Today on the podcast Michael Covel interviews Larry Doyle. Doyle’s book is called “In Bed With Wall Street”. Doyle is a former JP Morgan banker gets into why the system is fragile despite being five or six years removed from the crisis. Covel and Doyle discuss Doyle’s background and why he put “In Bed With Wall Street” together; Madoff, and what was missed from a regulatory perspective; KYC, or “knowing your customer”; MF Global, Jon Corzine, and touching customer funds; Dodd Frank and the supposed fixes to the 2008 financial crisis, and why Dodd Frank was more of an architectual blueprint rather than a completed piece of legislation; regulatory reforms to help fix the problems created in the 2008 financial crisis; informing the general public of the problems surrounding Wall Street today; the “bribe” of equity markets at all-time highs; manipulation of the markets; why Tim Geithner said “we saved the economy, but we lost the country”; if a crash is the only thing that will bring about change; why the banks must be broken up; and what would have happened if Goldman Sachs and Morgan Stanley had failed. Want a free trend following DVD? Go to trendfollowing.com/win.
Today on the podcast Michael Covel talks with Tucker Max. Max is a bestselling author and entrepreneur who has sold over 3 million books. Covel and Max talk about their first meeting, and Max’s brutally honest advice to Covel; diet and nutrition; the NCAA, college athletics, exploitation, the media, and having to 'beat' the system; marginal cost and marginal product; entrepreneurial thinking and Max's early career; Max’s experience in marketing; protecting your independence; Christopher Hitchens; facing rejection in publishing, and how rejection is part of success; how success only teaches you to repeat what you did before, and failure forces you to think; what drives Max today; how the landscape has changed in regards to authors; the fight for authority and trust in the publishing world; what motivates Tucker Max today--the quality of relationships you have with other people, and what you do that matters to others. More information on Tucker Max can be found on tuckermax.me. Free Covel trend following video go to trendfollowing.com/win.
Michael Covel discusses a white paper titled "Two Centuries of Trend Following". Covel likes the fact that when he goes through their references, it's all other academic white papers. Then, sandwiched in between the other white papers, "The Complete TurtleTrader" is referenced. Covel posted this on Twitter and received a response in which someone wanted to talk about the last couple of years of trend following performance. Trend following performance is going to differ depending on the trader, what’s in their portfolio, the type of system they’re trading, and the risk they’re taking. There isn't some one magical elixir. Covel believes that you’re better off in the long-term trend following world, rather than in the short-term world. Still, the person Covel interacted with on Twitter was not concerned with the two centuries of trend following that the white paper talked about, but rather, "what have you done for me lately?" Covel moves on to talk about a recent monologue he did concerning a Yahoo Finance article in which he questioned the vocabulary of the talking heads. Covel looks at the responses to that episode, and then the larger view: Most people don’t have the foggiest clue what trading is; what Wall Street is. They’ve been listening to nonsense in the media. The lure is still out there. The buy and hold lure is still out there. But even worse is that "get rich quick" attitude. People don’t understand it as a science. Covel looks at at "The Wolf of Wall Street" and analyzes a segment from the movie. Covel uses it as an example of how most people view money-making and Wall Street. People don’t think like Covel’s podcast guests and writing subjects; they don’t think like Marty Bergin at Dunn Capital or Ed Seykota. This is what Covel is up against. He wants people to understand the science of trading. Covel also notes that his old newsletter system is being changed. If you want to continue to receive Covel’s newsletter, go to trendfollowing.com/subscribe-now. Want a free trend following video? Go to trendfollowing.com/win.
Today on the show Michael Covel speaks with Mark Minervini. Minervini is the author of 'Trade Like a Stock Market Wizard: How to Achieve Super Performance in Stocks in Any Market' and was featured in Jack Schwager’s 'Stock Market Wizards'. Minervini and Covel discuss the importance of influences outside of the finance world; Minervini’s atypical background in music and how he got to where he is today; capturing 'super performance' and the trend; the importance of cutting your losers short; how Minervini spends his day; Richard Love and 'super performance' stocks; why Minervini is not a fan of diversification beyond the minimum amount that you can get away with; Richard Donchian, Jesse Livermore and their influence on Minervini; timeless strategies; Paul Tudor Jones and 'losers average losers'; the importance of not just trading what you know; 'new high ground' and not being afraid of buying higher highs; risk management and bet sizing; the biggest areas where new traders often start off on the wrong foot; Howard Lederer and poker players as an analogy to traders; why you shouldn’t even turn on the television as a stock trader. For more information on Mark Minervini, go to minervini.com. Want a free trend following video? Go to trendfollowing.com/win.
