Charles Faulkner returns to the podcast for his fourth interview with Michael Covel. Today, he comes to us from Belgrade. Faulkner is an author, trader, and international expert on modeling the knowledge and performance of exceptional individuals. He was originally featured in "The New Market Wizards" by Jack Schwager. Covel and Faulkner discuss behavior, emotions, decision-making, and intuition in the world of money--and what money does to us on a biological level. Topics include Neurolinguistic Programming; how money in the mind influences money in the world; the schizophrenic-seeming handout to the two recent Nobel Prize winners; “system one” and “system two”; how “one” is running all the time, how “two” takes effort--and where Faulkner hopes to take this research; how experience can teach “system one”; new lightbulb moments in current research; how the “afraid to lose” (or in Singapore, Kiasu) concept could be terribly dangerous when applied to money; why the less you know about something, the clearer the image--and the more certain you are that it’s real and true; the need for certainty; money as a living metaphor; sunk costs; the Myers-Briggs instrument; and rituals and money. Faulkner also tells us the heart of what he’s after in his new upcoming book. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Mikael Stenbom. Stenbom is the CEO and founder of RPM, which is a advisory consulting firm in Sweden. They advise, consult, or manage over 3.5B AUM. Stenbom has had tremendous experience in understanding strategy and the money management side of the CTA/managed futures world. Stenbom and Covel discuss what makes up a “smart money investor”; third party risk monitoring; and the life-cycle of CTA’s, hedge funds, and businesses in general. Nothing is constant in this world, and things change--Stenbom places a time axis on CTA’s to better manage for his clients. He also gives his opinions on why certain CTA’s have found such success. Covel and Stenbom discuss some of Stenbom’s early influences, such as the first time Stenbom had a “lightbulb moment” in the systematic world; Stenbom’s economics background; connections between economics, trading, and sociology; and the Austrian school of economics. Further topics include how Stenbom goes about explaining his style of responsive, systematic trading to new clients; Andrew Lo’s Adaptive Markets Hypothesis (which says that markets are for the most part efficient, but from time to time due to changes in the market ecology, become extremely inefficient); the process of rebranding Stenbom’s firm in 2008; the “politically infected” investor; and the cultural compatibility between Nordic countries and the Japanese. Free trend following DVD: www.trendfollowing.com/win.
Michael Covel speaks with Tom DeMark. DeMark is the founder and CEO of DeMark Analytics and the creator of the DeMark Indicators. DeMark considers himself a market timer and believes that fundamentals are critical; however, he and Covel have a lot in common. His work is price driven and technically driven. DeMark and Covel discuss how all conceivable market factors are in the price movement; obsession, passion and practice; having the “cover story” of fundamentals, but using technical analysis behind the scenes; Elliott wave; the fibonacci sequence; forecasting; DeMark’s thoughts on George Soros, Michael Steinhardt, Paul Jones, Steve Cohen, and others; thoughts on when DeMark first started computerizing his indicators; why you’ll fail if you rely solely on charts; DeMark’s thoughts on the pure price driven, reactive trend following traders; and introducing a new variable into a pure trend following approach. Receive a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel interviews Cal Newport. Newport writes on a really interesting subject: Passion (mission critical to trading). You hear it all the time: chase your passion, find your passion. But Newport comes at it from a different perspective, similar to Covel's experiences--passion does not come first, but rather developing top skill comes first. Newport and Covel also discuss Alan Watts; why following your passion isn’t such a great idea from Newport’s perspective; the notion of deliberate practice and the 10000 hour rule, falling back on simplistic strategies that fail; passion following success as the true gauge; misconceptions about passion; thinking of passion as a side-effect of running your career in the right way; overcoming difficulty as a necessary step in the process; the work and analysis Newport has done looking at top chess players; the systematic aspect of gaining skill and its ties to passion; and anxiety and failure. Cal Newport can be found at calnewport.com. Want a free trend following DVD? Go to trendfollowing.com/win.
Today on the podcast, Michael Covel speaks with Yaron Brook. Brook is the president and executive director of the Ayn Rand Institute. Covel early on was introduced to Ayn Rand's work by famed trend trader Ed Seykota. Over the years Covel has come to appreciate that numerous top traders and entrepreneurs cite Rand's work as inspirations in their careers. Covel and Brook discuss trading; the nature of altruism; the idea and definitions of selfishness in the context of objectivism; the power of ideas; the idea of being a victim; schools, teaching, and political teaching; entitlement leading to victimhood; the rise of state power, the ambitious poor, and the minimum wage; free work and internships; Alan Greenspan; and America compared to Singapore. More on Yaron Brook: http://en.wikipedia.org/wiki/Yaron_Brook. Receive a free trend following DVD: trendfollowing.com/win.
