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Trend Following with Michael Covel

Bestselling author Michael Covel is the host of Trend Following Radio with 5 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 500+ eps at www.trendfollowingradio.com/rss.
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Now displaying: March, 2016

Bestselling author Michael Covel is the host of Trend Following Radio with 5 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 500+ eps at www.trendfollowingradio.com/rss.

Mar 28, 2016

Michael Covel interviews Tom Bilyeu. Tom is the co-founder and president of Quest Nutrition. He is the consummate entrepreneur who went from running a successful tech company to starting all over and developing Quest Nutrition. He has created his own narrative for entrepreneurial greatness.

Tom started out as what he would describe as a “good employee,” with never questioning the system. He didn’t take high school seriously but when he started college he buckled down. He heard that the brain doesn’t stop developing until the age of 25 and that helped shape a large part of his 20’s. Watching ‘The Matrix” at age 22, he realize that he wanted to be in control of his own life. Around age 26 he met his business partners with whom he would start his first company.

In 2012 his tech company was named the 42nd fastest growing tech company in North America. Soon after that, he had a talk with his partners letting them know he wasn’t happy, wasn’t having fun anymore, and wanted out. His partners felt the same way, and they proceeded to sell their company at the height of their success. Quest Nutrition came out of the folding of their prior company. They chose to go into the nutrition business by asking themselves “How can we deliver value to people.” Tom and his partners were told over and over again by factories that they were not able to produce the product they wanted to make, and the factories were right. They ended up buying their own equipment and re-engineering it to produce a nutrition bar unlike any other on the market.

Tom says that the combination of unbelievably good tasting food coupled with horrific ingredients makes for the worst kind of drug. Sugar affects the brain just like dopamine. Evolution has instilled a need for sugar in our brains and has brought us where we are now. Tom spent a long time learning about, from a metabolic state, what is nutritious for your body. The “auto pilot thought process” is one thing that Tom really works with people on. He works with people to focus on what their subconscious is telling them to do, and decipher what is right from wrong.

Michael asks Tom to go into international regulations. He says that dealing with all the different regulations can make a person go crazy. He doesn’t think that we should legislate sugar or saturated fat out of people’s diets. People should be able to have free choice. Tom’s life has been based on mastering one baby step after another and accomplishing everything with discipline and practice. Whether you are trying to get better in leadership, finance, or in relationships, everything is a learning experience. The more you attack something the more it continues to get better.

Lastly, Tom talks about letting go of the need to be right. He got to a point where he built his self esteem around being right. He soon realized that, that was actually helping him move further away from his goals. He switched his belief system over to focusing on identifying the right answer faster than anyone. There are so many that just want to protect their ego with being right, but as soon as they learn to let that go, a whole world opens up.

In this episode of Trend Following Radio:

  • Discipline and practice
  • The Quest belief system
  • Escaping the Matrix
  • Tom Bilyeu’s ultimate reading list
  • Being authentic
  • Obesity
  • Autopilot thought process
  • Letting go of being right
  • Reaching your true fans
Mar 25, 2016

Michael Covel interviews Steven Pinker. Steven is a Canadian-born American cognitive scientist, psychologist, linguist, and popular science author. He is Johnstone Family Professor in the Department of Psychology at Harvard University, and is known for his advocacy of evolutionary psychology and the computational theory of mind. He covers phenomena that have traditionally not been looked at scientifically such as: visual perception, war and peace, and differences in writing styles. He has authored numerous books with his most recent being, “The Sense of Style.”

Steven knew he was an atheist from the age of 13. He never had a big revelation because God was never a real part of his consciousness. However, his religious awareness as a young man helped to guide his career into using science, and science only in his research. He puts science as the decider of “what is.”

Michael asks, “How has human behavior been shaped by evolution.” Steven based his book, “The Blank Slate” around the idea that humans aren’t born with a blank slate. He says that to have the ability to analyze speech and comprehend speech you have to have something there at birth. If the mind has a built in structure, where did it come from? Steven argues it comes from evolution and natural selection. He uses a combination of cognitive science and evolutionary psychology to back up his theories. He also covers why there has been so much controversy surrounding the idea that we are not born with a blank slate and why our common sense so often clashes with our political conviction. One reason he offers is because many think the idea of equality means that we should be indistinguishable, essentially like clones. He argues that fairness should not be based on sameness.

