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Bestselling author Michael Covel is the host of Trend Following Radio with 9.5+ 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.

Praise:

“Your questions were excellent questions. I enjoyed this very much.”

--Vernon Smith, Nobel Prize in Economics

“You’ve surrounded yourself with one of the most advanced group of mentors possible…The people on your podcasts, and people in your life, all are people with strong opinions, all people that make you think and make you grow. You just have some kind of an affinity for people like that, and that’s part of what makes you good at what you do.”

--Ed Seykota

“Michael Covel’s podcast has had over [9.5] million listeners and he’s completed [900+] episodes. He’s probably the most established podcaster on this list—and it shows. Mr. Covel’s podcast is great for those looking for alternative views on the market, those who are tired of hearing the same old stories told on CBNC and other traditional outlets. This is highly recommended if you are looking to expand your mind in investing. Mr. Covel has had some incredible guests, to include multiple Nobel Prize winners and world-famous investors. One of my favorite episodes was when Mr. Covel interviewed Annie Duke, a former professional poker player who has some incredible insights on decision making. Mr. Covel always has me thinking and Annie Duke only amplified my brain-wave activity.”

--Wall Street Journal

Nov 25, 2016

Michael welcomes Daniel Crosby, author of “The Laws of Wealth: Psychology and the Secret to Investing Success.” His background is in behavioral psychology and he sees the markets as a great backdrop to view human behavior in a real world setting.

Michael and Daniel start breaking apart the efficient market theory into two concepts: 1. You can’t beat the market, and 2. The price that you see is always right. They discuss debate in the academic world between the efficient market camp and the behavioral finance camp. Daniel says that the 2008 crash shows where the efficient market theory starts to break down. He moves into value and momentum trading.

Daniel brings in research proving that rules based approaches is 94% more successful than expert personal discretion. “Let your profits run and cut your losers short” is perhaps the biggest rule in trend following which takes great psychological discipline. Daniel says that it is an easy concept to grasp, but so hard to follow. Any investment discipline rooted in human psychology has a much better chance of working and sticking around than other strategies that don’t take human nature into account.

To make the risky choices Daniel says you need a mentor. Humans don’t do well with volatility and uncertainty. We live in the present and not in the future so a lot of people need coaching to look beyond the day to day. The hallmark of a good investor realizes that the rules do apply to them and they own the fact that they are no more gifted or special than the next person. Most investors tend to leave about 50% of their profits on the table due to bad emotional decisions.

Daniel says that everyone talks about the idea of “trouble is opportunity” but they don’t really live by it. People need to take a closer look at what “opportunity” really is. They need a rule, system or automation in place that makes them do the thing they don’t want to do. Michael and Daniel finish up the podcast talking about “benchmarks” and how they hinder investors performance and aid in making bad decisions. People who have personal benchmarks rather than index benchmarks have shown to trade more successfully.

In this episode of Trend Following Radio:

  • Expert discretion
  • Efficient market theory
  • The eradication of guinea worms
  • Human ego
  • Warren Buffett and his trading strategy
  • Passive investing
  • Sigmund Freud’s impact on trading
  • Standard deviation as a proxy for risk
  • Matching “the benchmark”