Michael Covel reflects on the recent guests he’s had since his last monologue, including guests like Ed Seykota. Covel discusses Seykota’s book, “Govopoly”, and how government and crony capitalism is eating the US from the inside-out. If you have to navigate a system like this, that’s unpredictable at its essence, there’s no better way to maneuver around the chaos than with trend following. Covel discusses how trend following, and being an entrepreneur, gives you freedom. Covel moves on to talks about the 2014 conference in Singapore, where Covel is preparing to have some of the best and brightest names in trend following. Covel then plays a clip from CNBC featuring David Harding. Covel discusses the clip and gives his commentary, discussing momentum and trend following in Harding’s own work, and how the talking heads just don’t get it. Covel questions why CNBC would bring on someone and act like they have no idea of what he does, and spends some time exploring why CNBC would have someone on and ask the questions they ask. Harding also interestingly notes that he is not at the particular conference he is at to learn strategy; Covel explores why Harding might not want to learn strategy at a conference with some of the world’s most powerful people, and what this might mean to the young trader.
Michael Covel talks with Dave Rapach, a professor of economics at the John Cook School of Business at Saint Louis University. Rapach comes at trend following from an academic perspective, and he explains it from this vantage point. Covel and Rapach discuss why trend following works from an academic standpoint; "publish or perish" and the difficulty of publishing scholarly articles on trend following; early research on trend following, the random walk theory, and Burton Malkiel’s “A Random Walk Down Wall Street”; Warren Buffett, Bill Dunn, and survivorship bias; a paper that Rapach traces to the reintroduction of trend following and technical analysis to the academic community; measuring systematic risk; Eugene Fama’s recent nobel prize; how the trend following world has been neglected by the academic community; how Rapach found his way into the academic finance world; Covel’s experience digging in to trend following research in the early to mid 1990’s; some of Rapach’s recent papers; and why recessions are good for trend following. For more information on Dave Rapach, visit http://sites.slu.edu/rapachde. Want a free trend following DVD go to trendfollowing.com/win.
Michael Covel speaks with Ed Seykota. Seykota was famously first featured in the original “Market Wizards” book. He’s also appeared in Covel’s “Trend Following”. Covel considers Ed a friend and a mentor, and Seykota has provided a major influence on Covel’s work. Their conversation today gets into a bit of trend following, but it’s mostly about Seykota’s new book, “Govopoly”. Together, Covel and Seykota discuss Seykota’s concerns about our economy; the assimilation model and how Seykota sees assimilation happening today; the definition of “govopoly”; how Seykota’s mentor’s work plays into Seykota’s work today; thinking about systems; what we can do to “fix” the economy, or to at least prepare yourself; the exponential curve that assimilation takes; noticing things before they’re important; why Seykota doesn’t provide a “solution” to the problem and instead advocates for the system to correct itself; what we can do as people in response to the system; Detroit as a microcosm of the US; and ways to make money during the assimilation.
Michael Covel interviews Dominic Frisby, a self-proclaimed accidental financial bod, comedian, actor of unrecognized genius, voice of many things, & presenter. His new book is called “Life After The State”. Covel and Frisby talk about Frisby’s beginnings as an actor and comedian; what comedy can teach us about finance and the discipline of clarity; how Cuba’s currency confusion led the nation to unfortunate circumstances; real estate; other peoples’ trust in the state; how the poor and needy would be cared for in a society without a state; the monopoly on compassion; how the state takes a piece of everything; “greed is good”, “money is the root of all evil”, etc; crony capitalism; predation vs. productivity; the influence of lobbyists; the duopoly on money by banks and the state; education; Bitcoin, digital currency, and taxation. For more information on Dominic Frisby, visit www.dominicfrisby.com. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel talks with Harry Dent in his second visit to the podcast. Dent studies demographic and historic trends to see major events unfolding long before the mainstream media has them on their radar. Dent’s new book is called "The Demographic Cliff". Covel and Dent discuss why demographics are so important; the definition of the "demographic cliff"; demographic comparisons between the US and Asia; rates of urbanization and GDP in emerging countries; the baby boomer generation; the Japanese "coma economy"; why the retirement age needs to be raised; how real estate in America will never be the same; and "die-ers" vs. buyers. For more information on Harry Dent, go to www.harrydent.com. Want a free trend following DVD? Go to www.trendfollowing.com/win.
