Trend Following With Michael Covel

Steve Burns and Michael Covel get together yet again to discuss all that is trading. After a lifelong fascination with financial markets, Steve Burns started investing in 1993, and trading his own accounts in 1995. It was love at first trade. A natural teacher with a unique ability to cut through the bull and make complex ideas simple, Steve took to blogging and social media by founding New Trader U in 2011. Since then, New Trader U has attracted hundreds of thousands of visits a month, becoming the go-to resource for people wanting to build a strong, trading foundation. New Trader U offers an extensive blog resource with more than 1,000 original articles (Steve posts daily and is the author of numerous trading books). In this episode of Trend Following Radio: Trend following Taking a loss Risk management Proper psychology Mindset

Chris Fussell starts the podcast explaining the process of becoming a Seal. The teams of the Special Forces do not select as much as they down select. Out of the 150 people who start a Seals class, maybe 25 will make it. The military uses rigorous training to sort out “who has it” and who doesn’t it. People have to have special inherent skills and then they are nurtured to refine those skills. A good team is made up of individuals that complement each others shortcomings and are able to magnify each others strength. Chris stresses that these men have all the same burdens that civilians have, they just have it coupled with combat stressors as well. They deploy for an amount of time and then come how to a wife, kids, and a stack of bills. Everyone, especially soldiers, need to have a cocktail of coping tools so there is a balance between work and personal life. You can’t be amazing at work and have your family falling apart. Things will start to unravel at work rapidly. Chris was a young officer in 2004 when

Fear drives all in today’s world. Two operations who have not let fear dictate their trading are Berkshire Hathaway and Dunn Capital. Both have 40+ year track records that should be studied. What was their system? How has it worked? If you look at the month by month and year by year of these two much can be learned. Both track records have not just gone up, up, up–they have had massive drawdowns (at least by the definitions of mortals) and still they have been able to persevere. No matter who you are, the ability to adapt to the markets is mission critical. In this episode of Trend Following Radio: Drawdowns Dunn Capital performance Warren Buffett performance Risk management Ego in trading Cognitive dissidence Efficient market hypothesis Black Swans Transparency Critics; Trolls!

Anthony Tjan is author of “Good People: The Only Leadership Decision That Really Matters.” He is CEO and managing partner of Cue Ball and has a successful track record as an entrepreneur, principal investor and strategic advisor. He leads his firms overall direction and is involved in activities across the board with Cue Ball. What was the progression in Anthony’s life that brought him to where he is now? Anthony is an immigrant and experienced a great amount of generosity throughout the years aimed at him and his family. He shares a story of being 15, selling picture frames in Canada. At the end of a long hot day of lugging around picture frames an elderly women invited him in for some tea. She finished their conversation saying, “As you go forward just make sure, as much as you love the product you are selling, you love the people more.” She ended telling him, “Just so you know, I believe in you.” This woman and that conversation resonated with him and set the stage for his leadership philosophy. Anthony

John Force is an American NHRA drag racer. He is a 16 time champion and his team has 18 championships under them. John is one of the most dominant drag racers in the sport with over 144 career victories and he is still pushing limits at 68 years old. John is considered the best. He is a premier example of making it happen with no excuses. What drives John? He says, “At the end of the day everyone has to eat.” But beyond that, he simply loves what he does. He loves driving the cars and explains it as magic to him. It is that passion that has gotten him through crashes, burns and even fatalities among fellow racers and friends. Passion may be what keeps him going, but it is a system that keeps him alive. There is an aspect of a cowboy attitude, however John has a checklist that he lives by. He has been driving for 4 decades and at this point he pokes fun at himself saying he is a trained monkey. It’s about sticking to what you have been taught and not veering too far from those teachings. In this episode of T

