars. If the renaissance’s greatest artist was one of the wealthiest artists, then what does that tell us about today?
How did Jeff go down the path he is on now? Jeff is a big fan of apprenticeship and has always had the mindset that life is a classroom. Apprenticeship and observing how other successful artists have made a living is how you get started. Many find success by essentially stealing ideas from others and arranging it in a new, interesting and better way. Apple and Microsoft or McDonalds and In n Out are great examples of stealing from everyone around them and doing better. Look at your peers, the people in your industry and just do it better. Be persistent.
Another way to become a thriving artist is to own as much of your art as you can for as long as possible. Jay Z and Dr. Dre are two examples of this. You don’t let the label and manager take over you. Dre realized he didn’t want or need a manager, label, or partner in his company. It took him some time and going through a few learning experiences but he eventually established his own label on his own terms. Michael and Jeff end with a story about Disney and Pixar showing listeners that selling your art too soon can leave a lot of money on the table.
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Michael Covel uses Richard Feynman to help break down the scientific method. Michael reads quotes from Feynman explaining it, then uses the scientific method to look at the recent actions of Tiger Woods highlighted in the news. Investing, money, and sports figures are examples of where people those sight of reality. Most do not make decisions based on the scientific method. They want to think that their sports hero is still a hero or they want to think they have not lost money in the markets just because they have not sold. People just want to be right. Ego and arrogance run amok.
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Eric Barker is founder of the blog, Barking Up The Wrong Tree. He provides science based answers and expert insight on how to be awesome in life. His newest work is “Barking Up the Wrong Tree: The Surprising Science Behind Why Everything You Know About Success Is (Mostly) Wrong”.
What happens to valedictorians after graduation? Valedictorians are great at following rules and not breaking outside the box. This gets them far in school but not too far in the real world. Studies have proven most who excel in school end up in structured non-pioneering jobs. Most entrepreneurs don’t follow the rules of school or society. They are also generally classified as creative people and therefore have huge obstacles to maneuver through. Most teachers say they love creative children but research shows those are the students hated most. They don’t sit still or follow direction well. Luckily, In today’s era it is easier than ever for those creative types to succeed. The internet has given ideas the opportunity to spread quickly and easier than ever before.
With ideas easily being spread, so are negative (and positive) influences. We are always more influenced by those around us than we realize: work colleagues, friends, people at social events… whoever you choose to surround yourself with will have a tremendous influence on your life.
Learning to accept failure is just as important as surrounding yourself with the right crowd. New opportunities and innovation springs from a person’s ability to fail. Doing everything the same way every time, will always get the same results. Pushing boundaries is critical otherwise you’re not working toward expertise, you are just practicing redundant behavior. Everyone loves to hear about the 25 year old billionaire because it doesn’t seem like there was much work involved but when you peel back the layers, you see the grit necessary in getting to their success.
One example of grit and sustaining the right mindset is a research project Eric did with Navy Seals. What stood out the most was their optimism. They have short term focus that keeps them optimistically moving forward. Personal, persistent and pervasive are the three P’s that if kept positive, you can produce optimism and grit. Navy Seals don’t look at a 60 day program and say, “I can have no sleep or food for 60 days.” Instead they say, “I can get to lunch” and then after lunch they say, “I can get to dinner.” It is a day-to-day survival mode rather than big picture. The big picture is too daunting.
Michael and Eric end the podcast discussing what Eric calls “the buffet.” How close are you to buffet food? How much are your friends eating? Are you facing the food, or are you facing away? All these factors play a part in how your life is modeled.
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Denise Shull is a performance and decision coach to traders and athletes. She is well known for her effectiveness in assessing performance under high pressure situations. Denise began her Wall Street career in 1994 as trader and desk manager on the Chicago Board Options Exchange. She was always fascinated by the psychology side of trading from the outset of her trading career. In 2015 she offered critical insight on how to put together one of the main characters of the hit show “Billions” on Showtime.
Denise has counseled an extremely wide variety of traders with all kinds of personalities and trading styles. However, at the end of the day everyone is human and all traders have common psychological threads which she points out. When Denise analyzes a client she tries to understand a sequence of feelings that person is making and what the patterns of their feelings are. At first it is just about her figuring out how a clients brain works, and then she helps them see the patterns.