Michael goes back to the blank slate concept and asks, “Are we born good or bad? And explain what you have learned throughout your career about the evolution of language.” Steven says we have some good and some bad. The brain is massively complex and layered. There is so much going on in the brain when someone speaks and when someone listens and retains the information. Eggs and sperm have about 70 mutations. That is how we have natural selection that makes someone run faster, see better, think faster, etc.

Next, Michael and Steven dive into the history of violence, where it came from and where we stand today. Steven says you can’t get an accurate view of violence from the news. They find the worst violence and promote it. The rate of homicides have plummeted over the years. There are far less wars going on now than in the 60’s, 70’s, 80’s and so on. Since the end of WWII there has been a steady decline. Civil wars have still occurred but they are far less plentiful than they use to be and death rates are also less than they use to be. Steven’s next book, due to be published in 2017, is a defense of science, reason and humanism as a source of aiding in morality.

In this episode of Trend Following Radio:

  • Evolution
  • Natural selection
  • War statistics
  • Cognitive science
  • Evolutionary psychology
Mar 21, 2016

Michael Covel brings a different perspective to countries and cultures. He starts off reading an article by Simon Black, “Việt Nam will become one of the top expat destinations in the world.” Due to China’s growth in the last 10 years they can’t compete making cheap goods like they have in the past. That business is moving to Việt Nam. The lifestyle that you can achieve in Việt Nam for a moderate amount of money is amazing. They have high quality at an inexpensive price. They are making it easier for locals to earn more money and thrive. Things began changing in the late 1980’s when the communist government opened up and encouraged private business.

Michael moves on to talk about his recent trip to Myanmar (formerly Burma). It was colonized by the British, but in 1948 Myanmar declared their independence. Their borders were closed off for about 50 years after that. Around 2011 they opened the borders to foreigners again, and in 2015 they held their first elections. There are 50 million people currently living in Myanmar. Now, there is a buzz about the country that shows they are clearly moving forward. The ethnic diversity is immediately apparent, and the hustle for commerce is everywhere. People there are beautiful, friendly and energized. The lessons for all of us are there staring back at us.

Michael encourages everyone listening to get on a plane and go. Go travel. Capitalization in America has made starting anything nearly impossible. People and commerce in other countries have more drive and ambition to make something happen. Don’t let the system control you. The system is rigged. Michael ends with a clip from comedian George Carlin on government control.

In this episode of Trend Following Radio:

  • Capitalization
  • George Carlin clip on “The American Dream”
  • History of Myanmar
  • Growth of Việt Nam
Mar 18, 2016

Michael Covel interviews Catherine Stott. Catherine is author of, “Hypnotrading: A practical guide to using hypnosis and NLP to improve your trading performance: Self-hypnosis and psychotherapeutic techniques for traders.” Catherine believes that hypnotherapy and neuro-lingustic programing can help traders defeat inner challenges and become more successful. She got started working with traders after helping a friend, who happened to be a trader. He helped her understand the world of trading a bit more throughout their sessions and this ignited her interest deeper. She has been helping traders for years but didn’t start HypnoTrading until 2014.

Catherine was working as a psychologist when a friend referred her to see a hypnotherapist. She started to see the hypnotherapist for stress relief in her work and personal life. She was intrigued by the therapy so much that she switched career paths and sought training as a hypnotherapist. Hypnosis is essentially being in a deeply relaxed state of mind. It is an open state of consciousness, but you are fully in control of your thoughts. The first time Catherine experienced hypnosis she found it incredibly relaxing, and thought “I can’t believe that just happened, why haven’t I done this before?” Catherine dives deeper in the different steps she goes through in her sessions to get people in that relaxed state.

When Catherine trained as a hypnotherapist, part of the training was in NLP. Hypnotherapy and NLP are two different practices buy when used together they can be very powerful. An example of using the two fields together would be to associate pain with a color or a shape. It gives the client a way to view pain in a tangible way. They are able to think about that pain as an object that can be picked up and taken out of their body.

Michael moves on to asking, “How do different trading styles play into how you treat patients?” Catherine explains that there are certain universal techniques in hypnotherapy. When it comes to traders, the goal is to find the right trading style that works for them. There are many methods of trading and people should find the one that fits their personality. For example, some people are not built to use a strategy with precise rules and vice versa, some are not cut out for the fast pace of day trading.

