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Bestselling author Michael Covel is the host of Trend Following Radio with 10+ million listens. Investments, economics, psychology, politics, decision-making, human behavior, entrepreneurship and trading -- all passionately explored and debated. Guests include Nobel Prize winners: Robert Aumann, Angus Deaton, Daniel Kahneman, Oliver Hart, Harry Markowitz & Vernon Smith. More guests: Jack Canfield, Howard Marks, 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.

May 27, 2014

My guest today is Jean-Philippe Bouchaud, the Chairman of the multi-strategy quantitative hedge fund Capital Fund Management (5B+ AUM) and co-supervisor of the research team. He is a well known authority in the field of Econphysics, co-author of “Theory of Financial Risks and Derivative Pricing”, a Professor of École Polytechnique where he teaches Complex Systems and has his Ph.D in theoretical physics from École Normale Supérieure.

The topic is Trend Following.

In this episode of Trend Following Radio we discuss:

  • Bouchaud’s physics background and how it collided with the world of classical economics
  • The Black-Scholes model, and it’s still use; experimenting with simulation
  • Bouchaud and his colleague’s paper, “Two Centuries of Trend Following“
  • The efficient market hypothesis
  • Why the existence of trends is one of the most statistically significant anomalies in financial markets
  • How trends predate trend following
  • Why classical economics has no framework through which to understand “wild markets”
  • Benign randomness vs. wild randomness
  • Accepting uncertainty
  • Differences between physicists and economists

Jump in!

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I’m MICHAEL COVEL, the host of TREND FOLLOWING RADIO, and I’m proud to have delivered 10+ million podcast listens since 2012. Investments, economics, psychology, politics, decision-making, human behavior, entrepreneurship and trend following are all passionately explored and debated on my show.

To start? I’d like to give you a great piece of advice you can use in your life and trading journey… cut your losses! You will find much more about that philosophy here: https://www.trendfollowing.com/trend/

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