Michael Covel speaks with Chris Ducker. Chris Ducker is a British businessman, the founder and CEO of Virtual Staff Finder and the Live2Sell Group of Companies. His new book is called "Virtual Freedom". Ducker and Covel discuss the definition of virtual freedom; how Ducker came from the cubicle originally, and how he got to be the location independent entrepreneur he is now; how Ducker became a “virtual CEO”; the idea of a “superhero syndrome”; the idea of a virtual, international staff; the process of finding a VA (virtual assistant); the two types of outsourcing; hiring for the role--not for the task; text, audio, and video communication; Tim Ferriss and the four-hour work week; and developing a location independent lifestyle. Big fan of Ducker and his business acumen (more: www.virtualfreedombook.com). Learn something! Note: Go to www.trendfollowing.com/win for a free trend following DVD.
Michael Covel interviews Russell Napier. Napier is a consultant with CLSA, who Covel had the good fortune to speak for in 2013 in several cities across Asia. Napier is a global macro-strategist. He definitely comes at it from a different trading perspective than trend following. However, from a big picture perspective Covel loves the way that Napier questions the system (a broken system at that). They discuss why the average person will never see an interest for their savings again in their lifetime; how the choice of equities is made for many; how we’re not really in a free-market capitalistic world; why Napier thinks we’re on the eve of a major deflationary period; and how the equity bull market causes people to simply not think (or question). Napier's book is titled "Anatomy of the Bear". Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel talks with Bobby Casey on today’s podcast. Casey and Covel met in October 2013 in Singapore. Covel quickly realized he had to have him on the podcast for Casey's travel perspective alone. As an American expat who has moved and lives in Latvia, and who helps others relocate to many different countries, Casey and Covel discuss location independence and ultimately changing your lifestyle into a traveling way. The two discuss how Casey found his way to Latvia; travel in general; some of the issues you may encounter during travel; Lithuania; holding dual citizenship; and the advantages to having a passport from another country. Today, nothing is guaranteed. You must be adaptive. And that may just mean your country will adapt too. Nice perspective and inspiration from Casey. Also, receive a free trend following DVD: www.trendfollowing.com/win.
Michael Covel talks with Barry Schwartz, an American psychologist and author. He is a professor of Social Theory and Social Action at Swarthmore College with books such as “The Paradox of Choice: Why More is Less” and “Practical Wisdom”. Schwartz’s psychological work is right there at the foundation of why any trader or investor will have success (its the foundation of any success for that matter). Covel and Schwartz discuss choice and practical wisdom; choice in selecting a mutual fund, and how Schwartz has seen that unfold in corporations; the paradox of options; having too much choice; democracy and choice; the idea that decision-making has shifted from the expert to the individual; why prescription drugs are marketed to people who can’t buy them outright; if choice drives clinical depression; expectations; the idea of practical wisdom; judgment and discretion in the workplace; wisdom and the education system; having a “script” from your employer that prevents you from thinking outside of the box; the importance of working with like-minded people; and how things have changed since the 2008 financial crisis. Want a free trend following DVD? Go to www.trendfollowing.com/win.
Michael Covel talks with Frank Curzio of Stansberry and Associates. Curzio is the voice behind S&A Investor Radio, as well as the editor of the Small Stock Specialist. Although they have different stances on trading, Covel and Curzio connect on a number of trends. Curzio and Covel discuss the CES (Consumer Electronics Show) and upcoming electronics trends; connectivity; narratives; protecting your downside; the Federal Reserve and the gold market; Netflix, Best Buy, and 4K televisions as a trend; Apple; being on the ground, physically going somewhere, and the importance of being there. Covel saw Curzio present in the fall of 2013 in Singapore and really appreciated his technique of stop lossing his narrative. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel talks with Tom Basso, the trader most famously known as “Mr. Serenity” in Jack Schwager's "New Market Wizards”. Basso, now retired, was a stock and commodities trader who was president and founder of Trendstat Capital Management. He is the author of two books, "Panic-Proof Investing" and "The Frustrated Investor". Basso 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. This is Basso’s third podcast conversation, and Covel and Basso talk about location independence; making sure trading doesn’t take up your entire life; stoicism; trend following in the emotional arena; mental exercises; the psychology of trend following; the “observer self”; the mental aspects of success; the importance of being able to lose small amounts of money; why trend following does so well when the black swans hit; Basso’s daily routine and the importance of routine in daily life. Covel and Basso also go through listener questions such as whether Basso would make the same trading decisions that he did from the start; money management v. trading; tinkering with current systems; knowing when it’s a regular drawdown v. something really going the wrong way; and whether Basso is a one-system kind of guy v. multiple systems.
