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Trend Following with Michael Covel

Bestselling author Michael Covel is the host of Trend Following Radio with 4 million listens. Investments, economics, decision-making, human behavior & entrepreneurship--all passionately explored. Guests include Nobel Prize winners Robert Aumann, Angus Deaton, Daniel Kahneman, Harry Markowitz & Vernon Smith. Also: 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. All 450+ episodes only at www.trendfollowingradio.com/rss.
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Bestselling author Michael Covel is the host of Trend Following Radio with 4 million listens. Investments, economics, decision-making, human behavior & entrepreneurship--all passionately explored. Guests include Nobel Prize winners Robert Aumann, Angus Deaton, Daniel Kahneman, Harry Markowitz & Vernon Smith. Also: 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. All 450+ episodes only at www.trendfollowingradio.com/rss.

Dec 5, 2016

“If you are in a dead end existence and feel like you need something else, get on a plane.” Fly to a foreign country, go alone, and do not have a plan. The influx of adrenaline from getting away and exploring can break anyone out of their day to day hypnosis.

Michael plays a series of news clips starting from the beginning of the Presidential race. The various clips start off profiling Donald Trump’s campaign as a joke, and then slowly morphing into him inching his way up in the polls and taking the Presidency. Michael then reads an excerpt from “Follow Me and Die” by Cecil Curry.

Michael ends the podcast with a quote from a recent Financial Times article featuring David Harding. The excerpt explains how Harding exploits the failures in the efficient market theory. He says that the markets are a psychological game and should not based off of fundamentals. Bet your money on the price, not what is happening in politics.

In this episode of Trend Following Radio:

  • Trump as President-elect
  • Trading off of price, not politics
  • Nazi’s in America
  • David Harding
  • Efficient market theory
Dec 2, 2016

Olympic gold medalist Lanny Bassham is on today’s podcast. After falling short in the 1972 Olympics winning the silver medal rather than gold, Lanny went home and re-applied himself. He returned to the 1976 Olympics and won the gold medal in rifle shooting.

Lanny was the kid in school that nobody wanted on their team. He was slow, short and uncoordinated. He worked hard, but he was never going to be able to compete against others that were taller, faster and more coordinated. He shares a story about being in school and one of his classmates saying that he would be the least likely person to become an Olympic gold medalist. This prompted him to go home and learn all he could about the Olympics. This began his journey in finding his place in Olympic history.

Lanny moves on to share how much practice and work he had to put in to become an elite performer. He never felt like practice was something he had to do, it was something he got to do. He loved rifle shooting not just because of the action of it, but because he was good at it. He took obstacles and turned them into opportunities.

Next, Lanny says there is a big difference between winning silver and winning gold. When you go back home and everyone asks how you did, they always ask who won the gold, not who won the silver. Lanny relates winning silver saying, “It is like going to the super bowl and losing.” Doesn’t matter that you made it there if you don’t win. He quickly realized the reason he won silver wasn’t because of his shooting capabilities, it was his mental game. He teaches people how to have a mental process and tap into it when they need it the most.

Lanny breaks performance down as a function of three mental processes: the conscious mind, subconscious, and self image. He goes into depth explaining the balance between all of these psychological functions. He says that you need to focus on your process rather than outcome. When you are 100% in control, then you will be much more mentally consistent. Outcome will always follow process. Lanny finishes up the podcast asking the question, “Do you really want it to be easy?”

In this episode of Trend Following Radio:

  • Creating a mental process
  • Changing your self image
  • How the top 5% think
  • Hard work in practice vs. Hard work in tournaments
  • Thinking of process not outcome
  • Valuing performance not just participation
Nov 28, 2016

Michael brings football into the podcast today. He starts off playing a press conference clip with Tony Romo and his response to being injured and falling from his spot as the starting quarterback.

Michael moves on to Donald Trump and what government should be. There are pro’s and con’s to Trump becoming President, but the bottom line is that people voted against the current political system. 50% of Americans decided to roll the dice and see what happens.