Mark Minervini is author of “Trade Like a Stock Market Wizard: How to Achieve Super Performance in Stocks in Any Market” and now his newest book, “Think and Trade Like a Champion: The Secrets, Rules and Blunt Truths of a Stock Market Wizard.” He was also featured in Jack Schwager’s “Stock Market Wizards.” This is Mark’s second appearance on the show. Nature vs. nurture or the debate of whether a person is “naturally gifted” is one of the oldest debates out there. Mark says he was an “unnatural” when it came to trading and he was actually in the negative for the first six years when he started. Why did he keep going? He had a passion for trading and a bigger vision of what he was doing. Mark knew he had all the tools to trade for profit, just not all the experience yet. He believed in what he was doing, had a passion for it, took responsibility for his flaws and put the process before the results–that is why Mark thinks he has been able to thrive over the years. “If you do not think you can perform at a certa

Paul Singer is described as one of the smartest money managers. He has a 2.2B net worth. His perspective on trading mirrors trend following even though he is not a stated trend trader. Listen and learn. In this episode of Trend Following Radio: Doom and gloomers Macro economic perspective Trump’s impact on the markets Timing markets The moment of right now

Jeff Goins is author of “Real Artists Don’t Starve: Timeless Strategies for Thriving in the New Creative Age.” Jeff dismantles the myth that being creative is a hindrance to success and reveals how an artistic temperament is an advantage in the competitive marketplace. Mindset, technique and understanding the right perspective is key, and Jeff helps get you there. We all know there are staving artists in the world. We have told ourselves long enough that artists need to be struggling – that’s a myth. You can be creative and make money. Jeff uses an example of Michelangelo and how he was actually wealthy to the tune of about 47 million dollars. If the renaissance’s greatest artist was one of the wealthiest artists, then what does that tell us about today? How did Jeff go down the path he is on now? Jeff is a big fan of apprenticeship and has always had the mindset that life is a classroom. Apprenticeship and observing how other successful artists have made a living is how you get started. Many find success b

Michael Covel uses Richard Feynman to help break down the scientific method. Michael reads quotes from Feynman explaining it, then uses the scientific method to look at the recent actions of Tiger Woods highlighted in the news. Investing, money, and sports figures are examples of where people those sight of reality. Most do not make decisions based on the scientific method. They want to think that their sports hero is still a hero or they want to think they have not lost money in the markets just because they have not sold. People just want to be right. Ego and arrogance run amok. In this episode of Trend Following Radio: Cognitive dissonance Confirmation bias Tiger Woods Richard Feynman The scientific method

Daniel DiPiazza is founder of the blog and podcast Rich20Something, which is also the title of his first book, “Rich20Something: Ditch Your Average Job, Start an Epic Business, and Score the Life You Want.” How did Daniel understand in his 20’s that he needed to make a big move to set himself up for life? He knew he needed something else. He wanted more than others were able to give him so he decided to start off on his own. His brand sprung up out of frustration. Michael and Daniel spend time talking about the disadvantages of college. College can be one of the quickest ways to set yourself back a few years and get into massive debt. They seem more like zoo’s these days than places of education. Most kids think at the end of their school career, from kindergarden through college, there is going to be some big prize at the end. Usually there is massive debt and an entry level job waiting for you. Time spent in school should be about actual life skills, like how to manage money, rather than long hand algebra

Michael Covel breaks open the newest edition of Trend Following and discusses details of the 5th edition. It becomes a challenge to continually “up the ante”. The book is double the size and broken down into three sections: Principles, interviews, and research. Michael discusses: Dunn vs. S&P, mechanical trading, fundamentals, Warren Buffett and his drawdowns, 200 day moving averages, Nate Silver and Harry Denton on prediction, large fund trading vs. small fund trading, John W. Henry, chasing tops and bottoms of the market, Paul Tudor Jones, price action, process and outcome, CNBC and Joe Kernen, and much more. In this episode of Trend Following Radio: Is trend following dead? Warren Buffett Catching the bottom of the market Prediction as a business Price action Process vs. Outcome CNBC Fundamentals

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 quick

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

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 Den

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

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 websi

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

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

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

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