Note: This original #200 episode has to been updated to include all Basso interviews so far. 4 hours plus!
Today on the podcast Michael Covel speaks to Peter Schiff. Schiff is a businessman, investment broker, author, and commentator. Whether you like him or you hate him, Schiff presents his perspective straight and without compromise. This is a quick conversation that Covel had with Schiff about Federal Reserve policy. Regardless of the part of the political spectrum that you’re on you have to admit that this is a discussion that has to be had. The two talk about QE infinity, expectations and Fed overall policy. Other topics include ZIRP; inflation; real estate; foreclosure; how the stock market keeps people satiated; protecting the value of the dollar; how we can get to effectively negative interest rates; and the way out of QE infinity (if even possible). Want a free trend following DVD? Go to trendfollowing.com/win.
Today on the podcast Michael Covel talks to William Adams. Adams has over 17 years of experience in financial markets and is now based in Zurich, Switzerland. Covel and Adams talk about systematic trading strategies and Adams’ early beginnings to his rise to his position today. Covel and Adams discuss the first time Adams got the “trading bug”; early trading strategies; generating alpha; the strategies that Adams uses today; the “core satellite approach”; why Adams chose options over futures; the seasonality of trades; inspirational resources found by Adams; the influence of Zurich on Adams, and whether or not Americans can learn a thing or two from the Swiss. Free DVD: trendfollowing.com/win.
Today on the podcast Michael Covel talks to world renowned paleontologist Jack Horner. Horner was the technical advisor for all of the “Jurassic Park” films. You might question why Michael Covel would have a paleontologist on his podcast, but the reason is to listen to how Horner thinks. Horner is dyslexic and talks about the process of learning. He uses words like “opportunistic”, “scavenger” and “devil’s advocate”. Same attitude, different field. Outside of the system, against the status quo. Covel and Horner discuss passion; why you’d break open a dinosaur egg rather than hold onto it as precious material; how Horner attributes his way of thinking to dyslexia; the shapeshifting dinosaur hypothesis; “chickasaurus” and the idea of dinosaurs and chickens intersecting; the accuracy of the “Jurassic Park” dinosaurs; whether the T. Rex was a scavenger v. predator; and how Horner came to his way of thinking. More information can be found at www.museumoftherockies.org. Free trend following DVD: trendfollowing.com/win.
Michael Covel opens up about his more interesting experiences in 2013, first talking about his experiences presenting to the sovereign wealth funds for Singapore and Malaysia. Covel moves into talking about the Abu Dhabi Investment Authority (another sovereign wealth fund), and whether they are understood as a trend following trader or not. Covel talks about the “silent magic hand”, and its connection to the Abu Dhabi Investment Authority, and whether this means they are now executing trend following in-house. Covel talks about how this means potentially less and less public information about trend following going forward. Covel moves into media manipulation and distraction and how it surrounds us 24/7. He also discusses an upcoming trend following conference in Asia in late 2014. Time to start kicking ass. No sitting still. Get on a plane now! Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel takes us out of 2013 with his unique perspective on today’s podcast. Always the passenger, Covel discusses his travels throughout 2013. He moves on to discuss the people who have appeared on the podcast in the last few months. Discussing his most recent guest, Covel quotes Dan Ariely from a TED Speech. Covel notes that being a trend following trader is not about excitement; once you’ve figured out your system, there’s no day to day information flow that’s useful. That’s over: CNN, Bloomberg, etc. People think they need constant and more information to make decisions about the market--wrong. So how do you make good decisions in the light of so much information? Price movement, price action. Covel moves on to talk about simple heuristics and his recent podcast with Gerd Gigerenzer. Covel also announces a trend following conference in Singapore. Happy holidays! Free trend following DVD? Go to trendfollowing.com/win.