Lastly, Michael and Catherine dive into the idea of modeling and goal setting. Modeling is a process of looking at other people and what they do, and essentially modeling that. One way to change yourself for the better is to mimic others who are successful in the field you are trying to master. It is a way of seeing what your results will look like. Modeling helps refocus. The majority of people may not have the chance to get next to a great trader, but everybody can get close to those insights through the written word or videos online. Find people that reflect your values and the style of trading that you want to achieve. There are thousands of trading books out there; you need to weed out what will work for you. Break down what you want to achieve and how you are going to achieve it. Defining your goals and how you want to achieve them is key.

In this episode of Trend Following Radio:

  • Stress vs. anxiety
  • Meditation vs. hypnosis
  • Being in a relaxed state
  • Negative self talk
  • Fear of success
  • Modeling
  • P-A-C-E-R
  • Luck and expectation
  • Defining goal setting
Mar 14, 2016

Michael Covel talks about shaking up the establishment, referring to Trump and the presidential race. He sees hope that the political establishment could take a hit and just maybe a dent in the political health of America could happen. He isn’t saying that he would get great legislation through, or solve world peace, but he might shake up the political arena and detour the agendas of some special interest groups.

Next, Michael leads into discussion of the lottery, banks, and government. The lottery has become one of the biggest cons by government directed at the lower to middle class. They have convinced people that playing the lottery is a form of investing for their retirement. Michael plays a clip from the Virginia state lottery. They found a Jim Cramer look alike to get people to think of investing as they talk about playing the lottery and saving for the future.

Michael moves into reading an article by Barry Ritholtz that was written in January of 2016 when the Powerball prize was around 1.5 billion dollars. He makes the point that Americans spend 70 billion dollars a year on the lottery which is more than they spent on sports tickets, books, video games, movie tickets, and music plus all types of apps, games and programs bought from Apple’s iTunes app store combined last year. Barry then asks the question, “Is investing gambling?” His short answer, “Your goal as an investor should be to eliminate as much of the element of chance from your process and like the house, stack the odds in your favor… How do you become the house? You understand the nature of risk, are comfortable with the idea of uncertainty, rely on long-term measures of valuation, use mean reversion as a guideline to unknown future outcomes, allow time to work in your favor, understand the impact of leverage, recognize the folly of relying on forecasts, consider all possible outcomes; including extremely rare black-swan events, and accept that some losses are inevitable.” Above all, he makes the point that even though you have full control over how you invest, you do not have complete control over the outcome.

Michael ends with the nonsensical idea of government achievement. He says that we need someone who leads by example rather than telling us what the next government hand out will be.

In this episode of Trend Following Radio:

  • Trump as President
  • Lottery and Powerball
  • Changing American politics
  • Getting something for nothing
Mar 11, 2016

Michael Covel interviews Bill Bonner. Bill is author of “Hormegeddon: How Too Much Of A Good Thing Leads To Disaster.” He has made a career out of skepticism. That skepticism started right out of college as he helped a friend start a grassroots organization, The National Tax Payers Union. There, he was able to get an inside look at government. It was during his lobbying for this grassroots organization that he saw the true motivations of politicians.

Bill and Michael start the conversation off talking about having too much of something, good or bad. Everything in the world, when you get too much of it, it is bad. Bill uses Germany as an example: When Hitler first got into power, his message to the people was more security. As Hitler kept gaining more power, the government took more control and things began to fall apart rapidly from there.

Next they talk about negative interest rates. There is a social contract being broken by the use of negative interest rates. Bill says the whole idea of work leading to output, leading to money, leading to investment, which leads to further output all falls apart with negative interest rates. Negative interest rates don’t stimulate the economy, they actually lead to people hunkering down and saving more money. This segues into the next topic of myth and reality. Myth plays a large part in society. Our conception of government is based on myth, and our idea of how government operates is far different than the reality of how it is actually run.

Michael and Bill move into discussing how internet has connected people and put information at everyone’s fingertips. However, it has proven too difficult for people to sift through all the information and find the wisdom inside it rather than the noise. Bill brings up a poll that was done by the National Constitution Center. The poll said that 41% of Americans are not aware that there are three branches of government. 62% of them cannot name what the three branches of government are, and 33% of them cannot name a single one of the branches. Americans can’t be shocked that a government doesn’t work the way it “should” work when they don’t even know how it “should” work in the first place.