What was the trigger for Denise to go down the path of studying the mind and human behavior? Starting from a young age she enjoyed observing and counseling friends. In her mid to late 20’s she started looking at her friends relationships and seeing that the people were all different but the scenarios were the same. A teacher helped point out a theory of Freud’s. Freud believed there is a critical period for attachment and self image when you are a child. Denise gives examples of how human reactions stem from a template made in the first 2-3 years of life.
Michael and Denise finish up talking fractals, psycho analytics, efficient market theory and compare notes on Nobel Prize winner Harry Markowitz.
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On today’s episode of Trend Following Radio, Michael Covel opens the conversation by taking a look at the concept of faith, and how it has no place in the trading world. In trading, logic and reason trump faith. If you can’t “grow” up and use reason to gather information and form strategy, Michael notes, then you have no place at the “adult” table.
Next, Michael outlines core decision-making precepts. Sometimes making the right move means going against your instincts, and it’s at these times that you need to force yourself to make a decision – even if it means quitting. People tend to equate quitting with failure when the truth, as Michael points out, is that sometimes quitting is what keeps you in the game. This line of thinking is again linked to logic rather than faith – the erroneous faith that if you necessarily stick it out (i.e. a losing trade in the markets) success will follow.
Other topics covered in this episode touch on how financial advisors primarily exist to push mutual funds and buy and hold orthodoxy, why investing without a plan dooms you before you begin, and why embracing the challenge of how the world and investing really works makes you a smarter investor.
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Today on Trend Following Radio Michael Covel talks with author and startup entrepreneur Gabriel Weinberg about the concept of traction. Gabriel points out that in the business world traction is about far more than simply getting a grip and hanging in there – it’s about then moving forward, ultimately toward a defined goal (customers).
Just like a trend following trader that uses quantitative methods to invest scientifically, Gabriel relies on numbers and hard data to inform him about which marketing channels are working and which should be focused on, and which are less effective and should be dropped. The result is a streamlined marketing approach that’s allowed Gabriel, a self-published author, to sell upwards of 35,000 copies of his book.
Michael and Gabriel also talk about how psychology factors into startup entrepreneurship. For anyone investing their time and energy into a project, both passion and resiliency are paramount. If you aren’t passionate about the work you’re doing, and if you don’t genuinely enjoy the challenge of bringing a product to market, then you’re doomed before you ever start. Best, as Michael suggests, to run back to the office cubicle.
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This time on Trend Following Radio, Michael Covel talks with Paul Slovic. Paul is president of Decision Research and a professor of psychology at the University of Oregon, and today he talks with Michael about the science behind risk perception.
To demonstrate how people tend to conflate actual risk with their perceptions of risk, Michael and Paul discuss a topic that’s always been a hot button issue in the public consciousness, nuclear power. In the early days of this industry, people were rightfully concerned with the possible mismanagement of such a potentially dangerous technology – concerns seemingly crystallized by the partial meltdown at Three Mile Island in 1979. Similar concerns continue to be raised today, particularly in light of the Fukushima disaster of 2011. But as Paul explains, neither of these tragedies can completely outweigh the obvious benefits of nuclear power. It’s a case of risk perception to overcome the actual risk posed.
The conversation also focuses on the role of the media in influencing people’s decision-making processes. Why is it, you might ask, that the media spends so much more time pushing negative stories than positive ones? The answer, according to Paul, goes back to biology. It’s a survival mechanism in human beings that we’re affected far more by negative stimuli than positive stimuli. This makes sense when you consider the external dangers we’ve faced in our evolution. So today, we tend to harp on the bad things that happen while ignoring the good.
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On today’s show, Michael Covel talks about decision-making, and how too often people allow the "rules" of others to dictate the actions they take. This, as Michael explains, is indicative of the politically correct culture that’s taken root in all of society.
What are we to think when wildly successful comedians such as Jerry Seinfeld, Louis C.K, and Chris Rock flat-out refuse to play college campuses because of the close-minded, irrationally sensitive nature of today’s student bodies? How have we arrived at a place where anything less than absolute conformity to preselected attitudes and beliefs means running the risk of being labeled "something"? Racist? Homophobic? Sexist? The list goes on.
