Ep. 388: Logic Over Faith with Michael Covel on Trend Following Radio

Steven Levitt
Steven Levitt

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On today’s episode of Trend Following Radio Michael Covel opens the conversation by taking a look at the concept of faith, and how it has no place in the trading world. In trading, logic and reason trump faith. If you can’t “grow” up and use reason to gather information and form strategy, Michael notes, then you have no place at the “adult” table.

Next, Michael outlines core decision-making precepts. Sometimes making the right move means going against your instincts, and it’s at these times that you need to force yourself to make a decision – even if it means quitting. People tend to equate quitting with failure when the truth, as Michael points out, is that sometimes quitting is what keeps you in the game. This line of thinking is again linked to logic rather than faith – the erroneous faith that if you necessarily stick it out (i.e. a losing trade in the markets) success will follow.

Other topics covered in this episode touch on how financial advisors primarily exist to push mutual funds and buy and hold orthodoxy, why investing without a plan dooms you before you begin, and why embracing the challenge of how the world and investing really works makes you a smarter investor.

In this episode of Trend Following Radio:

  • Logic over faith
  • Financial advisors: there to give mutual fund advice
  • Adapting your strategy
  • How quitting can keep you in the game
  • Forcing yourself to make decisions
  • Risk and reward

“What I say is, at what price? If low interest rates were just that simple of a panacea, we would never have recessions. We would never have these crises, we would never have these panics.” – Carl Icahn

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You might like my 2017 epic release: Trend Following: How to Make a Fortune in Bull, Bear and Black Swan Markets (Fifth Edition). Revised and extended with twice as much content. Out April 24th 2017.