Lastly, Michael and Bill talk about prediction and crashes. Since 1970 there has been seven recessions. Economists were able to predict none of them. Even in early 2008 when everything was crashing, not a single economist thought we were heading into a recession. This just shows how little the government basis their studies on facts but rather on human judgement. Bill says that unemployment is a great example. Unemployment rates aren’t subject to scientific analysis, they are subject to human analysis. The GDP growth rate is made up of the same kind of fictitious numbers and based on human judgment. It is more a measure of how quick people are going into debt not if they are better off in life.

In this episode of Trend Following Radio:

  • Declining marginal utility
  • Unemployment
  • Negative interest rates
  • Myth vs. Reality
  • Government polling
Mar 7, 2016

Michael Covel starts the discussion off with Mark Zuckerberg and the virtual reality realm we are entering. There is now an infamous picture of Mark Zuckerberg walking down an aisle with a huge audience behind him hooked up to helmets. All audience members are in a virtual reality. Michael bridges the gap between speculative follies of the past, with the virtual reality bubble we are about to embark on.

David Harding and James Holmes wrote a book titled, “The Pit and the Pendulum: A Menagerie of Speculative Follies.” Michael reads an excerpt from the book, giving a historical narrative about how people have behaved over the centuries. People always get excited about something new, and that “something new” historically always seems to crater and crash. The chapter Michael reads from is titled “Basking in an Indian Summer: The Bombay Share Mania of 1865.” The excerpt relates to cotton exports during the American Civil War. Bombay saw massive profits in cotton and silver due to cotton exports being halted in America during the war. Due to the boom in the economy Bombay saw huge expansion in their commercial sectors. Investors were only focused on the short term rather than long term.

When the American Civil War ended the Indian economy hit depression. Banks went bankrupt and the housing market crashed. The Bombay commercial world went totally bust. This is only one of many speculative examples that are in “The Pit and The Pendulum.” History always repeats itself. All speculative follies go down the same path. The only difference is the name or market caught up in the mania. Whether it be technology, cotton, or tulips, it’s all the same. How do you protect yourself from the next big mania? Educate yourself and have a strategy in place.

In this episode of Trend Following Radio:

  • Bombay cotton market 1865
  • Bubbles and mania
  • Profiting from the speculation
  • Having a plan in place
Mar 4, 2016

Today on Trend Following Radio Michael Covel interviews Jim Rogers. Jim is a famed American investor based in Singapore. He was co-founder of the Quantum Fund, and has authored numerous books. Today’s conversation is geared toward the central banking system and the direction Michael and Jim think the world’s economy is headed.

Michael starts the podcast off talking about negative interest rates and if that is a possibility in the U.S. Jim brings up a study published in 2007 that said, “We have the Federal Reserve, we have 1,000 of the most brilliant economists in the world how can we be wrong? How can people say that we are wrong?” Jim says that for the last 30 years the Fed has done just that. They have gotten just about everything wrong. Janet Yellen has been getting everything wrong since before she was even head of the Fed. She blames her blunders on the market being wrong or the public being wrong. According to Jim, every head of the Fed has been an academic and political hack.

Michael posits, “Everyone should be able to imagine another stock crash, we have had enough of them.” Jim says that the debt is staggering right now so when we have a crash it is going to be utter chaos. When we have extreme economic problems a war usually follows as well as someone coming in on a white horse to save the day. That white horse person will also cause more debt and make things even worse. This is the first time in history that government is actually out to destroy the people who have saved and set away for retirement. The middle and saving class has been destroyed before, but that was because of war or inflation. Jim says that it is mind boggling that the government’s solution to clearing up debt is to create more debt.

Next, Michael asks, “How do you see China right now?” Jim says that when they had their big market crash they chose to invest in the future with money they had saved. In America, we did the opposite. We chose to bail out the bureaucrats and make sure the rich didn’t go poor. The European and Japanese central banks have come out saying that they will practice unlimited QE funding. They will print unlimited amounts of money to solve their economic problems. Most do not question this because most people have no idea who or want the central bank is.

Lastly, Michael asks Jim what the best way is to prepare for potential problems that may unfold in the future. Jim says the first thing is to not listen to the news or what you may read on the internet. Stay with what you know and if you don’t think you know something, do nothing..

In this episode of Trend Following Radio:

  • Negative interest rates
  • Central banking systems
  • Market crashes
  • The impact of unintended consequences
  • Preparing for the future
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