Trend Following With Michael Covel

Michael reads some of his favorite quotes circa 1920’s/1930’s from a famed trader. These quotes are timeless bits of wisdom. Michael adds commentary throughout. In this episode of Trend Following Radio: How is the “price” made? You will never know all the fundamentals Speculation Getting mad at the market gets you nowhere Bull and bear markets Entry and exit signals 1920’s wisdom on numbers Always be ready to catch that unexpected move Follow the price action

Robert Cialdini is on today’s podcast. He is best known for writing “Influence: The Psychology of Persuasion” published back in 1984. Robert is the “go to man” for understanding effective persuasion. Reciprocity, commitment and consistency, social proof, authority, liking and scarcity are his six key principles of influence that he teaches. His new book, “Pre-Suasion: A Revolutionary Way to Influence and Persuade”, introduces a seventh key principle of influence. Michael asks “How did you start down this path? What was your ‘A-ha’ moment that got you researching for this new book?” Robert says it was a series of recognitions as he was reading the newest work in behavioral studies that made him realize that creating mindsets in people didn’t involve just six principles. He went back to his notes and looked at what the top people in various professions were doing. He realized that they were acting like gardeners. They were preparing the earth before planting the seed. These professionals were priming a persons

Michael opens the podcast with an excerpt from “The Fountainhead” about creating, entrepreneurism, and living for one’s self. “The Fountainhead” is one of Michael’s favorite books and encourages all to read it. Michael dives into an example that dovetails right into “The Fountainhead” excerpt. Recently Michael tweeted a quote from Derek Bok, “If you think education is expensive, try ignorance.” He quickly got a response on Twitter saying he was “bearish”. Michael stresses throughout the conversation that it doesn’t matter if you are liberal or conservative. Trend followers don’t care about politics or media. It is all about price action. In this episode of Trend Following Radio: Creators vs. parasites Human relationships Altruism The individual vs. The collective Liberal and conservative trading perspectives Price action is paramount

Jared Dillian is editor of The Daily Dirtnap: A daily market newsletter for investment professionals. Jared is also author of “All the Evil of This World” and “Street Freak”. He gives a behind the scenes look at the good, the bad, and the ugly of Wall Street. Jared’s interest with Wall Street didn’t start with the idea of making money. It was more academic. He wanted to learn why so many traders were trying to beat the market when all the Wall Street books he was reading said that beating the market was a huge waste of time. He started working at Lehman Brothers and quickly learned the culture within an investment bank was completely different. Everyone working at investment banks were in the business of making money, they are all traders. Jared speaks about the structure of Lehman Brothers and how they changed under the management of Dick Fuld. He then dovetails into detailing the dot-com bubble and the housing bubble, and explains why some firms were able to fail and others were able to survive. Next, Mic

If you can’t change the data, then why try and fight it? Listening to people who have spent their lives researching and digging into the data is how we learn and progress. In today’s podcast Michael plays a clip by Richard Dawkins about data. Michael shows that listeners can find insight within the talk that can be applied to their lives–all aspects. In this episode of Trend Following Radio: Evolution Looking at the data Natural selection Long term macro evolution and short term evolution Fossils do not prove evolution Comparing animal and human bodies Evolutionary arms race

“What is it about growing up in poverty that leads to so many troubling outcomes? Or to put the question another way, what is it that growing up in influence provides to children that growing up in poverty does not?” This is the question that today’s guest, author Paul Tough, poses in his newest book, “Helping Children Succeed: What Works and Why.” It is a data driven book about how young kids are growing and developing in today’s world. 51% of children in the public school system are below the low income bar set by the government. Paul goes through the psychological issues of children from low income homes starting from birth all the way through high school. Science is very clear that children develop the most during the first three years of their life. He says there are two main things to think about when children are developing: stress, and day-to-day interaction with parents or caregivers. Paul gives examples of the types of stress and interaction that is good and bad during early childhood. Paul talks

There are back-to-back monologues on today’s episode. The two episodes consist of the same material, just said a little different. The first take Michael was told was too aggressive with too many F bombs, so he re-recorded but still left it up on the tail end of the podcast. The double header podcast today was inspired by a film Michael recently re-watched called, “Boom Bust Boom”. Michael talks about Hyman Minsky’s “financial instability hypothesis”. Minsky said that there is instability in capitalism and if capitalism was eliminated, that would help eliminate bubbles. Minsky believed that offsetting the economy is how you eliminate instability. This is where the government came up with zero interest rates, and in some places, negative interest rates. Due to the Minsky mentality, economists think they can control the markets and stop human nature from happening. Michael ties his documentary film into the discussion and describes the insight he got during ’08 when he happened to be filming. Trend following

