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Trend Following with Michael Covel

Bestselling author Michael Covel is the host of Trend Following Radio with 6+ 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.
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Now displaying: 2017

Bestselling author Michael Covel is the host of Trend Following Radio with 6+ 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.

May 26, 2017

Eric Barker is founder of the blog, Barking Up The Wrong Tree. He provides science based answers and expert insight on how to be awesome in life. His newest work is “Barking Up the Wrong Tree: The Surprising Science Behind Why Everything You Know About Success Is (Mostly) Wrong”.

What happens to valedictorians after graduation? Valedictorians are great at following rules and not breaking outside the box. This gets them far in school but not too far in the real world. Studies have proven most who excel in school end up in structured non-pioneering jobs. Most entrepreneurs don’t follow the rules of school or society. They are also generally classified as creative people and therefore have huge obstacles to maneuver through. Most teachers say they love creative children but research shows those are the students hated most. They don’t sit still or follow direction well. Luckily, In today’s era it is easier than ever for those creative types to succeed. The internet has given ideas the opportunity to spread quickly and easier than ever before.

With ideas easily being spread, so are negative (and positive) influences. We are always more influenced by those around us than we realize: work colleagues, friends, people at social events… whoever you choose to surround yourself with will have a tremendous influence on your life.

Learning to accept failure is just as important as surrounding yourself with the right crowd. New opportunities and innovation springs from a person’s ability to fail. Doing everything the same way every time, will always get the same results. Pushing boundaries is critical otherwise you’re not working toward expertise, you are just practicing redundant behavior. Everyone loves to hear about the 25 year old billionaire because it doesn’t seem like there was much work involved but when you peel back the layers, you see the grit necessary in getting to their success.

One example of grit and sustaining the right mindset is a research project Eric did with Navy Seals. What stood out the most was their optimism. They have short term focus that keeps them optimistically moving forward. Personal, persistent and pervasive are the three P’s that if kept positive, you can produce optimism and grit. Navy Seals don’t look at a 60 day program and say, “I can have no sleep or food for 60 days.” Instead they say, “I can get to lunch” and then after lunch they say, “I can get to dinner.” It is a day-to-day survival mode rather than big picture. The big picture is too daunting.

Michael and Eric end the podcast discussing what Eric calls “the buffet.” How close are you to buffet food? How much are your friends eating? Are you facing the food, or are you facing away? All these factors play a part in how your life is modeled.

In this episode of Trend Following Radio:

  • The entrepreneurial feeling
  • What makes valedictorians succeed
  • Filter leaders
  • Obstacles for creative people
  • Structure of story telling
  • Failure tolerance
  • Creating meaningful mentorships
May 22, 2017

R.P. Eddy is an American businessman, venture investor, former U.S. government official and former U.N. diplomat. He is currently the CEO of Ergo, a strategy and geo political intelligence firm. R.P. is also co-author of “Warnings: Finding Cassandras to Stop Catastrophes.”

How did Fukushima happen? There were lots of Cassandras who knew there were issues. There were warnings thousands of years old, along with experts telling officials not to build the nuclear plant so low. Hurricane Katrina in the United States is another example where there were Cassandras who had the foresight to fix potential disaster, but were ignored. What would have happened if there was foresight to Saddam Hussein and the Kuwait invasion? A man named Charlie Allen had that foresight but was pushed aside.

With such credible people having undeniable evidence being ignored, this brings up the question: How does a dynamic change in government happen? It doesn’t. R.P. did a study finding that 1% of the public think for themselves to make informed decisions. As people turn on the T.V. or surf the internet they find biased information. It’s hard to sit down, find unbiased information and make opinions of their own. When we have Cassandras who come out with real data and information to make changes that can save thousands, it is hard to decipher if they are chicken little or the real thing.

R.P. profiled in depth Cassandras ranging from: Fukushima, Katrina, Madoff, 2008 collapse, the rise of Isis, and the invasion of Kuwait. In every instance the Cassandra went to the decision makers and asked the question, “Why are you ignoring all the data?!” The more outlandish the warning, the easier it is to be ignored. People who understand what is wrong with our brains, the ones who doubt themselves and double check data are the traders and leaders who thrive. Michael and R.P. end discussing nuclear weapons theory, North Korea, potential Cassandras, India vs. Pakistan, and why we should all stop and reassess the information that is fed us.

