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Trend Following with Michael Covel

Bestselling author Michael Covel is the host of Trend Following Radio with 7+ 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 600+ eps at www.trendfollowing.com/podcast.
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Now displaying: November, 2017

Bestselling author Michael Covel is the host of Trend Following Radio with 7+ 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 600+ eps at trendfollowingradio.com/rss.

Nov 27, 2017

Michael explores two of his favorite monologues covering Roger Waters of Pink Floyd fame and trader Nicolas Darvas.

Nov 24, 2017

Tim Larkin is one of America’s leading Pro-Victim Rights and Personal Safety Advocates. He has had a 25 year career training over 10,000 clients in 52 countries in how to deal with imminent violence. His books include How To Survive The Most Critical 5 Seconds Of Your Life and Survive The Unthinkable. His newest book is When Violence Is the Answer: Learning How to Do What It Takes When Your Life Is at Stake.

Tim’s father was an officer in the Navy. He knew at the age of 13 he was going to be a Navy Seal. His whole adolescence and early adulthood was dedicated to that goal. After college he started his Seal training. Toward the end, with just a couple weeks left of rigorous training, he went out on a routine training dive and a wave hit his ear. Tim burst his eardrum and his career was over. This was the first time, at age 21, his body had failed him. Sometimes the smallest things, like an eardrum bursting, can change your whole course of life. This lesson learned early on by Tim translates to everything he now teaches.

Tim has always stressed that the human mind is the only thing we do not have a weapon against. The human mind will always find a way if there is intention and Las Vegas is an example of that. Gun control is important however there is no amount of laws that will stop someone from inflicting pain, and this is where Tim’s work comes into play. He shows how a rational fear of violence is necessary in today’s world.

Knowing where threats lie, having an exit plan and being self-aware at all times might feel mundane, but it could save your life. Tim runs through real life scenarios: both men and women being targeted and attacked. What is the biggest takeaway? There is no benefit in focusing on the differences between you and a predator (ie. he is bigger, stronger, faster), but rather focus on the similarities and where the universal week spots are throughout the human body. We as humans are all hardwired to protect ourselves. Even though predators may be bigger, stronger, faster, if you understand basic human injury, you can exploit that and stop an attacker.

In this episode of Trend Following Radio:

  • Las Vegas shooting
  • Simulated shootings
  • Asocial violence
  • Non-verbal cues
  • Disabling one of your sensory feelings
  • Navy Seals
  • Exploiting the human body
  • Knowing principles not techniques
  • Violence is a 50/50 endeavor
  • Killing with kindness first
Nov 20, 2017

Michael explores meeting the achievers, great coaching and brings back two trend following legends from the archives–a must listen.

In this episode of Trend Following Radio:

  • Meeting the achievers–how?
  • Coaching
  • Trend Following Legends Ed Seykota and Martin Bergin
Nov 17, 2017

Robert Carver got his start in finance working at trend following firm AHL in 2001 during his final year of college. He was introduced to quantitative trading while at AHL and for the first time began thinking of finance in a systematic way. He later went back to AHL, working there from 2006-2013. His newest book is “Smart Portfolios: A Practical guide to building and maintaining intelligent investment portfolios.”

It took a lot of research and digging for Robert to decipher which financial tools available to traders were appropriate for him. He knew he was not the only trader with this problem so he decided to write a book laying out what he had found through his research. Robert gives actionable tips and guidelines for others who may need help finding what trading instruments are right for them. Robert also wanted “Smart Portfolios” to be a book for the average investor. He wrote it in a way that is not over complicated. Any trader, new or professional, can pick it up and find it useful.

Robert bases portfolio selection around three questions: 1. What should you invest in? 2. How much of your capital goes into those investments? 3. Do you make changes to your portfolio along the way? Whenever he receives questions from people, those questions usually fall into one of the above categories. There is never perfection when trying to predict how a portfolio will perform but Robert stresses that if you start your investing answering the above questions, you will be on the right track. After the right portfolio and financial tools have been selected it’s necessary to understand different types of returns. Michael and Robert finish the podcast discussing differences between geometric and arithmetic returns.

In this episode of Trend Following Radio:

  • Portfolio selection
  • Benchmarks
  • International investing
  • Fundamental trading
  • Warren Buffett trading
  • Expected average performance
  • Leveraging a portfolio
  • Luck vs. Skill
  • Venture capitalism
Nov 13, 2017

Michael throws Jeff Bezos, Amazon and trend following into a giant melting pot. Jeff Bezos is a trend following trader – along with venture capitalists, Hollywood, the MIT black jack team, Warren Buffett (to some degree, yes), and many more.

Michael notes an excerpt from a document written in 1983, gleaning wisdom from Richard Dennis and Bill Eckhardt. Not relevant today? Think again. Richard Dennis makes it clear in the document that you never know where the next home run is coming from – missing a big payout is just as bad as taking a loss. Are you guilty of forgetting about big opportunity when trading? Do you focus too much on your downside? Most unfortunately get fixated on the downside and ignore the positive unknown.

Michael also notes an article written by Li Jiang titled, “What I Learned From Reading Every Amazon Shareholders Letter.” Li lists key lessons he has pulled from shareholder letters: type I and type II decisions, end each day of business like it is the first day, always operate like a hungry upstart, only the paranoid survive, make small bets because you can’t predict anything, move fast and break things, and if you are offered a seat on a rocketship – don’t ask which seat, just get on. Jeff Bezos’ words dovetail seamlessly with trend following philosophy. Thinking outside the box is essential to making great things can happen.