Big picture: Your trading strategy must not be based on who the President might be. Just follow the trend.

In this episode of Trend Following Radio:

  • Meritocracy
  • Donald Trump as President
  • Trading off the trend, not fundamentals
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”
Nov 21, 2016

On today’s episode of Trend Following Radio Michael Covel interviews Jim Rickards. Jim was front and center during the 1998 LTCM blow-up. He was a partner and general counsel for Long Term Capital Management. Following their blowup, he was principal negotiator in the 1998 bailout of LTCM by the Federal Reserve. He has had a bird’s eye view of some of the most interesting events in the economy over the last 20 years.

Jim and Michael start the conversation off talking about WikiLeaks, who the global elites are, and how they are slowly being exposed. WikiLeaks is showing the private face of how politicians think and giving a behind the curtains look into their lives. People are losing confidence in these “elites” and the “elites” are starting to lose confidence in themselves.

In Jim’s latest book, “The Road to Ruin: The Global Elites’ Secret Plan for the Next Financial Crisis,” he talks about 1998, 2008 and 2018. Jim gives these dates as examples of financial crises that happen (and will happen) every six to ten years. He relates financial panics to earthquakes. If you could stop an earthquake mid earthquake, this is similar to how we have been dealing with financial crises over the years. When bubbles are created, and then bailouts occur, government is only putting a stopper in the problem, however the problem is still there and building. The next bailout can’t come from the central banks.

Jim and Michael finish the podcast discussing cyber hacking and WWIII. Jim believes WWIII has already begun between Russia and America on a cyber warfare front. Cyber warfare has been happening between Russia and the U.S. for years. It is the worse kind of attack because you can get into major operating systems. Jim uses the operating systems of the Hoover Dam or getting into the operating system of the New York Stock Exchange as examples. If a terrorist got into the operating system of the Hoover Dam and opened up the flood gates it would wipe out hundreds of thousands of people.

In this episode of Trend Following Radio:

  • IMF
  • Long Term Capital Management
  • Federal reserve and bailouts
  • Efficient market theory
  • Bayes theorem
  • Complexity theory
  • Cyber warfare

Free copy of Jim's new book: Go here.

Nov 18, 2016

John Miller, author of “QBQ: The Question behind the Question”, is on today’s podcast. John’s message is all about person responsibility. His dad was the wrestling coach at Cornell University and he taught John the foundation for his way of thinking early on.

What could I have done different? How could I have done a better job? These are just a couple questions John tells people to ask themselves before they try and pass blame onto someone else. John shares a personal story of someone going above and beyond in their service. This story is referred to as “The coke story.” He shares it with every audience he speaks in front of because it is the perfect example of someone going above and beyond. John says that people need to rise above situations, swallow pride, and fix problems even if it wasn’t their mistake to fix.

Next, John shares what he did before writing books and doing speaking engagements. He was bored and depressed working behind a desk. Michael asks, “Even in a bored and depressed state, did you ever have a victim mentality in your psyche?” John shares another personal story about him shutting down an entire branch of his company (for good reason) so he could move locations and be in a more positive place. He says that he has always been proactive in how he looks at a situation. He gives a few “rule of thumb” phrases to try and stay away from: Whenever you ask “Why me”, that is falling into a victim mentality. “When” questions are typically linked to procrastination. “Who” questions seek culprits or people to pass blame onto. Ask questions that contain an “I” in there because "I" can only change me.”

In this episode of Trend Following Radio:

  • Staying accountable for your actions
  • Social media bullying and accountability
  • Stress is a choice
  • Asking yourself the right questions to stay accountable
  • Entitlement
Nov 14, 2016

Are markets efficient? Can you beat the market? Is the market the right price? These are questions Michael answers today. Michael brings in Benoit Mandelbrot to help explain the efficient market hypothesis and where we have all gone wrong in our thinking over the years. Next, he goes to Richard Feynman to explain the scientific method and how one goes about comparing and contrasting. Lastly, Michael lets Gerd Gigerenzer elaborate on the concept of heuristics.