In this episode of Trend Following Radio:

  • Indicators and warning
  • Analysis and foresight
  • Pax Americana
  • Fukushima
  • Corruption vs. competence
  • Bernie Madoff
  • Black Swans
  • 2008 collapse
May 19, 2017

Denise Shull is a performance and decision coach to traders and athletes. She is well known for her effectiveness in assessing performance under high pressure situations. Denise began her Wall Street career in 1994 as trader and desk manager on the Chicago Board Options Exchange. She was always fascinated by the psychology side of trading from the outset of her trading career. In 2015 she offered critical insight on how to put together one of the main characters of the hit show “Billions” on Showtime.

Denise has counseled an extremely wide variety of traders with all kinds of personalities and trading styles. However, at the end of the day everyone is human and all traders have common psychological threads which she points out. When Denise analyzes a client she tries to understand a sequence of feelings that person is making and what the patterns of their feelings are. At first it is just about her figuring out how a clients brain works, and then she helps them see the patterns.

What was the trigger for Denise to go down the path of studying the mind and human behavior? Starting from a young age she enjoyed observing and counseling friends. In her mid to late 20’s she started looking at her friends relationships and seeing that the people were all different but the scenarios were the same. A teacher helped point out a theory of Freud’s. Freud believed there is a critical period for attachment and self image when you are a child. Denise gives examples of how human reactions stem from a template made in the first 2-3 years of life.

Michael and Denise finish up talking fractals, psycho analytics, efficient market theory and compare notes on Nobel Prize winner Harry Markowitz.

In this episode of Trend Following Radio:

  • Bio-psychology
  • Attachment theory
  • Neurosciences
  • Conviction as data
  • Fractal emotions
  • Efficient market theory
  • Self blame as a positive
May 15, 2017

The Yale Endowment is the crème de la crème. Nothing beats it? Their AUM is about 25 billion. Michael evaluates and reads some of the 2016 copy of The Yale Endowment. He wants listeners to decide if it is an example of how the best think, or if it is how one of the best operations self-describes themselves. Michael ends with breaking apart an excerpt from a presentation that David Swensen gave on his portfolio management strategy.

In this episode of Trend Following Radio:

  • Yale Endowment
  • Portfolio management
  • Black box trading
  • Mean variance analysis
  • Harry Markowitz
  • Passive index
  • Forecasting
May 12, 2017

Andy Molinsky author of “Reach: A New Strategy to Help You Step Outside Your Comfort Zone” is on the podcast. Everyone can learn better ways to push themselves and step outside of their comfort zone. Andy and Mike help show listeners how to get there.

If we can’t find ways to sacrifice comfort, how do we obtain future success? There is some truth to living on the edge of your comfort zone. However, sometimes it is perfectly OK to stay in your comfort zone, like trading in the stock market. There are times to play it safe and there are times to take the leap. Often there is a lot of work that goes into taking a leap that is commonly overlooked. Having a person to hold you accountable, push you, or just let you know when an idea is good or not can be a critical building block to your success.

How you execute an idea is also monumental to creating success. Taking uncomfortable steps is often necessary to get projects off the ground. Andy uses the story of Neil Kennedy as an example. Neil had a comparable website to Facebook before Facebook was around. He was shy and uncomfortable talking to venture capitalists and wasn’t able to move forward in getting his project off the ground. Because of this, Facebook succeeded and Neil failed.

Five core challenges to stepping out of your comfort zone that Andy points out are: 1. Authenticity challenge 2. Likeability challenge 3. Competence challenge 4. Resentment challenge and 5. Morality challenge. You may not experience all of these challenges but they are a nice road map to help single out your weak points. Mike and Andy finish up their conversation talking about presentations and how to engage an audience.

In this episode of Trend Following Radio:

  • Stepping outside your comfort zone
  • Accepting failure
  • Creating challenges of yourself
  • Fear of failure as motivation
  • How to present in front of an audience
May 8, 2017

Today is another mega eclectic episode featuring Douglas Emlen, Toby Crabel, Robert Aumann, Ryan Holiday, Sally Hogshead and Michael Mauboussin.