Chris Zook is co-author of “The Founder’s Mentality: How to Overcome the Predictable Crises of Growth.” The work leading to “the founder’s mentality” started for Chris about 5 years ago. It is predicated on, “What are the deep root causes that allow some companies to stay young, stay energetic, and be sustainable in their performance over time?” Only 1 in 10 companies sustain a modest level of growth over a decade. Chris, and his co-author James Allen, found that when the founder of a company was still evolved and their presence was still looming, companies had about three times higher performance than other companies where the founder had stepped away. Chris elaborates on their research process and the steps he and James took in writing “The Founder’s Mentality”. A deep sense of insurgency, frontline obsession, and an owner’s mindset are the three characteristics that make up the founder’s mentality. Keeping an open mind at all times and willingness to adapt to your company’s growth is key. When companies

“What is the goal? What does it take to get to the goal? What is the most efficient path to get to the goal? And is the goal obtainable?” Michael starts the podcast off asking these critical questions and relates them back to the explosion of social media in today’s culture. Social media is constantly being thrown in everyone’s face, and subsequently you need an efficient tool kit under your belt to be able to gain any type of real achievement in today’s world. There is an epidemic of 20 to 30 year old men who cannot think. There is also a feminization of men that is taking over the younger generation. They seem to only be attached to their feelings. Men have traditionally had a more analytical view on things and women have a greater capacity to think with emotion. The analytical side of men is starting to get edged away. Michael then poses the question, “How do you end the dominance of the 1%?” Michael says you either take their money, or kill them. If you do not act on one of those two things, then how el

Zen DeBrucke is on today’s podcast. She is the author of “Your Inner GPS: Follow your Internal Guidance to Optimal Health, Happiness and Satisfaction.” Her goal is to help clients find a stress free and happy existence by getting in touch with their inner voice. Michael and Zen start off talking about the inner GPS. Zen believes that everyone is born with this inner voice guiding them, but most lose sight of that influence. Buddhism and Daoism have strong beliefs in the use of meditation to help people use their minds as a tool rather than an operating system. The more people realize there is a flow within their body, the more they can train their mind to get into this energy. Once someone gets into that flow, they are able to understand their thoughts and emotions clearer. Neuroplasticity is the next. Zen says she has a tool kit to make people’s minds move in different directions. Zen teaches practices that help move their brain into a different domain when they have a block or feel trapped. She uses an ex

“We all avoid reality non-stop. We don’t know where it starts and where it ends. We don’t like to look at facts. We don’t like new information. We have biases that are non-stop.” Michael goes down a reality tour of market prices today. He talks about past prices in the market and the present all time highs we are experiencing right now. He makes listeners think about prices and how they move rather than voices at Bloomberg and CNBC. Michael says, “Just focus on price action and look at markets from a ‘desert island approach’.” Trading price is the only information you can trust. He gives examples from the past including the dot-com bubble, housing crisis, 1989 NIKKEI crash, Gold in the 1970’s, and possible current bubbles. Michael emphasizes to put away all the noise and just look at the numbers. He is not saying when there will be the next market crash, just that there will be another one. Historically we are due for a significant decline. What are the odds that the S&P losses 50%? If you are going to r

Morgan Wright is an internationally recognized expert on cyber security strategy, cyber terrorism, identity theft and privacy. He brings vast knowledge and insight into the space of cyber activity. Michael and Morgan start the podcast off talking about cyber footprints. People don’t realize that there are countless ways to steal personal identities. You don’t even need to be present anymore to become a criminal. The Chinese hacking US government databases is just one of a few examples used by Morgan to illustrate the point. Morgan says that there is no accountability in the government, which is a major contributor to why some of these hacks are able to take place. Email is the next topic. How safe is it? Email is one of the best ways to attack someone. Companies are being hacked and having money stolen in the millions of dollars through email. Scams can come in all forms, from flat out asking for money to relationship scams. Glitches in security and technology are sometimes even known, it just comes down to

Michael starts the podcast off with excerpts from an interview with Clint Eastwood. Clint answers the question, “What is the pussy generation?” He also goes on to give his take on what is wrong with the US presidential election, unemployment and free education. Michael sums up the interview saying, “I do love that this 86 year old tough guy is telling us…” Michael uses Eastwood to lay the foundation for the rest of the podcast as he talks about “Trend Following Commandments.” Michael goes in depth about some of these fundamental trend following principles. In this episode of Trend Following Radio: Political correctness Pussy generation Absolute returns Inefficient markets Market bubbles Fundamentals are religion The market is never wrong Cutting your losses Learn to love your losses Price action Betting the markets properly Failure is the secret to success

Chase Jarvis is an award winning photographer, director, artist and entrepreneur. He is co-founder of Creative Live, a live educational platform. There is much to learn from his entrepreneurial ventures and how he made it in the photography world. Michael and Chase start the podcast talking about basketball, and Golden State in particular. Chase goes to a lot of games and has had the opportunity to sit up close and personal with the players. He says the best part about going is seeing the infectious energy and passion among the players. Steph Curry is his favorite to watch and compares his confidence, energy, and talent to Michael Jordan. Next, Michael asks about how Chase got involved with photography, and how his career has evolved into what it is today. Sports were a huge factor in his success as a photographer as well as becoming an entrepreneur. Teamwork, hardship, success, disappointment all gave relevance to his professional career development. His first photography shots were of skateboarding, snowb

