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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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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.

Jun 6, 2016

Michael Covel interviews Josh Hawes. Josh is the Risk Officer and Investment Manager of Hawking Alpha. He is a trend following trader now who started off at Goldman Sachs. Josh breaks apart the trading industry, highlighting many of the cons associated with the mutual fund space.

Josh has always had a passion for math. He started looking at the performance of different funds within Goldman. As soon as he started to look at returns of some, he began to see a disconnect. They would judge themselves off “beating the index” but they were still losing massive amounts of money. They would also have access to CEO’s of top companies and still not be able to make money off of the information they would share. This is when he began to transition out of the company and turn to other forms of trading, not just long only.

Josh was given many books to read while at Goldman. “Reminiscences of a Stock Operator” was one that resonated with him the most. “Trend Following” was another book that Josh had come across. “Trend Following” triggered him to reach out to some of the traders mentioned in the book. Ed Seykota and Jerry Parker were just a couple of the traders he was able to spark up a conversation with by reaching out.

Next, Michael and Josh break apart index investing. Josh says everyone should ask themselves, “Why does the market owe you anything? And if the market goes down, does that not mean that the markets can go down for a long period of time?” You can’t say that you should go long the market because for 200 years the market has gone up. There has been massive ups and downs and you have to be able to navigate the down periods. Michael then asks, “How does one become the next Warren Buffett?” Josh says that 2008 is one of the best examples of why you could never be the next Warren Buffett. There are a lot of people in the mutual fund space that try and mirror Buffett. Some of these people fail trading the exact strategy as Buffett. So does that make Buffett lucky or a genius?

Josh and his firm guarantees to always follow their stops. He guarantees his clients that he will be a trend follower and although he can not guarantee any level of return, he will always follow his stops. This sets Josh and other trend followers apart from fundamental traders. Josh then segues into what he believes are the four ways to make money: When prices move, when prices don’t move, arbitrage, and high frequency trading. He expands on these four points and gives examples. Michael and Josh end the podcast on the importance of talking directly with clients and connecting with people on a personal basis.

In this episode of Trend Following Radio:

  • Trading off fundamentals
  • Keeping up with the Jones’s
  • Smooth equity curve’s
  • Concept of an Index
  • Mutual fund industry
  • 10,000 hours
  • Arbitrage
  • High frequency trading
3 Comments
  • almost two years ago
    N. Frank
    Really enjoyed this one, you seem to make a personal connection with Mr. Hawes, listened to the last 10 minutes a couple of timed more.
  • almost two years ago
    William Turner
    Did Josh ever work with Hillary's Son-In-Law while at Goldman? Talk about insider info! He will probably restart his failed hedge fund if she gets elected. Great interview from a knowledgeable trader. Regards.
  • almost two years ago
    Don Taylor
    is there a transcript of this interview, I am hearing impaired