Douglas Emlen is a professor at the University of Montana. He is the recipient of the Presidential Early Career Award in Science and Engineering from the Office of Science and Technology Policy at the White House. He has also earned multiple research awards from the National Science Foundation, including their five-year CAREER award.

Toby Crabel is founder of Crabel Capital Management. His approach is very different from Covel’s, but there are some commonalities: price action driven, systems, models, risk management. Crabel works on a whole different timeframe than the typical trend follower, typically turning his portfolio over in less than a day. Crabel, a former pro tennis player, has a philosophical nature and discusses how he executes these philosophies in the trading world.

Robert Aumann is an Israeli-American mathematician and a member of the United States National Academy of Sciences. He is a professor at the Center for the Study of Rationality in the Hebrew University of Jerusalem in Israel. Aumann is the 4th Nobel Prize Laureate in economics to be a guest on the podcast.

Ryan Holiday is an American author, writer, and marketer. He is the media strategist behind authors Tucker Max and Robert Greene, the former Director of Marketing for American Apparel and an editor-at-large for the New York Observer.

Sally Hogshead is an American speaker, author, former advertising executive, as well as the Chief Executive Officer of Fascinate, Inc. Hogshead’s newest book is “How The World Sees You: Discover Your Highest Value Through The Science of Fascination.”

Michael Mauboussin is an author, investment strategist in the financial services industry, professor at the Columbia Graduate School of Business, and serves on the board of trustees at the Sante Fe Institute (an independent, nonprofit theoretical research institute). He is managing director and head of Global Financial Strategies at Credit Suisse, where he advises clients on valuation and portfolio positioning, capital markets theory, competitive strategy analysis, and decision making.

In this episode of Trend Following Radio:

  • Humans and animals
  • International hacking
  • Game theory
  • Economics
  • World champions of peace
  • The book writing process
  • Flow state
  • Personal branding
  • Multi-disciplinary thinking
  • Luck vs. Skill
  • Outcome bias
May 5, 2017

Jack Schwager is author of the Market Wizards series and just completed his second edition of A Complete Guide to the Futures Markets: Fundamental Analysis, Technical Analysis, Trading, Spreads, and Options. Jack has gone into great detail updating his 1984 original edition with over 600 pages of educational insights.

At the beginning of his trading career technical analysis never made much sense. However, as he worked in markets over the years, he came to see that those who used charts and technical analysis tended to make more money. He also saw that fundamental analysis almost goes against the idea of money management. He found that the same went for risk management: How does risk management work with a truly fundamental perspective? It doesn’t for most.

The basics of futures trading for most is fuzzy. Jack gives a short summation of the basics: 1. Futures are very liquid. 2. They trade for every type of instrument you could think of. 3. You can go short or long just as easy. 4. Futures are truly a zero sum game. 5. They are real markets and have real fundamentals pushing trends. 6. Basic trends do have some sort of rational behind them in futures markets and the skilled fundamental players will beat the unskilled players if they are good at assessing probabilities. Michael and Jack finish talking about trading as an art vs. science, whipsaws, failure to exploit major trends, drawdowns and the efficient market hypothesis.

In this episode of Trend Following Radio:

  • Fundamentals vs. Technical analysis
  • Risk management
  • Contrarian view on fundamentals
  • Charting
  • Science vs. art in trading
  • Whipsaws
  • Exploiting trends
  • Sharpe ratio
  • Efficient market hypothesis
May 1, 2017

Michael reads, “Sparks Fly on Wall Street Over Tesla’s Current Valuation: The electric carmaker overtook GM in market capitalization last week. Is this just a bubble – or is battery tech the future?” Michael uses the piece to drive home the point that nobody knows why one stocks price is high or low. All that matters is the price. There is no way to know all of the fundamentals. Bottom line, Tesla stands around $300 a share. It is a waste of time to try and figure out why. Make sure you have your stops in place and enjoy the ride.