Michael takes the podcast back to the 1960’s with a talk from Milton Friedman. Throughout the presentation Friedman outlines the role of government in a free society. He emphasizes the different variations of “free”. The first is freedom with the absence of coercion. The second is free in the sense of a “free lunch”. They have two very different very different meanings and Friedman goes in depth on the two. Michael wraps the podcast up summarizing Friedman’s talk with a slightly more pessimistic view. Michael thinks that politics and government will never be straightened out. He loves Friedman’s thinking but has a hard time thinking that human nature will ever change. “I have a hard time imagining, with the irrationality of human nature, that anything will ever change. As long as we keep dying and keep replenishing with a whole new group of useful idiots and sheep…we can have our fantastic view of change, but…” Michael stresses that the key thing that’s important is building capital and the only person you c

Michael talks with Christopher Lochhead. Christopher is co-author of “Play Bigger: How Pirates, Dreamers, and Innovators Create and Dominate Markets”. Michael and Christopher start the podcast talking about the commonalities between most innovators and entrepreneurs. The legendary innovators that make their companies into a success focus on three main points: product design, company design, and category design. Category design is about inventing a whole new space in the world for their product. Legendary innovators are just as thoughtful about their category design as they are of product and company design. Christopher and his co-authors went back and looked at every start up company founded in the United States dating back to 2000. They asked, “What percentage of the market cap in the category goes to the category king or leader?” On average the category king captured 76% of the markets profits. Category design is a secret “black art” in Silicon Valley. Only about 10% of companies are thinking about teachi

Today, Michael dives into silence. An excerpt from Daniel Gross: “In the mid 20th century, epidemiologists discovered correlations between high blood pressure and chronic noise sources like highways and airports. Later research seemed to link noise to increased rates of sleep loss, heart disease, and tinnitus. (It’s this line of research that hatched the 1960s-era notion of “noise pollution,” a name that implicitly refashions transitory noises as toxic and long-lasting.)” “Silence” science is leading the way with awesome new insights: “The growth of new cells in the brain doesn’t always have health benefits. But in this case, cells [generated from silence] seemed to become functioning neurons. “We saw that silence is really helping the new generated cells to differentiate into neurons, and integrate into the system.” Michael weaves this narrative right back into his wheelhouse: day trading v. trend following. Lessons for traders, lessons for life. Enjoy the silence! In this episode of Trend Following Radio:

Emma Seppala is today’s guest. She is author of “The Happiness Track: How to Apply the Science of Happiness to Accelerate Your Success.” She is the Associate Director for the Center of Compassion at Stanford University. Emma’s work isn’t based on theories or common knowledge, there is a tremendous amount of neuroscience backing her work. Emma starts the podcast off stating that being happy is a very subjective experience. With that in mind, in general, happiness is divided into two main categories; hedonic and eudemonic. Hedonic happiness doesn’t last long and is more associated with short burst of excitement such as sex and food. Eudemonic is much longer lasting and is more associated with self-fulfillment. Emma goes into depth explaining and giving example of both forms of happiness. Michael asks Emma to talk about the myth of success next. Emma says Americans are over stimulating themselves, and believing that running on adrenaline is the best way to get things done. Chronic stress is actually what we ar

Michael takes the podcast back to 1959 with an interview between Mike Wallace and Ayn Rand. Wallace and Rand focus on her ‘revolutionary’ view on the world. Rand capsulizes her views as a philosophy based on objective reality. She expands on a new code of morality centered around mans life as a standard of value. This means that a mans highest moral purpose is the achievement of his own happiness and each man must follow his own rational self interest. Atlas Shrugged demonstrates Ayn Rand’s philosophy in human terms. Rand and Wallace briefly touch on many subjects such as; self sacrifice, love, altruism, the democratic system, and welfare. Michael wraps up the podcast by summarizing the interview and comparing it to life in 2016. He talks about the importance of leaving his own impact on the world and how necessary logic and reasoning is to being successful. In this episode of Trend Following Radio: Man’s morality Altruism Self sacrifice Free and unregulated economies Capitalism with government help Welfar

Laura Roeder is a serial entrepreneur and her newest company is Edgar, a social media application. She started working for herself creating websites for people when she was 22 living in Chicago. It spread to optimizing traffic and online marketing for her clients. In 2014 she launched her social media software business, Edgar. They haven’t taken any money from investors and have grown to 2.8 million annual revenue. Twitter, Facebook, and LinkedIn are the biggest social media platforms today. Many entrepreneurs get overwhelmed by the scope of content creation and posting needed to be successful. They tend to give up before they have even begun. Laura goes into the advantages of recycling content, notes that small percentages of your audience will ever see your content, and that the nature of the internet is all about repeated content. The questions to ask yourself are, “How much traffic are you driving back to your website? How many people are buying off of that traffic?” There needs to be a balance between