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“The message of this story is, if you don’t change, you shall be removed from the competition….”

Interesting:

Nokia CEO ended his speech saying this “we didn’t do anything wrong, but somehow, we lost”.

During the press conference to announce NOKIA being acquired by Microsoft, Nokia CEO ended his speech saying this “we didn’t do anything wrong, but somehow, we lost”. Upon saying that, all his management team, himself included, teared sadly.

Nokia has been a respectable company. They didn’t do anything wrong in their business, however, the world changed too fast. Their opponents were too powerful.

They missed out on learning, they missed out on changing, and thus they lost the opportunity at hand to make it big. Not only did they miss the opportunity to earn big money, they lost their chance of survival.

The message of this story is, if you don’t change, you shall be removed from the competition.

It’s not wrong if you don’t want to learn new things. However, if your thoughts and mindset cannot catch up with time, you will be eliminated.

Stay real. Stay open. Learn.

Source: Ziyad Jawabra, Nokia CEO ended his speech saying this “we didn’t do anything wrong, but somehow, we lost.” November 13, 2015. See https://www.linkedin.com/pulse/nokia-ceo-ended-his-speech-saying-we-didnt-do-anything-ziyad-jawabra.

Posted in Trend Following

Tom Brady: Trend Following Trading Insights

Sports lessons applied to trading:

Told another time by reporters that Brady attended a Broadway show instead of watching the Jets-Colts playoff game that would determine New England’s next opponent, Ryan quipped, “Peyton Manning would have been watching our game.”

What Ryan and others have never seemed to grasp, one of Brady’s former teammates explains, is that Brady has always been smart enough to accept that it’s impossible to know everything. That’s why he’s the best postseason quarterback of all time. (Brady holds the record for most playoff wins, yards and touchdowns.) That’s why he obsesses over the simple fundamentals of playing catch, drilling for hours and hours in the offseason with guys like Edelman and former teammate Wes Welker on stuff as basic as ball position and splits. A player can study film and look at 10,000 formations on an iPad for as many hours as the eyes and the brain will allow. But ultimately, the human mind is not a computer. Overthinking in tense moments, trying to decode a defense like it’s a sudoku puzzle, is the perfect recipe for hesitation and panic.

“You know, Brady probably doesn’t watch as much film as Manning, and that’s OK,” said Brady’s former teammate. “You know why? Because he’s got coaches that are watching just as much film as [Manning] is. What Brady gets is that he’s the only guy who understands exactly what’s going on down on the field. So when Josh McDaniels calls a certain play, Brady is thinking: ‘I know exactly why he called that play. I know exactly what my read is on this.’ Brady’s genius is that he understands delegation. He trusts the people around him.”

Indeed. More.

Source: Kevin Van Valkenburg, Tom Brady’s big reveal. ESPN, January 22, 2016. See http://espn.go.com/nfl/story/_/id/14615476/new-england-patriots-qb-tom-brady-big-reveal.

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Posted in Psychology, Trading 101, Trend Following

Ep. 480: Efficiency with Michael Covel on Trend Following

Don't Be a Snowflake

Don’t Be a Snowflake

Subscribe to Trend Following Radio on iTunes

“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 else do you strip away their dominance? Once you walk through how you are going to “take care of the 1%” then you realize the statement is a sham. It just doesn’t work.

Michael moves on to poverty and unemployment next. 50% of Americans do not have $1 in the bank. 50% of Americans are also on welfare. Looking at the overall health of the American economy, things look a little messy, however the stock market is at all time highs. Although nobody can predict exactly when a black swan will hit, the economy is sure looking like it is ready for one.

In this episode of Trend Following Radio:

  • Donald Trump politics
  • The 1%
  • Generation snowflake
  • Efficiency in your thinking

“If you want to make something big happen. If you really want to leave a legacy, it depends on you.” – Michael Covel

Mentions & Resources:

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Posted in Multimedia, Podcasts, Trend Following

David Harding on Trend Following and Spreadsheets

Famed trend follower David Harding:

Taking a distant perspective, the trend following systems, which we developed in the 1980s, have just continued working. They didn’t work smoothly, but they continued to make money, so some level of success—providing you were not over-leveraged and you stuck to it—some level of success was eventually guaranteed, wasn’t it? Because if you keep making money, in the end the world’s going to find you. It’s not very quick, because it’s not very smooth, it’s not this high short ratio thing; its virtue is in trends forming in very high capacity. That’s its great virtue, because if you put a lot of money in it, it’s a very profound thing. It’s much more profound than many hedge fund strategies because it’s talking about the very exploitable effect in the price movements of whole asset classes. People talk about anomalies; it’s not like some small anomaly. It’s about the whole way the whole world works. It’s a theory about the way the world works, which is different from the theory that everybody in the financial world has about how the world works.