In this episode of Trend Following Radio:

  • Tesla stock price
  • Seeing the world through a different lens
  • Fake News
  • Trading off price alone
Apr 28, 2017

Scott Hartley is a venture capitalist and startup advisor. He has served as a Presidential Innovation Fellow at the White House, a partner at Mohr Davidow Ventures, and a venture partner at Metamorphic Ventures. Prior to venture capital, Hartley worked at Google, Facebook, and Harvard’s Berkman Center for Internet & Society. He is a contributing author to the MIT Press book Shopping for Good, and has written for publications such as the Financial Times, Inc., Foreign Policy, Forbes, and the Boston Review. Hartley speaks on global entrepreneurship with MIT, the World Bank, Google, and the U.S. State Department. He holds an MBA and an MA from Columbia University, and a BA from Stanford University. He is a term member at the Council on Foreign Relations.

Hartley is the author of “The Fuzzy and the Techie: Why the Liberal Arts Will Rule the Digital World.” Scott brings a wealth of knowledge from across Silicon Valley and beyond to the subject. He gives a perspective: What kind of background do most techie’s start with? The term “fuzzy” relates to liberal arts and “techie” to computer science and electrical engineering.

Michael and Scott also discuss Mark Zuckerberg. Zuckerberg is a curious skeptic. He challenges norms, is deeply curious about science fiction, and has many interests outside of the technical world. How do we know where this curiosity came from? Where did Zuckerberg and other successful techies cultivate their curiosity? Michael and Scott give insight into these questions and finish up the podcast discussing the ethical and moral implications of technology.

In this episode of Trend Following Radio:

  • Ethical side of technology
  • Addictions on top of addiction
  • Artificial intelligence
  • Curiosity and skepticism
  • Frontier markets
  • Liberal arts in the technical world
  • Myth busting the standard path to a tech career
Apr 24, 2017

The new edition of Trend Following has gone from 100,000 words to 230,000. It is out now and it is the definitive effort on trend following. Other books have been written and they have given some good insights. However, this new edition is it. Today, Michael reads passages from the Preface and Chapter 1 of the 5th edition of Trend Following. This sneak peak gives listeners a flavor of how Michael is pushing the envelope in today’s world and further enhancing an understanding of trend following.

In this episode of Trend Following Radio:

  • 5th edition of Trend Following Preface
  • 5th edition of Trend Following Chapter 1
Apr 21, 2017

Erik Wahl is author of “The Spark and The Grind,” “Unthink,” and “Unchain the Elephant.” Starting from an early age Erik was never encouraged in the arts but rather encouraged in his reading, writing and athletics. He believed that if he got straight A’s he would be successful later on in life. Things generally worked out for him–until the Dot-com bubble hit. He was devastated and realized he needed to figure out a new way to live.

Erik started meeting artists rather than business types. He came to find that mainstream society does not understand artists and because of this, many of these people would become, for lack of a better term, “tortured artists.” The love of art is what launched him into work as a professional artist. Art was not about producing a product but rather about a new way of thinking. He began processing information in a whole new way, not just linear.

Everyone has creative ideas. What sets people apart is how they chose to leverage and use it. When Erik does any presentation he starts off creating a painting on stage to rock music in 3 minutes. He is disrupting thinking by showing the audience rather than telling them. Unless you know how to use agility and mental dexterity you will be left behind. Erik teaches how to tap into creativity and adapt to the increasing rate of change happening in the world.

In this episode of Trend Following Radio:

  • Dot-com bubble
  • 2008 crisis
  • Routine and structure
  • Misconceptions of overnight success
  • Embracing the grind
  • Mental agility
Apr 17, 2017

Michael’s first edition of Trend Following hit April 2004. Since both Michael and trend following were largely “under the radar at the time” the publisher did not put much money into the first edition and it was not carried in bookstores. Since it’s inception, however, Trend Following has become a bestseller with 4 editions, 100,000+ sold, and now a 5th edition out April 24, 2017. Michael goes into detail outlining this new edition (double the size) and how it gives Trend Following a whole new look and feel across 688 pages.