Michael Covel talks with Bill Adams in his second visit to the podcast. Adams is a private trader and systems developer. He is based in Zurich and works with institutional clients. Adams and Covel discuss if Adams views himself as a trend following trader; why the word futures can be problematic; broad diversification and diversifying on a number of different tiers; risk-based diversification; why making sure you're in the game is the most important factor; why every business is seasonal; why price is the most important aspect to a trade; how Adams has (or doesn't have) the "expertise" to trade certain markets; informing your system of various events as a quantitative or systematic trader; thinking about Adams' strategy in the context of evolution; core baskets vs. satellite baskets; the adaptive aspect of what Adams does; the philosophical and operational aspects of volatility; average true range as a volatility measure; trading to make a return vs. trading as an economist; Adams' greatest areas of challenge and frustration; Michael Lewis and whether the markets are "rigged"; and execution strategy. Want a free trend following video? Go to trendfollowing.com/win.
Michael Covel cuts up a Yahoo Finance segment called "Are Social Media Stocks In A Bear Market?" with Michael Santoli and Jeff Macke. Covel dissects the terminology and words used by the media, and the position of the talking heads on this Yahoo Finance article. First, inspired by Larry Tentarelli, Covel discusses the idea of researching stocks. There is advice that says you should be doing one hour of fundamental research per week on every stock you own. If you own 50 stocks, that's 50 hours a week. Covel thinks this advice is asinine, and points out that the best traders don't do that. If the best traders in the world don't do that, why should you? It doesn't matter what the research tells you; if you don't have a stop loss, you're going to lose your money. Period. Covel then moves on to the Jeff Macke/Michael Santoli segment and dissects it each step of the way. Covel breaks down the terminology, including "crowded longs", "chatter from brokerage firms", and "hedge fund favorites". Covel also discusses how we don't know the why behind bubbles, inspired by his Justin Fox interview from a few days ago. Covel also discusses why you don't need to know what a good price is on the way down; defining "smart money", "aggressively buying", and "leadership" in a trading system; and whether or not the market is "anxious". Covel ends with something inspired by James Altucher's article, "Ten Reasons You Have To Quit Your Job In 2014". Want a free trend following video? Go to trendfollowing.com/win.
Michael Covel speaks with Justin Fox. Fox is the executive editor at the Harvard Business Review Group. He writes a blog for hbr.org (http://blogs.hbr.org/fox/) and a monthly column for Time magazine. Fox is also the author of "The Myth Of The Rational Market: A History of Risk, Reward, and Delusion on Wall Street". Covel and Fox discuss Harry Markowitz, Bayesian statistics, and making smart decisions in an uncertain world using quantitative tools; stocks, beta, and the importance of making useful predictions; Commodities Corporation and trend following trading in the early 1970’s; why a market in which everyone was rationally anticipating the future would be a random market; Amos Hostetter; how the behavioral mindset started to unfold in the 1970’s; Eugene Fama and the efficient market hypothesis; the Capital Asset Pricing Model; why well-designed markets and well-informed investors are prone to manias and panics; and individuals making errors vs. the group getting it right. Justin Fox can be found on Twitter at @foxjust or on the web at byjustinfox.com.
Michael Covel speaks with Larry Tentarelli. Tentarelli is a self-made trend following trader and he returns for his third visit to the podcast. Covel and Tentarelli discuss Michael Lewis, high frequency trading, and if the market is “rigged”; trend following track records; day trading; why you can’t get rich overnight in the markets, but you can go broke; why price is the reality, and everything else is just a fantasy; the efficiency of only looking at price; Warren Buffett and the secret to his success; why trend following is straightforward and simple compared to day trading and fundamentals; why having a high winning percentage is not the prime focus in trend following; Soros, his positions, and why he might be a trend following trader; reactive vs. predictive technical analysis; the similarities between predictive technical analysis and fundamental analysis; why psychology is integral to trend following’s success; Van Tharp and why winning is based on 60% trader psychology, 30% money management, and 10% the parameters of what you’re trading; divorcing the price on the chart from your geopolitical thinking; “trader’s highs” and emotional issues that are played out in the market; the difference between being “right” and making money; why people say that trend following doesn’t work on equities, and why that is 100% false; getting preoccupied with the instrument rather than what markets really consist of; and quality of life in trend following vs. other trading styles. Larry Tentarelli can be found on Twitter at @SystemsTrader95. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Thomas Gilovich. Gilovich is a professor of psychology at Cornell. He is an expert on behavioral economics and decision making. Covel and Gilovich discuss how his world dovetailed into money and markets; basketball, streak shooting, and the “hot hand”; randomness and the clustering illusion; the missing Malaysian Airlines flight and probability; the reluctance to accept a probabilistic view of the world; politics, predictions, and probabilities; people who see the world in black and white; drawing conclusions from incomplete and unrepresentative evidence, and how to avoid that folly; the position of the devil’s advocate, and the importance of that role; Gilovich’s response to the media’s talking heads, and their often black and white opinions; behavioral economics vs. traditional economics; when people do the wrong thing because the public demands it; Bill James and the closer; instinct vs. considered judgment and test taking; irrationality in financial markets and bubbles; loss aversion; and why you don’t need to be better than the market. More information on Thomas Gilovich can be found at psych.cornell.edu/people/thomas-gilovich. Want a free trend following DVD? Go to trendfollowing.com/win.