In this episode of Trend Following Radio:

  • Jeff Bezos
  • Amazon
  • Type 1 errors/decisions
  • Type 2 errors/decisions
  • Sunk cost
  • Opportunity cost
  • Prediction
  • Trend following is dead?
Nov 10, 2017

Mark Kritzman is a Senior Lecturer in Finance at the MIT Sloan School of Management, founding Partner and Chief Executive Officer of Windham Capital Management and serves as a senior partner of State Street Associates. Mark has written six books, his latest titled “A Practitioners Guide to Asset Allocation”.

Mark began his career on Wall Street in 1974 and was immediately drawn toward systematic trading. At a time when there were not many quantitative traders, he was affectionately titled a “token quant” within his company.

Over the years Mark has been an advisor to many funds. While working with various companies it became clear fund managers were mixing how they invest with how they would choose asset classes. He decided to break down the most basic and logical ways of organizing the investment process. What are some components of an asset class: stable composition, be investable, internally homogeneous, externally heterogeneous, raise the utility of a portfolio, and you should be able to access it in a cost effective way. From there, depending on a persons risk, different combinations of asset classes would make up a portfolio.

Being in the game as long as Mark has, he has been able to witness the enduring and turbulent nature of markets. He saw one silver lining come out of the 2008 financial crisis – it provided a context where investors could go back to the basics of trading, and in particular, recalibrate how they manage risk. Mark finishes the podcast talking fixed weight portfolios, Peter Bernstein on scaling portfolio risk, dynamic asset allocation and explaining Samuelson’s Dictum.

In this episode of Trend Following Radio:

  • Definition of an asset class
  • Actively managed portfolios
  • Passively managed portfolios
  • Time diversification
  • Portfolio diversification
  • The fallacy of large numbers
  • Leverage
  • Value at risk
  • Risk management
  • Fear and greed
  • Risk and reward
  • Exposure to risk
Nov 6, 2017

Today’s mega combo episode is Chris Voss, Robert Cialdini, Philip Tetlock, Spyros Makridakis, and Tim Ferriss.

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.

Robert Cialdini 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 six key principles of influence he teaches. His new book, Pre-Suasion: A Revolutionary Way to Influence and Persuade, introduces a seventh key principle of influence.

Philip Tetlock is a Canadian American political science writer currently at The Wharton School of the University of Pennsylvania. He is right at the intersection of psychology, political science and organizational behavior. His book, Superforecasting: The Art and Science of Prediction, is probabilistic thinking defined. Phil is also a co-principle investigator of The Good Judgment Project, a study on the art and science of prediction and forecasting.

Spyros Makridakis is Rector of the Neapolis University of Pafos NUP and an Emeritus Professor of Decision Sciences at INSEAD as well as the University of Piraeus and one of the world’s leading experts on forecasting, with many journal articles and books on the subject. He is organizer of the Makridakis Competitions, known in the forecasting literature as the M-Competitions.

Tim Ferriss is an author, blogger and motivational speaker known for his bestselling books. Tim has revolutionized the idea of writing a book; he has engineered the process of a bestseller.

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
  • What are superforecasters?
  • Probabilistic thinking
  • Looking at data
  • Location independence
  • 80/20 rule
  • Known knowns, known unknowns, and unknown unknowns
  • Uncertainty
  • How to publish a book
Nov 3, 2017

Frank Ostaseski has dedicated his life to helping others. He is co-founder of the Zen Hospice Project and founder of the Metta Institute. Frank is a Buddhist teacher, international lecturer and expert on the end-of-life experience. His work spans from helping the homeless to the wealthy to the young and to the elderly have an easier transition to the other side. Frank loves what he does because of how “real” the experience of death is. His new book is The Five Invitations: Discovering What Death Can Teach Us About Living Fully.

How did Frank begin helping people with the experience of death? It was not a linear path. Frank had experiences with death early on in his life with the passing of his parents. He later was introduced to the Buddhist practice with the central tenet of Buddhism being the study of constant change. When his son was born he felt it was important to “birth his soul”. He went to a program where everyone was grieving and learning about the loss of a soul. Frank on the other hand, wanted to learn how to gain a soul for his son. He didn’t find much help with that, however the leader of the program invited him back to see first hand what experiencing death was like. He later visited Central America working in refugee camps where he saw a lot of misery and death. He then went to San Francisco when the aids epidemic was running rampant on the streets. Each experience kept pulling him in a little more and more and every death he witnesses continues to show him how precious and precarious life is.

Frank’s five invitations, outlined in his book, have become his road map and guidelines for life: don’t wait, welcome everything and push away nothing, bring your whole self to the experience, find a place of rest in the middle of things, and cultivate don’t know mind.

In this episode of Trend Following Radio:

  • The territory of mystery
  • The inevitability and intimacy of dying
  • How saying goodbye at a party relates to saying goodbye when dying
  • Importance of human connection
  • Don’t wait
  • The reality of constant change
  • Openness during the travel experience
  • Trusting our intuition
  • Common humanity
  • Resting in the middle of activity
  • Discovering the truth
  • Stoicism
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