In this episode of Trend Following Radio:

  • What went into the newest edition of trend following
  • Performance
  • Survivorship bias
  • Efficient market theory
  • Volatility
Apr 14, 2017

Mark Weatherford is an American cyber security professional who has held extremely high positions in both the public and private sector. He was appointed the first deputy under secretary for cyber security at the US Department of Homeland Security from 2011-2013. Mark brings a wealth of experience and insight into a subject that all of us should be worried about in this day and age. He gives examples of how things are unfolding in regards to the cybersecurity and steps we can take to try and mitigate risk.

The basic infrastructure of the internet is essentially the same as it was back in the 90’s. A lot of physical infrastructure hasn’t really changed for most things since they were designed, however there has been layers of technology added. Michael uses the Hoover Dam as an example of old infrastructure with new technology layered on and asks, “Is it possible for the dam’s security to be hacked?” Mark says he always works from the viewpoint that absolutely everything can be broken into.

Michael moves on to ask about Hillary Clinton’s home server and what the scandal entailed. “Puzzling” is the word that Mark uses to describe the situation. She hired a company to build an email server and essentially put it physically in her basement but managed it remotely. None of this made sense or seemed well thought out. There are plenty of things you can do to protect infrastructure and it didn’t seem that they put any of those measures in place.

Michael and Mark end on discussing the idea that intelligence is all about deception. This is one of the biggest challenges in working in cyber security — figuring out what is true and what is false.

In this episode of Trend Following Radio:

  • Cyber hacking
  • Hillary Clinton server scandal
  • Podesta hacking
  • Cyber security
  • “Model what you admire”
  • Partisanship in cyber security
  • Game theory
Apr 10, 2017

To celebrate my upcoming fifth edition of Trend Following (April 24, 2017)…my mega episode with Tom Basso is here again by popular demand. If you want to know the right way to think, Tom brings it. Michael plays all of Tom’s interviews back to back and throws in a bonus interview at the beginning. The bonus excerpt is a Tom Basso presentation from the early to mid 1990s.

Tom is most famously known as “Mr. Serenity” in Jack Schwager’s “The New Market Wizards”. Now retired from managing client money, Tom was president and founder of Trendstat Capital Management. He became a registered investment advisor in 1980, a registered commodities advisor in 1984, and was elected to the board of the National Futures Association in 1998.

Throughout this 4 1/2 hour podcast Michael and Tom cover a broad range of topics including: Tom’s background and how he got into trading, speculation, emotional rushes, emotional devastation, catastrophic events, separating trading from politics, behavioral economics, advice to newcomers entering the CTA industry, location independence, time management, stoicism, black swans, and the importance of routine.

Michael and Tom also go through listener questions spanning topics including: trading regrets, money management vs. trading, tinkering with current systems, drawdowns, one-system vs. multiple systems, thoughts on Alan Watts, emotions during both losing and winning periods, exit strategies, practice trading vs. live trading, money management, risk control, how to handle skeptics, serenity, John W. Henry, coin flip entry method, percent betting, comfort with uncertainty, initial capital at risk vs. unrealized gains, and fighting against your gut reaction. This podcast includes a wealth of knowledge worth listening to over and over again.

In this episode of Trend Following Radio:

  • Speculation
  • Fighting against emotions
  • Catastrophic events
  • Separating trading from politics
  • Advice to newcomers entering the CTA industry
  • Time Management
  • The importance of routine
  • Money management vs. Trading
Apr 7, 2017

Cass R. Sunstein is the Robert Walmsley University Professor at Harvard Law School. He is also founder and director of the Program on Behavioral Economics and Public Policy and is the most referenced law professor in the United States. From 2009 to 2012 he served under the Obama administration as Administrator of the White House Office of Information and Regulatory Affairs. Cass is the author of “#Republic: Divided Democracy in the Age of Social Media.”

This past Presidential election created a huge rift within parties, largely propelled by social media and even search engine interference. GOOGLE has the ability to filter your searching, pushing things that are suitable to your interests. They are walking a fine line between giving you an easier searching experience and putting you in an echo chamber and shaping how you think. Cass is a big fan of Facebook and Twitter when people are balanced with it. He uses the analogy of cars, “They are great because they get people from point A to point B, however, they do create negatives such as air pollution.” The same can be said for social media.