In this episode of Trend Following Radio:

  • Efficient market hypothesis
  • Scientific method
  • What is a heuristic?
  • The market price
  • What if money was no object?
Nov 11, 2016

Roger Housden is an author, speaker, and writing guide. He writes for “living and writing wild.” He has authored 22 books and has been featured everywhere from the New York Times to the LA Times. His latest book is titled, “Dropping the Struggle.”

Michael and Roger start the episode by breaking apart Roger’s book title, “Dropping the Struggle.” Roger looks at different areas of life where struggle doesn’t work such as the struggle for meaning or purpose of life, the struggle for love, and the struggle against change, just to name a few. Next, Roger expands on the idea of “the moment of now.” He says that the idea of “fate” does not mean that your life is predetermined. The love of ones fate, and embracing fate as your life is how you write your own story. Planning for the future has its place, but when it preoccupies current life completely, then it can be problematic.

Next, Michael and Roger talk about the always occurring “end of the world” debate going on. They use the upcoming election as an example. Once the presidential election is over, the debate will move onto something else. Life is a constant river. There will always be ups and downs. It is just the way the world works. It is how people respond to the ups and downs that define how things work out.

Love is the next topic of conversation. Roger says that there will always be imperfections with love but even those imperfections contribute to who we are as people. If you take those imperfections out, then we wouldn’t be the people that we are. It is part of the process of humility. Michael and Roger finish up discussing the differences between eastern and western cultures.

In this episode of Trend Following Radio:

  • Reflective contemplation
  • The moment of now
  • The fantasy of control
  • Imperfections with love
  • Buddhist culture
  • Individuality in western culture
Nov 7, 2016

My special 500th episode is a 6-hour aggregate show featuring Charles Faulkner.

Nov 4, 2016

Jenny Blake is author of “Pivot: The Only Move That Matters is Your Next One.” She is a former Google employee and has a perspective that everyone can learn something from, especially if you feel like you are at a plateau in life.

Michael and Jenny start the conversation off with the benefits of yoga. Jenny says that “Your body is your business.” She quickly realized that when her body was operating at 50% then her business was operating at 50%. Yoga has always been her outlet and her source of strength, flexibility, and one of her biggest accelerators of focus.

Michael asks, “How did we get to this point where everyone thinks that life goes in a straight line?” Jenny says we are all hungry for a sense of adventure, however we so often resist change. 2008 was a game changer that made many realize that anything can happen at any time. Social media has contributed to this also by creating a sense of restlessness and what Jenny refers to as “cognitive junk food”.

Jenny talks about the word “plateau” next. Plateau is the word she uses for when one thinks things/life are generally OK and then things start to gradually decline. When you hit a plateau, it is usually a case of mastering the job that you are doing at hand. It isn’t about personal failure. Plateau’s are more about figuring out what is next, how you can continue to grow, and how you can make the most impact on the world, Jenny interviewed a wide variety of people from peak performers to others who peak in some other way. She found that pivots were the most successful when the answer was already within someone. When it doesn’t work out is when people try to pivot too sharply. We can’t always know 100% if a pivot is going to work or if it is right but you need to put yourself outside of your comfort zone and take the risk.

Jenny moves on to explain what she calls “the pivot method”, which is comprised of a four step process. Plant, is the first step: One foot stays planted and the other foot pivots and scans the other options. It is about where you want to end up one year from now. The second step is scan: As you plant your feet you scan all the options. The third step is piloting: This is the experimentation phase. The last step is launch: This step is exactly how it sounds, you are launching into whatever that pivot is that you have been experimenting with. Michael and Jenny give lots of personal examples of all of these steps and go into great detail.

In this episode of Trend Following Radio:

  • Ditching the cognitive junk food
  • Efficiency
  • The pivot method
  • Mindfulness practice
  • The happiness formula
  • Rejection is a stepping stone
Oct 31, 2016

Norton Reamer is the former Chief Investment Officer and CEO of Putnam Investments. He also founded and ran United Asset Management for 20 years. He has 50 years of experience on Wall Street. Today, Michael and Norton talk about his new book, “Investment: A History.” It is a detailed anthology on investment.