What’s worse, as Michael points out, is that this culture of victim-hood has many feeling they’re entitled to certain things simply because they "exist". These are the people who blindly accept societal rules, rather than analyze and develop proper strategy. Good decision-making, whether in trading or everyday life, means developed a plan and a set of rules and then sticking to them. Because in the end, everyone gets what they want (to paraphrase trader Ed Seykota).
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On today’s show Michael Covel talks with memory expert and Memrise co-founder Ben Whately. Not surprisingly, central to the discussion is memory and how the human brain interprets and processes information.
When we think of fond memories, we often see events from someone else’s point of view. Ben explains that this is because in addition to our own personal recollections, we have also encountered alternate perspectives of the event through such devices as photos or home movies. Our brain mashes the imagery together and produces a composite image – a memory.
Michael and Ben talk about how humanity’s view on memory throughout time has always been a reflection of the best technology of the era. This leads to one of Ben’s favorite subjects, language. According to Ben, the way language is taught today – rote memorization – is completely wrong. Language is best learned by immersing yourself in the culture of the people who speak it. Take his memory lessons throughout this episode and apply them tomorrow.
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Today’s guest is prolific author, mathematician and entrepreneur John Casti. John talks with Michael Covel about social mood, and how ultimately the events that urge populations to move in one direction or another are largely unpredictable.
John discusses the concept of socionomics – the idea that the collective beliefs of a society about its future will influence the kinds of social events to occur in that future. And while these triggers, which John refers to as X-events, can’t be predicted, John explains that they can absolutely be prepared for by understanding the greater social context of the region.
As an example, John cites the so-called Arab Spring. As he points out, no one could have predicted the single event that moved millions in the Arab World to take to the streets in protest. But it wasn’t hard to see that the region had long been primed for something big. Charles Faulkner recommended John as a guest (even though he only knew his work). Good tip from Charles!
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On today’s show Michael Covel vents some of the frustration he’s been feeling over the past few weeks. Central to his discussion is the idea of failure, and how the vast majority of people are unable – or unwilling – to accept how vital it is to overall long-term success.
Michael opens by pointing out that most people today seem to be under the delusion that someone will always be there to take care of them. This, as Michael explains, is by design. Government and the talking heads of the media want the average citizen to be soft, dependent, and unwilling to take risks. Safety and security, according to the official line, should be valued above all else (even if it is all an illusion).
But this line of thinking doesn’t account for the truly successful of the world. Those who’ve risked everything and succeeded – specifically because they failed and learned from their mistakes. Success requires tenacity and dedication, but neither are required if you don’t take a risk in the first place. Because if you never take a shot, you’ll never hit the target.
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Today’s guest is author, entrepreneur and professional poker player Annie Duke. Michael Covel and Annie Duke discuss several of the countless ways in which the psychology of gambling overlaps with that of trading, investment and other aspects of business.
Annie explains the importance of thinking probabilistically for decision-makers. Gamblers, like investors, can sometimes become so focused on their losses that it begins to affect their decision-making process in a negative way. Annie calls this “tilt” and says it occurs when players put too much emphasis on outcome. She points out that so long as you are getting an overall return on your investment via a positive expectation, small losses should be both expected and absorbed.
Michael and Annie also discuss further in depth expectancy and how the top minds in both trading and gambling think about the long-term. When involved with risk, it is always important to think realistically. If there is a 90% chance of success, don’t round it up to 100% simply to boost your confidence. This way, if the venture fails, you won’t feel the need to discard your strategy since there was always that 10% chance of failure. Overall, your odds of success are still very good. This is why Annie’s thinking is so important for all of us.
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Today’s podcast guest is Chris Clarke, ex-Goldman Sachs executive director and founder of Lawrence Clarke Investment Management. Clarke has been developing trading systems for decades.
The conversation today gets into the psychology of systems trading. Trend following is inherently simple to understand, and does not require above-average intelligence once the system is in place. Yet so many people, including most fund managers, tend to downplay trend following and keep seeking the “holy grail” – a magical system that will supposedly make them money without any downside. An interesting metaphor for this that Chris offers is that of weight loss. Although the theory of it is simple (diet and exercise), most people keep seeking the magic bullet that will make them achieve results without following the system. Much the same with trading.
Another topic that Michael Covel and Chris Clarke talk about is understanding the difference between risk and drawdowns. Drawdowns are normal, and will be there for as long as trend following as a strategy exists, and the markets keep trending. Ultimately, trend following is about human nature, and that’s not about to change.
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