The founding fathers of the United States wanted a government that gave the opportunity for exposure to the uncomfortable and to have a forum where both sides could interact and hear each other. Madison and Hamilton were told that to have a self governing system it needs to be little and not diverse, but they thought that the opposite needed to happen: A self governing system needs to be large and diverse. If not, the government would end up as a echo chamber. We are now living in what Cass describes as “Hamilton’s nightmare.” Although government is diverse, people are not listening and learning from one another.

In this episode of Trend Following Radio:

  • Echo chambers
  • Limiting people’s horizons
  • Hamilton’s nightmare
  • The daily me
  • Censorship
  • Bernie Sanders followers
  • Donald Trump followers
Apr 3, 2017

Michael has had some of the brightest psych minds on his podcast. Today he pulls together the great psych minds in trading into one podcast. Those interviews include: Brett Steenbarger, Jason Williams, Van Tharp, Daniel Crosby, and Meir Statman.

Brett Steenbarger is a Clinical Associate Professor of Psychiatry at New York State University, and author of The Daily Trading Coach, The Psychology of Trading, and Enhancing Trader Performance. His newest work is Trading Psychology 2.0: From Best Practices to Best Processes.

Jason Williams is author of The Mental Edge in Trading. Jason received his psychiatry degree at John Hopkins. His father is famed trader Larry Williams.

Van Tharp runs the Van Tharp Institute and is author of four acclaimed books published by McGraw Hill: Super Trader, Trade Your Way to Financial Freedom, Safe Strategies for Financial Freedom, and Financial Freedom Through Electronic Day Trading. His new book is called Trading Beyond the Matrix. He was also featured in Jack Schwager’s Market Wizard’s: Interviews with Great Traders. Van Tharp received his Ph.D. in psychology.

Daniel Crosby is author of The Laws of Wealth: Psychology and the Secret to Investing Success, and co-author of the New York Times bestseller Personal Benchmark: Integrating Behavioral Finance and Investment Management. His background is in behavioral psychology and he sees the markets as a great backdrop to view human behavior in a real world setting. He is also founder of Nocturne Capital.

Meir Statman is a professor of finance at Santa Clara University and a behavioral finance expert. His acclaimed book is titled What Investors Really Want.

In this episode of Trend Following Radio:

  • Envy and happiness
  • Fear of losing vs Fear of missing out
  • Mental accounting
  • Expert discretion
  • Efficient market theory
  • 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”
  • Systems theory
  • Money management vs. Position sizing
  • Ed Seykota’s trading and psychology strategies
  • Tom Basso’s trading and psychology strategies
  • Yoga
  • Training your brain how to think
Mar 30, 2017

My guest today is Vanessa Van Edwards, author of Captivate. Vanessa jokes that she is a recovering awkward person and learned in college that she could apply systems thinking to people skills. Once she started making formulas around communicating with others, she found there was more people like her.

“Treat others how you would want to be treated” is the golden rule. However, that rule should be changed to, “Treat others how they would want to be treated.” We think we know how others feel but we actually have very different ways of viewing the world and how we respond. Most are far better at intuition and snap judgment if they let their bodies do the work. Vanessa gives examples of our bodies sensing intuitively that something is wrong, exciting, etc. Our heart starts to pound, our palms start to sweat, and you may start blushing when your nervous. Your body also sweats differently when you are nervous or fearful rather than sweating from a workout.

What does it mean to “Work a room?” Being a social butterfly at events meant nothing to her because she was not the most outgoing person to begin with. She ended up engaging in countless meaningless conversations that went nowhere. This prompted her to do a study on what it actually meant to work a room and what the best people do to connect and network. She found most make their first impression before they even open their mouth and that we can spark dopamine with good conversation. How do you leave typical social conversation scripts (i.e. “What do you do?” “How are you doing?” “Where are you from?”) and have meaningful talks? This is how she came up with the idea of “conversational sparks.”