Norton stresses that everyone has a responsibility to understand their investments and to educate themselves to know what they are getting themselves into. Most people seem daunted by the challenges of investing. Real ownership, seeking a value, the role of leverage, and resource allocation are four key points of investment that Norton lays out in his book. When someone makes an investment, they need to really own that investment. It isn’t just a piece of paper.

Michael moves the conversation to economic bubbles and asks, “What are some of the timeless lessons that can be learned from bubbles you have witnessed in your lifetime?” Norton’s favorite bubble to have witnessed in his 80+ years is the latest bubble that popped in 2008. It was the way in which the bubble was created that fascinated him. He relates it to the great depression and discusses the similarities in recovering from it.

Next, Norton gives his perspective on efficient markets vs. the behavioral school. He says that it is a conundrum that has not yet been solved. Survivorship bias is the next controversial topic. They discuss the success of Warren Buffett and the “survivorship bias” argument that has been attached to him. Buffett has been around for many decades and both men agree that there is much that can be learned from Buffett. On the other side of the spectrum is Bernie Madoff. Norton explains how an operation like Madoff would be almost impossible to pull off in today’s markets. He also agrees with Michael in saying, “I would be deeply skeptical of someone producing 1% returns every month. You need risk to have returns like that.”

Michael brings up tail risk next. Norton describes tail risk as, “A one in a one hundred year event.” Things can be rare and unlikely but it is not the same as saying something is impossible. Conditions can always get extreme and produce “a one in a one hundred year event” and wipe you out. Norton uses Long Term Capital Management as a great example. Michael and Norton finish the podcast stressing that people can never be too cautious when investing in the markets. Educate yourself and prepare for risk adequately.

In this episode of Trend Following Radio:

  • Personal responsibility in the stock market
  • The role of financial leverage
  • Resource allocation
  • The suspension of diligence during economic booms
  • Efficient markets vs. Behavioral markets
  • Warren Buffett and survivorship bias
  • Tail risk
  • Quant and momentum style trading
  • Practicing caution in the markets
  • What impact does interest rates have on the value of assets
Oct 28, 2016

David Stockman is on the podcast today for his second appearance. He is a former United States congressman, who also served as the Director of The Office of Management and Budget under president Ronald Reagan. His books include, “The Great Deformation”, and “Trumped: A Nation on the Brink of Ruin… And How to Bring it Back”.

Michael and David start off discussing the recent news of Larry Summers suggesting that the Fed should start buying common stocks. David says that this is an act of sheer desperation and that any economist, 20 years ago, would have never come up with such an idea. What has happened is that policy makers have been led into a dead end path. “Madness” is how David describes the Fed right now. The mentality people have today, with Janet Yellen, is that intervention is necessary and without it, the whole system will fall apart. This mentality was not present prior to the year 2000 or maybe even 2008. Wall Street and Washington applaud the policy only because the market continues to go up.

Michael turns the conversation to the present election and asks David how he perceives the rise of Donald Trump and Bernie Sanders. “What does it say about America’s present state of mind?” David says it shows that America has had enough. The public is responding to Trump because he isn’t part of the system. Regardless of Trump’s stance on issues he will probably get a large part of Sanders supporters because they both have an “against the grain” political stance. David refers to Hillary Clinton as “the class president of a failed generation”. He gives examples back to 1991 when Bill Clinton was president, pointing out the senseless wars and damage that has been done to the economy due to policy. Clinton is “A survivor of what has been a 30 year consolidation of bad policy” says David. Hillary Clinton was the survivor who happened to be in the right place at the right time.