I did, I became very open. Of course Winton was relatively unsuccessful in the early 2000s. I actually went in when it was relatively unsuccessful. It became quite successful as a company, but several of our competitors, like Aspect, became much, much bigger and more successful because they had much more successful institutional sales, so I decided I might as well be hung as a sheep for a sheep is a lamb. And I started showing all the results that I hadn’t shown in 1993, so I started showing “this how it works.” Excuse me, but fuck it, this is my work. If I can’t make money, I’ll just show you it.

Yes, just following trends really. The trends changed slowly. The trends in the market, the slide in 2008, didn’t come out of the blue. It was a true bear market, a classic bear market, the kind of bear market that creates the need for the term bear market.

Had you computerized by that time, were you off the spreadsheets by this point?

A spreadsheet is a computer. This spreadsheet was just living somewhere inside a whole set of other computer programs. There’s probably a spreadsheet in NASA somewhere, one that was written in 1959 that’s still living in there somewhere. It’s just become part of a bigger thing.

It’s what Warren Buffett calls handicapping. That’s what he calls what he does, handicapping, which means setting the odds, so that’s what an investor has to do, they have to work out what the odds are.

The other thing, the book, it’s very important to realize that this is not a physical science, it’s social science, albeit it’s a bit of a wolf in sheep’s clothing, because it’s a social science which uses very rigorous and detailed mathematics. The thing about physical science is reality is what it is and it doesn’t change when you investigate it, whereas there are rules and laws that you’re seeking to tease out, whereas there aren’t any rules or laws in financial markets. There are no immutable eternal truths at all. That’s certainly nothing original I’m saying here. You can watch any presentation by James Simons and it’s the first thing he says, so it is obvious, but I suppose it needs more than one person to say it.

A lot of the scientists and mathematicians who have gone into financial markets are not sophisticated enough to grasp fully this point. They sort of felt that there are physical laws. In fact, the efficient market theory is the idea of a physical law. The mainstream have fallen into precisely the trap that I’m saying there’s no excuse for falling into. If you’re going into business that’s the first thing you should try not to fall into, is believing that you’re going into physics because you can use maths productively to improve your ability to make inferences, but it isn’t physics. It’s not.

Blunt. Direct. Learn from him.

More.

Source: Securities and Exchange Commission Historical Society, Interview with David Harding. Conducted on June 18, 2013 by Ken Durr.

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Posted in Trend Following

Trading Food for Thought: August 28th Edition

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Posted in Economics, Trading 101, Trend Following

Ray Dalio on Mistakephobia

Wisdom:

Ray Dalio nails the education system well: “I believe that our society’s ‘mistakephobia’ is crippling, a problem that begins in most elementary schools, where we learn to learn what we are taught rather than to form our own goals and to figure out how to achieve them. We are fed with facts and tested and those who make the fewest mistakes are considered to be the smart ones, so we learn that it is embarrassing to not know and to make mistakes. Our education system spends virtually no time on how to learn from mistakes, yet this is critical to real learning. As a result, school typically doesn’t prepare young people for real life—unless their lives are spent following instructions and pleasing others. In my opinion, that’s why so many students who succeed in school fail in life.”

If you got mistakephobia in trading–you will fail. More.

Source: Ray Dalio, Principles. Bridgewater, 2011.

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Posted in Psychology, Trend Following

Three Ways to Be Like Jordan Spieth

Insights:

1. Split the Uprights:

“We do target training,” explains Cameron McCormick, Spieth’s longtime swing coach. “Jordan’s go-to range drill is to pick a left and right boundary — say, a bush and a flag — and envision a football goal post. He tries to land a percentage of his shots between the ‘posts.’ To mirror playing conditions, the goal-post width grows as he goes from his wedges — say, 10 yards wide — up to his driver.”

2. Know How to Miss:

“At the Masters, our plan was to attack the course while knowing where not to miss,” McCormick says. “On No. 3, a 350-yard par 4, Jordan hit hybrid off the tee to set up a full, spinning wedge from 100 to 115 yards out. That way, he could be precise with his approach and avoid the deep trap and the false front — two places you just don’t want to go.”

3. Debrief Post-Round:

“Jordan is great at post-round reflection. He detaches himself from the emotion of the day and asks, ‘What did I do well? What do I need to work on?’ This gives him an unbiased look at his performance, so he can keep improving.”

Trading too. Exact same applies.

Source: Mark Broadie, “What can you learn from a 20-year-old? Plenty. Jordan Spieth’s well-rounded game has made him a PGA Tour star.” June 23, 2014. See http://www.golf.com/instruction/jordan-spieths-well-rounded-game-has-made-him-pga-tour-star.

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Posted in Psychology, Trend Following
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