In this episode of Trend Following Radio:

  • Bringing the unconscious to the conscious
  • Confidence and lack of confidence
  • Introverts, extroverts and ambiverts
  • First impressions
  • Conversational spark
  • What makes a great presentation
Mar 27, 2017

Michael was recently interviewed by the CFA Society of Switzerland. Michael goes through the Q&A’s of his interview. Here are some of the questions:

  • When did you start trend following?
  • What do you say to trend following skeptics?
  • Do the experts you have talked to in economics, trading and psychology share any characteristics or qualities that may have contributed to their success?
  • Do many of your podcast guests, as well as yourself, have any habits that readers can emulate?
  • What are some of the books that have influenced you the most over the years?
  • What is the best advice you have ever received?

Michael finishes playing an excerpt from another interview he recently did with Bloomberg about the Turtles.

In this episode of Trend Following Radio:

  • Getting what you want out of markets
  • Trend following skeptics
  • The Turtles
  • Turtle Trading 101
Mar 24, 2017

Susan Peirce Thompson is author of “Bright Line Eating.” This is a podcast all about “aha” moments. Most have no understanding of how their bodies take in, and absorb food. Susan’s BHAG (big hairy audacious goal) is to make sure that all those who want to put forth the effort of losing weight and keeping it off have a road map.

Susan had trouble losing weight starting at age 12. She found early on that the only thing that worked for her was using drugs, specifically crystal meth. During her 20’s she was able to get off the hard drugs, but then became addicted to nicotine, sex, flour, and sugar. The turning point for her was when she decided to do a bikini body 12 week challenge with her husband. They were suppose to work out 6 days a week and eat 6 times a day. Her husband did great on the program, Susan did not. She wasn’t able to keep with the eating schedule.

She ended up running into an old friend that told her about a different way of eating. Her friend gave her the cliff notes version of a no flour or sugar diet—combined with weighing your food. Susan ended up quitting the bikini challenge and started down this new path of eating. She began losing weight instantly. This lead to her going back and reverse engineering why the program worked. She started Bright line eating in 2014 and started doing a scientific study on the results of the participants.

80% of food sold in the super market has added sugar. 60% of one year olds are fed sugar every day. Susan explains why it is so hard to have the brain let go of the need for sugar. The dopamine release in sugar is the same type of dopamine release that occurs when using drugs or having sex. Doughnuts and pornography give a dopamine release that is larger than the body is trained for. What happens over time is your need for stimulation rises. There is a need to keep it sustained.

What is the solution? You need to automate your eating just like brushing your teeth is automated. There is no impulse control, just automatic. There needs to be no choosing involved. 80% execution of this program is so much harder than going 100% all in. It’s a system.

In this episode of Trend Following Radio:

  • BHAG
  • Sugar is an addiction
  • How to handle withdrawal from sugar
  • Drinking calories vs. eating calories
  • The radish study
  • Willpower is a finite resource
  • Regulating task performance
Mar 20, 2017

The vast majority of the investing population only know their own country’s stock index inside their portfolio. Top investors know much more than that. They think about gold, palladium, the Swiss franc, the Japanese yen, silver, copper, bonds, wheat, etc. Most would never think of trading these markets, however these markets are part of the trend following world. Any everyone can trade any market through a handful of different financial instruments such as ETF’s, LEAPS, and futures. The fundamentals of these markets are irrelevant for profit. The only information needed to trade any market for profit is price. This type of thinking opens markets up to anyone and everyone willing to play the game and take advantage of the global opportunity trend following provides.

In this episode of Trend Following Radio:

  • Price action
  • Momentum
  • Macro hedge fund
  • Trade everything
  • Ignoring the fundamentals
Mar 17, 2017

Isaac Lidsky graduated from Harvard with a degree in mathematics and computer science, was a successful practicing attorney and became the only blind person to have clerked at the U.S. Supreme Court. His story is one of overcoming a rough obstacle. Isaac’s book, “Eyes Wide Open,” is about making the choice to take control of the reality you create for yourself. To choose in every moment who you want to be and how you want to live your life. Holding yourself accountable is the starting point.

Sight is a great case study for showing how we create the lives we live. What you physically see isn’t necessarily an accurate depiction of reality. Isaac had been living in fear of his blindness until he went to see a low vision rehabilitation specialist and had an “aha” moment. She asked about his using a cane to get around even though he could still see slightly. It made him realize that even though he was rapidly losing his sight, all he had was right now. He was subjecting himself to succumbing to a fear that was down the road. He was able to choose to live a different way.