Next, David goes into his stance on Glass Steagall and how he would reinstate it in a way that would re-stabilize the financial system. Michael then has David elaborate on Deutsche Bank and some of the other problems the European banking system is facing. Michael asks, “What will happen if there is another 50% decrease on the S&P? What will the authorities do next?” David believes they are out of options. Going to negative interest rates will create a firestorm that they can’t take on. It will induce the sensible people in America to riot. A real correction will not happen until the market is able to stay down and correct from the damage that happened in the propping up in 2008. Michael and David finish up the podcast discussing the Chinese economy. David believes their economy is just as unsustainable as the United States. They are a “huge financial accident waiting to happen”.

In this episode of Trend Following Radio:

  • Glass Steagall
  • Clinton and Trump campaigns
  • Donald Trump and Bernie Sanders supporters
  • Deutsche Bank
  • European banking system
  • Sub-zero interest rates
  • Chinese economy
  • 2016 Election as a turning point in America
Oct 24, 2016

Michael Covel interviews Milton Friedman. Of course, Friedman is dead. Such the conundrum.

In this episode of Trend Following Radio:

  • Free lunch myth
  • Robin Hood myth
  • Collectivism
  • Case against equal pay for equal work
Oct 21, 2016

Michael talks with Ted Parkhill. Ted has over 25 years of management experience in the investment business. He is a founding partner of systematic macro investment manager Incline Investment Management (IIM). He is also serves as an Assistant Professor of business at Sierra Nevada College in Incline Village, NV.

Prior to IIM he was the director of marketing for Zazove Associates a multi-billion dollar quantitative convertible securities manager. He was a senior marketing executive at John W. Henry & Company one of the original Commodity Trading Advisors.

In this episode of Trend Following Radio:

  • It is possible to consistently generate profitable returns through systematic trading
  • Markets are inefficient and therefore trends materialize
  • Trends last longer than people think
  • Prices reflect the sum of the knowledge of all market participants
Oct 17, 2016

Today, Michael dives into the fight for liberty. No show notes. Listen or not, your choice.

Oct 14, 2016

Michael welcomes Adam Khoo to the podcast.

Khoo is a Singaporean serial entrepreneur, author, trainer and a professional stock and FX trader. Khoo became a self-made millionaire at the age of 26, making him one of the youngest millionaires in Singapore.

Khoo is the Executive chairman and Chief Master Trainer of Adam Khoo Learning Technologies Group, one of Asia’s largest private educational institutions, which runs educational seminars for over 80,000 people annually in 7 countries.

From Neuro-linguistic programming to trend following, Adam and Michael cover the key topics.

In this episode of Trend Following Radio:

  • Neuro-linguistic programming
  • Technical analysis
  • Finding the edge
  • Trend following
  • Market Wizards
Oct 10, 2016

Michael provides a FREE chapter from his audio book versions of The Complete TurtleTrader and Trend Commandments.

Mentions & Resources:

  • The Complete TurtleTrader
  • Trend Commandments
Oct 7, 2016

Brian Christian, co-author of “Algorithms to Live By: The Computer Science of Human Decisions,” is on today’s podcast. The book shows how common algorithms relate to our everyday lives.

Brian starts off giving a historical explanation of an “algorithm”. Algorithms do not just relate to computers or mathematical procedures. A cooking recipe can be described as an algorithm or you could use an algorithm to solve the question, “How do you know when your best opportunity is?” Brian says you use an algorithm known as “optimal stopping” to solve this question. He explains the algorithm that provides the best probability of the best outcome.

Probability is the next. Is it worth exploring a new business possibility? Or is it better to hone in your skills and continue on with what you are doing? There is a formal framework or algorithm to help make these decisions. Brian explains the “win stay, lose shift” approach. If a restaurant is good, go back. If you don’t have a good experience, don’t go back. It may not be the optimal approach but it is a good approach and easy to live by.

Michael jumps to an example with Jeff Bezos, the CEO of Amazon. Brian tells Jeff’s story of Amazon and how he left his successful job at the time to start up this “online bookstore”. He ultimately used a “regret minimization framework” to make his decision. There was a possibility Jeff may not have been successful starting Amazon, but had he not tried it, he would have regretted not trying for the rest of his life. Brian also gives other examples of regret minimization algorithms.

