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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 www.trendfollowing.com/podcast.
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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.

Jun 25, 2013

Today's episode is an emotional rescue, so to speak. We don't think about it regularly when it comes to our money, but understanding our emotions is core to investing. Those emotions tie right into when you buy and when you sell. If you think you're going to become a successful trader without obliging the emotional side of the coin, you're wrong. First, Covel talks about the idea of multitasking, discussing an article called "Don't Multitask, Your Brain Will Thank You". Research shows that chronic multitasking can have long-term effects on your brain's functioning. Applied to trading what if instead of the chronic multitasking associated with fundamental analysis you could just focus on one thing? What if you could just reduce it all into something simple to digest? That's where trend following makes sense. Covel moves on and gives an example of a doctor friend who is confused with current markets. Related to that, Covel also discusses an article in the Wall Street Journal by Brenda Crane. There has to be a new way of looking at the investing landscape that can provide some sort of "emotional rescue". Covel moves on to another Wall Street Journal article titled "The Cold Truth About Emotional Investing" and the idea of the "fantastic object", as well as a clip from NPR on behavioral finance. So once you have this understanding that we're facing this multitasking hell, we need a way to decipher the hieroglyphics of the market, i.e. all the conflicting information. Covel's doctor friend is not the only one confused. Flow is one way to avoid the distraction, and Covel shares a classic Bruce Lee clip to illustrate the trend following mindset. Markets going down are only bad if you're only betting for them to go up. Go with the flow. Avoid distractions. Avoid multitasking. Then what? You need a process; you need a system to tell you when to buy and sell. And even if you get the monetary success, what are you going to do? Just buy stuff? Emotions come into the picture again...even when you're successful. Covel brings up an article called "Buy Buy Love" in the Economist about the most satisfying ways to spend your money. In the end, it's all about the tools you have in place to keep your emotions in check. Want a free trend following DVD? Go to trendfollowing.com/win.

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