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Ep. 528: The Mega Eclectic Episode with Michael Covel on Trend Following Radio

Trend Following
Trend Following

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Five guests are featured on today’s mega episode, including: Jason Fried, Andy Puddicombe, Steven Kotler, Walter Williams and Jack Horner. These men have all found great success in their fields of study. As different as they all may be, there is a thread that can be found connecting them all.

Jason Fried is the founder and CEO of Basecamp (formerly 37Signals). Fried is also the co-author of the book Rework.

Andy Puddicombe is the founder of Headspace, an award-winning digital health platform that provides guided meditation sessions. Puddicombe is also a former Buddhist monk with a degree in Circus Arts.

Steven Kotler is an American bestselling author, journalist, and entrepreneur. His newest book is The Rise of Superman.

Walter Williams an American economist, commentator, and academic. He is the John M. Olin Distinguished Professor of Economics at George Mason University, as well as a syndicated columnist and author known for his libertarian views.

Jack Horner is a world renowned paleontologist. He was the technical advisor for all of the “Jurassic Park” films.

In this episode of Trend Following Radio:

  • Zen and the moment of now
  • Building an audience
  • Meditation
  • Daily practice
  • Flow
  • Minimum wage
  • Morality of markets
  • The welfare state
  • Bailouts
  • The process of learning
  • Scavenger v. predator

Mentions & Resources:

Want a FREE Trend Following DVD? Get it here.

Ep. 527: Jennifer Mueller Interview with Michael Covel

Jennifer Mueller
Jennifer Mueller

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Jennifer Mueller, author of “Creative Change: Why We Resist it, How We Can Embrace it,” is my guest today. Many crave the life of creativity but choose not to live it. Jennifer explains creative change in a way that newbies and professionals can understand.

“What was the initial aha moment that made you go down this particular path?” People have this “love/hate” relationship with creativity. During a study, Jennifer found that more people relate the word “vomit” to creativity than they relate words like; love, peace, and happiness. This made her wonder, “What is it about creativity that makes people feel that way?”

More and more customers want a creative experience. When people think of a creative experience they think of: something beautiful, not mass marketed, not necessarily fashionable, something that took time and effort to put together, feels authentic and makes them happy. Corporations do think of creativity in the same way, however they end up moving in the opposite direction. They often get sucked into feeling like their product needs to be for everyone, mass marketed, fashionable, etc. so they can sell the product.

Steve Jobs created “corporate creativity.” He had a way of connecting with people from how he dressed to connecting through his products. When people engage in a creative effort they feel like their lives are meaningful and are happier. Jobs captured that. Giving people a surprise is one of the top things people attach to creativity, along with beauty. He was able to wrap all these things up in one presentation.

“We want more creative change. We know there has to be a disruption and we know we can’t predict the future. The heart of your work is to get people to understand, ‘This won’t make you feel comfortable to adopt creative change…it will not be a linear process.’” When you go through the process of learning something, sometimes that process can feel horrible. The good news is though, when you figure this out yourself, it can feel pretty empowering. When we generate creative ideas, we are more accepting of flexibility. Change is a psychological problem. It is not just emotional or rational, it is both.

In this episode of Trend Following Radio:

  • Jeff Basos vs. Steve Jobs
  • Integrating creativity with regimen
  • Rational uncertainty
  • Problems with risk assessments
  • 2001 vs. Star Wars
  • Disrupting the system
  • Millennial generation

Mentions & Resources:

Want a FREE Trend Following DVD? Get it here.

Trading Food for Thought: February 6th Edition

Ep. 526: I Will Survive with Michael Covel on Trend Following

Munger and Buffett
Munger and Buffett

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Charlie Munger and Warren Buffett are two men that not only have survived over time but made a boat load of money in the process. They are not trend following traders, yet they are very keen about risk management, position sizing and other core concepts that lead to success. Munger and Buffet, however, perform a type of strategy that you (as the average investor) cannot. They trade massive derivative positions. Trades that only happen when you’re at their level and can coordinate with the like Goldman Sachs. Buffett held the power in 2008. He had the money and called the shots. Across the media you can find hypocrisy in his statements, but the ultimate measuring stick is money. Has he made money? Has he made it generally in an ethically way? Absolutely.

This podcast and these excerpts aren’t about strategy. It is about getting into the mindset of Munger and Buffett. Even though we cannot replicate their strategy, we can take their philosophical views and apply them to our money making strategies.

In this episode of Trend Following Radio:

  • Psychological denial
  • Incentive cause bias
  • Pavlovian phenomenon
  • Negative psychological tendencies
  • Efficient market theory
  • Contrast phenomena
  • Envy bias
  • What distorts judgment
  • Tupperware parties
  • Watch one, do one, teach one
  • Compounding
  • Avoiding credit cards at all costs

“The biggest financial asset that you have going for you by miles is the value of your own earning power over the years.” – Warren Buffett

Mentions & Resources:

Want a FREE Trend Following DVD? Get it here.

Nate Silver and the Problem of Prediction

Check out my new piece on “Nate Silver and the Problem of Prediction” over at the Observer:

Wall Street always overflows with Holy Grails—those predictions, strategies, secret formulas, and genius interpretations that promise otherworldly knowledge and riches if you just trust. They are most often delivered in the investment world through a black box—a closed system where the inputs and outputs are known, but the internal analytical workings are left top secret, only for the high priests’ consumption. Black box positioning goes far beyond markets, however. It is not surprising in a modern, interconnected age that when you take a very smart guy, rows of computers, proprietary formulas, and code that only the one smart guy can see, and then add a string of successful forecasts, boom—you end up with a nerdy, made-for-social-media superstar who suddenly makes prediction cool for the proletariat.

Nate Silver is that guy. Consider… [Read whole article]

Nate Silver
Nate Silver

Ep. 525: Martin Bergin Interview #2 with Michael Covel on Trend Following

Martin Bergin and Bill Dunn
Martin Bergin and Bill Dunn

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Martin “Marty” Bergin is the President and owner of DUNN Capital Management. Bergin began working with DUNN in 1997. He took over the day-to-day operations of the firm in 2007 and became owner in 2015 (Bill Dunn remains Chairman). DUNN has an outstanding track record that spans over 40 years. Bergin first met Dunn while he was tasked with doing an audit of the company over the course of 7 years. Once the audit was over, Dunn offered him a job.

There has been ongoing dialogue since 2008 that trend following has been a negative. DUNN Capital’s track record does not reflect that. They have been doing things different. They are 100% systematic. They do not have an army of traders staring at screens. All emotion has been removed from the equation and traders use algorithms that have already been put in place to make day to day trades. They take positions strictly based on what the system tells them to do.

Managed futures (read: trend following) was the only strategy that stood out during the 2008 crisis. Historically DUNN has been able to outperform the S&P over their 40 year track record. I argue that when looking at their performance side by side with S&P performance, there could be a whole class taught on the chart. Bergin says that with all the changes in America (mostly political) there is no telling if the new policy’s that are said to come will crash the S&P or double the S&P. He has no way to predict the future and neither does anyone else.

In this episode of Trend Following Radio:

  • Management fees
  • How the financial industry works
  • Systematic trend following strategies
  • Trading off of price data
  • The advantages of diversity in your portfolio

“What has more information in it than price? It is the accumulation of all information in the marketplace, and that is all we trade.” – Marty Bergin

Mentions & Resources:

Want a FREE Trend Following DVD? Get it here.