Michael and Brian discuss threading next. Lastly, Michael brings up the “searching vs. sorting conundrum” that Brian discusses thoroughly in his book. Brian gives examples about sorting through information on the computer. He says that people should ask themselves “Should you be sorting at all?” Brian explains why “messy” is sometimes better.

In this episode of Trend Following Radio:

  • Optimal stopping
  • What is an algorithm
  • Process vs. Outcome
  • The explore, exploit trade off
  • The multi-arm bandit problem
  • Win stay, lose shift
  • Regret minimization framework
  • Frequency and intensity of mistakes related to age
  • Upper confidence bound algorithm
  • Threading
Oct 3, 2016

Michael dives into Donald Trump and the Fed. Listen at your peril!

Mentions & Resources:

  • Donald Trump
  • Janet Yellen
  • The Fed
Sep 30, 2016

Chris Voss is the author of, “Never Split The Difference: Negotiating As If Your Life Depended On It.” Chris is a former international hostage negotiator for the FBI. He has had an amazing career full of great experience and insights. Chris first entered the FBI in 1983 and has been involved with over 150 kidnapping cases. He started out working on a suicide hotline and quickly realized that his negotiating skills were applicable to all areas of life, not just hostage situations.

Chris starts the conversation off talking about how he begins hostage negotiations. It is about exchanging power and getting the upper hand early on in the negotiations. A lot of people want to think of negotiations as chess. Chris explains why this is not the case. You can make four moves in a row if you want. Not necessarily making one move, then a counter move by the other person. Chris goes on to explain that if you can walk out of any situation you don’t like, then you can win in any situation and you are able to have more fun with negotiating.

Next, Michael asks, “How do you go about negotiating with bat shit crazy people?” Even “bat shit crazy” has it’s patterns. Chris talks about being on Comedy Central and doing a skit on this exact situation. As long as he starts looking at patterns then things become aware to him and he can influence people’s emotions. When people don’t open themselves up to you, that is the first sign of danger. If people won’t talk, this is when you know psychologically they have shut down. 9-11 is an example of people being silent on the other side, shutting down, and leaving no room for negotiation. If you can ask someone “Have you given up on resolving this situation amicably?” Even having someone say “Yes” means they are immediately opening up a little more than they were before. Chris was always taught to go into situations knowing that people are not rational. They are driven by passion and purpose.

Chris also elaborates on “Why, How and Lying three times”. In general, “Why” questions make people feel defensive instantly. “How” questions make the other person feel powerful. People feel in charge when they are asked “How”, but it puts a lot of constraints on their answer. His last rule of negotiations is the “Lying three times” rule. If you get someone to lie three times then they most likely won’t act on that lie.

The podcast wraps up with bonus material of an interview between Michael and Chris recorded on a previous day.

In this episode of Trend Following Radio:

  • Aversion to negotiation
  • Negotiating skills
  • Never pretend people are rational
  • Business negotiations compared to hostage negotiations
  • Lying three times
  • “How” and “Why” questions
Sep 26, 2016

Michael reads some of his favorite quotes circa 1920’s/1930’s from a famed trader. These quotes are timeless bits of wisdom. Michael adds commentary throughout.

In this episode of Trend Following Radio:

  • How is the “price” made?
  • You will never know all the fundamentals
  • Speculation
  • Getting mad at the market gets you nowhere
  • Bull and bear markets
  • Entry and exit signals
  • 1920’s wisdom on numbers
  • Always be ready to catch that unexpected move
  • Follow the price action
Sep 23, 2016

Robert Cialdini is on today’s podcast. He is best known for writing “Influence: The Psychology of Persuasion” published back in 1984. Robert is the “go to man” for understanding effective persuasion. Reciprocity, commitment and consistency, social proof, authority, liking and scarcity are his six key principles of influence that he teaches. His new book, “Pre-Suasion: A Revolutionary Way to Influence and Persuade”, introduces a seventh key principle of influence.