We misunderstand luck as humans. People have a tendency to believe that we can isolate one moment and perceive what our lives would look like if we made that one change. It is a waste of energy to get caught up in thinking of the “what ifs.” So many fixate on a static decision that is unchangeable. You can move on from a decision. Looking at other situations and feeling envy of what they have is another swift way to get nowhere. Nothing is simple, even though another persons story may seem simple or that they got where they are based on one decision. Things are usually much more complicated than that.

In this episode of Trend Following Radio:

    Living in the “now”
    Heightened senses
    Luck and skill
    Fear we create
    Entrepreneurship

Mar 13, 2017

Howard Marks is a billionaire value investor with four decades of success. Although a value investor, his thought process mirrors trend following in many aspects. Michael plays an excerpt from Howard covering his thoughts on price, the lack of value in forecasting, efficient markets, surviving market randomness, and high yield bonds. Trend following and value investing may be two different worlds, however, there is a lot of overlap in how Howard trades and how trend followers trade.

In this episode of Trend Following Radio:

  • Price action
  • Forecasting
  • Value investing
  • How to think about investing
  • Black swans
Mar 10, 2017

This is Brad Rotter’s 3rd appearance on the show. He is well known in financial circles as being the first investor with Richard Dennis. As a venture capitalist, Brad has helped launch numerous new enterprises. Our conversation today takes you in the mind of how a venture capitalist thinks and describes how he views new opportunity, particularly his newest investment: desalinization of water.

What is your process? How do you explain venture capitalism? Brad grew up on a farm in Iowa and became interested in futures contracts. This made him interested in investing in the future and he quickly began to see things a little differently than the “normal” world. Brad made his first hedge fund investment in 1982. At that time hedge funds were a very inefficient market. He would look at managers that had a special niche, grasp what they were doing, and invest.

Brad looks for long term trends when he invests in ideas and companies. Technology brought him to California. His current venture is providing fresh water across the world. The one crisis facing humanity that has a solution is fresh water and it is now an invisible water emergency. Brad says, “We don’t really have a water problem, we have a salt problem.” Brad goes in depth describing the processes of desalination and the infrastructure, or rather the mobile infrastructure involved.

In this episode of Trend Following Radio:

  • Venture capitalism
  • Turtles
  • Efficient market theory
  • Mobile infrastructure
  • Desalination
Mar 6, 2017

Black swans arrive as a surprise. Rare stuff happens. Surprises walk up and punch you in the gut. They smack you upside the head. There is no exact preparation for the timing of a black swan, but you can position yourself. Michael plays an excerpt from Nassim Taleb explaining black swans. Taleb is of course responsible for popularizing the term.

In this episode of Trend Following Radio:

  • Knowledge is therapy
  • Black swans
  • Uncertainty
  • Probability
  • Global warning
Mar 3, 2017

Donald Hoffman is a cognitive scientist at UC Irvine. He studies how our visual perception, guided by millions of years of natural selection, authors every aspect of our everyday reality. His research is about uncovering the underlying secrets of human perception. Donald has discovered clues that point to our subjective nature of reality. According to Donald, we actively create everything we see. Donald started to learn how to program at a very early age. This is what got him thinking: Are we just machines, or actual humans?

Donald began to be bothered by the reality that we might not be seeing what our eyes are seeing. Do we see reality as it really is? Almost all of us have a belief that we see the world as it is. Michael and Donald go in depth about certain illusions and truths that may be hidden from the main public. Illusions are everywhere when you start looking. Evolution shaped us with certain perceptions and interfaces that we, as humans, evolved to keep us alive. Whether or not those perceptions are real or fake is irrelevant. As long as they keep us feeling happy and alive, that is all that matters. Natural selection has also led us to the reality we see. The only thing that matters in natural selection is fitness. Fitness according to natural selection is not based on physical fitness but rather if you are able to reproduce. That is the only criteria.

Michael and Donald end the podcast posing the question: Do humans have the capacity to even understand what the true reality is?

In this episode of Trend Following Radio:

  • Are we robot or human?
  • Evolution
  • Reality vs. Perception of reality
  • Natural selection
  • Pushing theories to their limits
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