Today on the show is Dan Ariely. Ariely is a professor of psychology and behavioral economics at Duke. He has a bestseller titled “Predictably Irrational”. He has given great TED Talks with millions of views. Covel and Ariely discuss irrationality and rationality on today’s show, including how we make decisions (with often poor processes). Covel and Ariely’s discussion includes the irrationality of fundamentals in equity markets; the wisdom of crowds, constraints and where else our money can go; the awarding of the Nobel Prize to professor Shiller and Fama--two famed professors with very different outlooks--and whether it’s irrational or not; macroeconomics vs. microeconomics; lessons learned during his life-threatening burns; why people lie; why the freedom to do whatever we want and change our mind is the shortest path to making bad decisions; and how 2008 became a constructive tool for Ariely; why Bubbles are some of the most imprecise factors out there; and Ben Bernanke. Want a free trend following DVD? Go to trendfollowing.com/win.
Today, Michael Covel speaks with Gerd Gigerenzer. Gigerenzer is the director of the Max Planck Institute for Human Development in Berlin, and is a former professor of psychology at the University at Chicago. Gerd is also the director of the Harding Center for Risk Literacy (read David Harding the head of trend following firm Winton Capital). Covel speaks with Gigerenzer about heuristics. For those of you that trade; for those of you that invest; and for those of you that just want to navigate risk and certainty in your life, this conversation is mission critical. His work is the philosophical foundation of trend following success, for starters. Covel and Gigerenzer discuss uncertainty; comparing decisions to baseball (gaze heuristic); complex problems and simple solutions; using price action as a decision making cue; unconscious heuristics; the art of knowing what one doesn’t have to know; the less is more effect; the miracle on the Hudson River a few years ago as a case in point illustrating heuristics; the idea of an adaptive toolbox; the element of surprise in Gigerenzer’s work; the distinction between risk and uncertainty; intuition vs. rationality. This type of understanding is ultimately far more important than any trading system breakdowns. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Dan Collins. Dan Collins is a 25-year veteran of the Futures industry, founder of the Dan Collins Report and most recently was named Editor-in-Chief of Futures Magazine (Covel and Collins’ conversation took place just before Collins was named Editor-in-Chief). Covel and Collins discuss why the mainstream media seems to not even attempt to hide the bias and the propaganda against the styles and types of trading in the worlds that Covel and Collins occupy (i.e. trend following, systematic, managed futures, etc.); a particular Bloomberg article which attacked managed futures and alternative strategies; and why articles like these are an attack on the average investor. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel talks with Eric Crittenden. Crittenden is a Founding Partner responsible for managing all research, risk quantification and trading operations at Longboard Asset Management. He's also been featured in Covel's own Little Book of Trading. Today, Crittenden and Covel talk about a white paper that was originally released in 2005 that concerns trend following on stocks. Topics of discussion include the decision to do research into trend following on equities, and the background behind the white paper; why others weren’t trading equities with a trend following strategy at the time, and why there’s been a sea change in the industry now; stress tests; how Critenden’s models and datastreams apply to a model; if Crittenden sees anything on the horizon that takes trend following on equities in a suboptimal direction, and where he sees it going in the future; whether Crittenden’s work is all price driven and all systematic; the amount of human judgment involved in Crittenden’s strategy; why this strategy works if it’s based on inefficiencies in the market, and Eugene Fama just won a Nobel Prize regarding the markets being efficient; why exposure management is more important than the entries and exits themselves; the importance of blocking out distractions.
Michael Covel monologue.