Michael asks “How did you start down this path? What was your ‘A-ha’ moment that got you researching for this new book?” Robert says it was a series of recognitions as he was reading the newest work in behavioral studies that made him realize that creating mindsets in people didn’t involve just six principles. He went back to his notes and looked at what the top people in various professions were doing. He realized that they were acting like gardeners. They were preparing the earth before planting the seed. These professionals were priming a persons mind to perceive their idea more fully.

Next, Michael and Robert talk about anchoring a persons perception of what they are paying or asking for. You start off with a higher number or a grander request before hitting the other person with what you really want. “Are there types of thinkers where pre-suasion is not as effective? Or have you found universally across the populations that pre-suasion is just very effective?” Robert says it seems to be a universal operating procedure that is built into us from birth. He uses a study done with 18 month old babies that proves that this is built into our psyche.

Lastly, Michael asks Robert to elaborate on the idea of unity. Robert shares a story of Warren Buffett and unity taken from his book. Michael finishes up the last 20 minutes of the podcast with a presentation on behavior change and the part that social norms play in creating that change, given by Robert. He focuses on how to make people move more towards a environmentally socially responsible role.

In this episode of Trend Following Radio:

  • Establishing trust before asking for anything
  • Rational self interest
  • Anchoring a persons perception
  • Asking for advice rather than an opinion
  • Warren Buffett’s shareholder letter
  • Environmental responsibility
Sep 19, 2016

Michael opens the podcast with an excerpt from “The Fountainhead” about creating, entrepreneurism, and living for one’s self. “The Fountainhead” is one of Michael’s favorite books and encourages all to read it.

Michael dives into an example that dovetails right into “The Fountainhead” excerpt. Recently Michael tweeted a quote from Derek Bok, “If you think education is expensive, try ignorance.” He quickly got a response on Twitter saying he was “bearish”. Michael stresses throughout the conversation that it doesn’t matter if you are liberal or conservative. Trend followers don’t care about politics or media. It is all about price action.

In this episode of Trend Following Radio:

  • Creators vs. parasites
  • Human relationships
  • Altruism
  • The individual vs. The collective
  • Liberal and conservative trading perspectives
  • Price action is paramount
Sep 16, 2016

Jared Dillian is editor of The Daily Dirtnap: A daily market newsletter for investment professionals. Jared is also author of “All the Evil of This World” and “Street Freak”. He gives a behind the scenes look at the good, the bad, and the ugly of Wall Street.

Jared’s interest with Wall Street didn’t start with the idea of making money. It was more academic. He wanted to learn why so many traders were trying to beat the market when all the Wall Street books he was reading said that beating the market was a huge waste of time. He started working at Lehman Brothers and quickly learned the culture within an investment bank was completely different. Everyone working at investment banks were in the business of making money, they are all traders. Jared speaks about the structure of Lehman Brothers and how they changed under the management of Dick Fuld. He then dovetails into detailing the dot-com bubble and the housing bubble, and explains why some firms were able to fail and others were able to survive.

Next, Michael and Jared talk about the “sex drugs and rock and roll” aspect of Wall Street. Jared looks back on what he saw when he worked in the pits of Wall Street and says that, “that culture” doesn’t really exist anymore since the 2008 crash. They finish up talking about the pros of being an entrepreneur rather than working for a big investment bank on Wall Street.

In this episode of Trend Following Radio:

  • Behavioral finance
  • Market psychology
  • Housing bubble
  • Dot com bubble
  • Lehman Brothers
  • Starting your own hedge fund
Sep 12, 2016

If you can’t change the data, then why try and fight it? Listening to people who have spent their lives researching and digging into the data is how we learn and progress. In today’s podcast Michael plays a clip by Richard Dawkins about data. Michael shows that listeners can find insight within the talk that can be applied to their lives–all aspects.

In this episode of Trend Following Radio:

  • Evolution
  • Looking at the data
  • Natural selection
  • Long term macro evolution and short term evolution
  • Fossils do not prove evolution
  • Comparing animal and human bodies
  • Evolutionary arms race
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