Michael Covel opens up today’s podcast with an excerpt from a book called “Maximize Your Potential”; talking about growing your expertise and taking bold risks. It comes down to making bets. That is the trend following way. You do not know which market is going to take off; you can’t know, you just have to make bets (with risk management). When whatever technical indicator you’re using hits, you’re in. And if it doesn’t go your way, you get out. With that overview, Covel goes over his week and his experiences so far in Cambodia. Covel talks about living large, comparing us to the people who built the temples in Cambodia. Nothing goes up forever, whether it’s the Cambodian grandeur or Twitter, Priceline or Google. Covel moves on to talk about when one market dries up--then what?. Can you trade all those markets the exact same way? Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel talks about fear: what scares us and why. What’s scarier: a deadly snake slithering across your path on a hike, or watching a 1000 point drop in the stock market? Covel discusses how there is no way to quantify fear itself. However, there’s a book out: “The Science of Fear”, and Covel quotes from it. Covel also shares his snake eating story from Asia. So what’s the moral of this? The science of fear, Covel’s snake eating story, etc.? Break it down into its component parts. Break it down, and then go live it; do it. The fears that one might have going through the snake scenario are exactly like those going through the markets. You can’t let that fear of losing grab you so that you can’t progress. Look at the opposite side of fear: fear and opportunity exist on either side of the coin. If you don’t think about breaking down trading and investing into its component parts, and figuring out how it works, you’re going to fail. If you hang out with those who make general feel good statements, that’s not breaking it down. Covel’s simple lesson for today: Walk right into the snake, find out how the snake works, take the snake apart, eat the snake (if you have to). That’s how you learn. That’s how you gain confidence. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel talks with Porter Erisman. His documentary film “Crocodile in the Yangtze” is the story of Chinese entrepreneur Jack Ma. Jack has assembled a net worth of over 3B USD all started from one little e-commerce site called Alibaba. Erisman’s film is a great window in to the cultural differences and similarities that exist across the countries of our planet. Even more specifically, it is an entrepreneurial manifesto for EVERYONE. Covel and Erisman discuss what it was like working with Ma; short-term vs. long-term entrepreneurs; the lack of knowledge/insight America has for China; the perceived threat of China to America; whether nationalism played into Ma’s success; the commonalities between the greatest internet entrepreneurial success stories; government interference with Alibaba; and how eBay was defeated by this small startup in China. More information can be found at www.crocodileintheyangtze.com. Free Covel trend following DVD: www.trendfollowing.com/win.
Michael Covel talks with Tim Price. Price is a partner and director of investment at PFP Wealth Management in the UK. Price makes no bones about it: He comes more from a fundamental value-based perspective. However, what Covel’s eye was the pragmatic, almost investigative look into what’s going on in government and central banks in the past five years. Covel and Price discuss the subordination of freely discovered prices to policy goals; why the recent trading environment seems “wrong and dangerous”; why Price wouldn’t be able to speak freely working for a large bank; why Price and his colleagues aren’t “doom and gloomers”; why the media neglects to report on black swans; why the role of the Fed is to keep “spiking the punch”; the vested financial pushback on having some of these views; risk and “Against The Gods”; why people are hardwired to be loss averse; and an analogy to the US Forest Service. Covel also offers a monologue on the back side of Tim's interview including an update on Bitcoin and an additional insight from Brad Rotter (ep. 177). Tim Price can be found at http://thepriceofeverything.typepad.com. Want a free trend following DVD? Go to trendfollowing.com/win.
Today on the podcast, Michael Covel speaks with Vernon Smith. Smith is a professor of economics at Chapman University in Orange, CA. He also shared the 2002 Nobel Memorial Prize in Economic Sciences with Daniel Kahneman. Covel and Smith discuss bubbles; some of Smith’s early experiments; how “we’re all born traders”; early “ah ha” moments; early science and engineering beginnings; upsetting the conventional economics “apple cart”; the difference between “hamburgers and haircuts” and the other 25% of goods; Smith’s experience bringing Chicago traders in to lab experiments; how we see the dotcom bubble, spring of 2003, and the real estate bubble today; differences between housing bubbles and stock market bubbles; understanding why bubbles happen; liberty; views on Adam Smith; and Smith’s idealogical journey from socialist to his libertarian leanings today. Want a free trend following DVD: trendfollowing.com/win.
Michael Covel interviews Brad Rotter. Rotter is a speculator, venture capitalist, and looks for big trends. He's not a trend follower per se, but he's made money in the trend following world. He was the first investor with Richard Dennis in the early 1980’s. Covel and Rotter have a wide-ranging conversation--Rotter's premise is that America has peaked and he sees Bitcoin as a tremendous opportunity. Covel and Rotter discuss how Rotter became an entrepreneur from early years as a farmer in Iowa; how he came to be Richard Dennis' first client when he started managing money; why the US is at 'peak civilization'; why technology is arbing away the need for people; how the unit of time is changing; why it's harder and harder to make an easy living; whether the US government is the greatest hedge fund in history; and why Bitcoin is a 'perfect' currency. Want a free trend following DVD: trendfollowing.com/win.