Michael Covel talks with Kathy Kristof. Kristof is a contributing editor for Kiplinger Personal Finance magazine. Kristof and Covel discuss the fact that, if we have bubbles, and we keep having bubbles, what does the average investor do?; the difficulty of trying to figure out value today (yes, clearly not Covel's world, but he listens to another perspective); the impact of interest rates on investors; the “nervousness” of stocks; government intervention and trust; why investors are better off with a “softer” job market, and a slower recovery; why we have a “Goldilocks” economy, and what might happen if a black swan swoops in; why almost every strategy will have good results at some time or another, and the importance of picking a strategy for yourself; technology, and the connection to entrepreneurial pursuits. For more information on Kathy Kristof see Kiplinger Personal Finance magazine and CBS MoneyWatch. Free trend following DVD: trendfollowing.com/win.
Michael Covel touches on on Motorhead, Hugh Hendry, David Harding, Vermeer, The Pope, acroyoga and Saigon psych rock in today’s monologue. How is it all related? Covel explores. First, Covel opens with a quote from Martin Bergin of Dunn Capital: “Everything we do is 100% systematic. There’s no over-ride, no individual decision-making whatsoever. That is the focus of the firm.” Covel moves into a clip from David Harding on Bloomberg. Harding doesn’t completely obliterate Eurgene Fama’s work, but he says, although his work is academic beauty, it doesn’t beat the performance of trend following. Covel then moves into Hugh Hendry. Although not a trend follower per se, he has often said things that are extremely trend following. The quote the Covel explores today, however, gives a clearer picture of Hendry's strategy (its not TF). Next, Covel discusses a documentary produced by Penn and Teller on the Dutch master, Vermeer, who may have used a tool to complete some of his paintings. The analogy to trading is there. There’s a system; there’s a process; there’s a model. Whether in painting, or whether in trading. Next, Covel talks about the Pope’s recent statement on economic inequality. Covel talks about how anyone who wants the politicians to legislate inequality is extremely naive. They have a vested self-interest. Covel moves on to talk about acroyoga, which he’s been practicing for the last several months. It’s reinforcing the idea of deliberate practice in Covel. That’s how Bergin makes that statement, and how Harding is so confident about trend following: They’ve been down the path of deliberate practice.
Charles Faulkner returns to the podcast for his fourth interview with Michael Covel. Today, he comes to us from Belgrade. Faulkner is an author, trader, and international expert on modeling the knowledge and performance of exceptional individuals. He was originally featured in "The New Market Wizards" by Jack Schwager. Covel and Faulkner discuss behavior, emotions, decision-making, and intuition in the world of money--and what money does to us on a biological level. Topics include Neurolinguistic Programming; how money in the mind influences money in the world; the schizophrenic-seeming handout to the two recent Nobel Prize winners; “system one” and “system two”; how “one” is running all the time, how “two” takes effort--and where Faulkner hopes to take this research; how experience can teach “system one”; new lightbulb moments in current research; how the “afraid to lose” (or in Singapore, Kiasu) concept could be terribly dangerous when applied to money; why the less you know about something, the clearer the image--and the more certain you are that it’s real and true; the need for certainty; money as a living metaphor; sunk costs; the Myers-Briggs instrument; and rituals and money. Faulkner also tells us the heart of what he’s after in his new upcoming book. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Mikael Stenbom. Stenbom is the CEO and founder of RPM, which is a advisory consulting firm in Sweden. They advise, consult, or manage over 3.5B AUM. Stenbom has had tremendous experience in understanding strategy and the money management side of the CTA/managed futures world. Stenbom and Covel discuss what makes up a “smart money investor”; third party risk monitoring; and the life-cycle of CTA’s, hedge funds, and businesses in general. Nothing is constant in this world, and things change--Stenbom places a time axis on CTA’s to better manage for his clients. He also gives his opinions on why certain CTA’s have found such success. Covel and Stenbom discuss some of Stenbom’s early influences, such as the first time Stenbom had a “lightbulb moment” in the systematic world; Stenbom’s economics background; connections between economics, trading, and sociology; and the Austrian school of economics. Further topics include how Stenbom goes about explaining his style of responsive, systematic trading to new clients; Andrew Lo’s Adaptive Markets Hypothesis (which says that markets are for the most part efficient, but from time to time due to changes in the market ecology, become extremely inefficient); the process of rebranding Stenbom’s firm in 2008; the “politically infected” investor; and the cultural compatibility between Nordic countries and the Japanese. Free trend following DVD: www.trendfollowing.com/win.