Ep. 538: Global Opportunity with Michael Covel on Trend Following Radio

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The vast majority of the investing population only know their own country’s stock index inside their portfolio. Top investors know much more than that. They think about gold, palladium, the Swiss franc, the Japanese yen, silver, copper, bonds, wheat, etc. Most would never think of trading these markets, however these markets are part of the trend following world. Any everyone can trade any market through a handful of different financial instruments such as ETF’s, LEAPS, and futures. The fundamentals of these markets are irrelevant for profit. The only information needed to trade any market for profit is price. This type of thinking opens markets up to anyone and everyone willing to play the game and take advantage of the global opportunity trend following provides.

In this episode of Trend Following Radio:

  • Price action
  • Momentum
  • Macro hedge fund
  • Trade everything
  • Ignoring the fundamentals

“All price action is, is human behavior manifested in the number. That’s it.” – Michael Covel

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Trading Food for Thought: March 16th Edition

Ep. 536: The Most Important Thing with Michael Covel on Trend Following Radio

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Howard Marks is a billionaire value investor with four decades of success. Although a value investor, his thought process mirrors trend following in many aspects. Michael plays an excerpt from Howard covering his thoughts on price, the lack of value in forecasting, efficient markets, surviving market randomness, and high yield bonds. Trend following and value investing may be two different worlds, however, there is a lot of overlap in how Howard trades and how trend followers trade.

In this episode of Trend Following Radio:

  • Price action
  • Forecasting
  • Value investing
  • How to think about investing
  • Black swans

“You should not act as though the things that should happen will happen.” – Howard Marks

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Ep. 535: Brad Rotter Interview #3 with Michael Covel on Trend Following

Brad Rotter
Brad Rotter

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This is Brad Rotter’s 3rd appearance on the show. He is well known in financial circles as being the first investor with Richard Dennis. As a venture capitalist, Brad has helped launch numerous new enterprises. Our conversation today takes you in the mind of how a venture capitalist thinks and describes how he views new opportunity, particularly his newest investment: desalinization of water.

What is your process? How do you explain venture capitalism? Brad grew up on a farm in Iowa and became interested in futures contracts. This made him interested in investing in the future and he quickly began to see things a little differently than the “normal” world. Brad made his first hedge fund investment in 1982. At that time hedge funds were a very inefficient market. He would look at managers that had a special niche, grasp what they were doing, and invest.

Brad looks for long term trends when he invests in ideas and companies. Technology brought him to California. His current venture is providing fresh water across the world. The one crisis facing humanity that has a solution is fresh water and it is now an invisible water emergency. Brad says, “We don’t really have a water problem, we have a salt problem.” Brad goes in depth describing the processes of desalination and the infrastructure, or rather the mobile infrastructure involved.

In this episode of Trend Following Radio:

  • Venture capitalism
  • Turtles
  • Efficient market theory
  • Mobile infrastructure
  • Desalination

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Ep. 534: The Swan Problem with Michael Covel on Trend Following Radio

Black Swan
Black Swan

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Black swans arrive as a surprise. Rare stuff happens. Surprises walk up and punch you in the gut. They smack you upside the head. There is no exact preparation for the timing of a black swan, but you can position yourself. Michael plays an excerpt from Nassim Taleb explaining black swans. Taleb is of course responsible for popularizing the term.

In this episode of Trend Following Radio:

  • Knowledge is therapy
  • Black swans
  • Uncertainty
  • Probability
  • Global warning

“History does not glide, it leaps.” – Nassim Taleb

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Ep. 533: Donald Hoffman Interview with Michael Covel

Donald Hoffman
Donald Hoffman

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Donald Hoffman is a cognitive scientist at UC Irvine. He studies how our visual perception, guided by millions of years of natural selection, authors every aspect of our everyday reality. His research is about uncovering the underlying secrets of human perception. Donald has discovered clues that point to our subjective nature of reality. According to Donald, we actively create everything we see. Donald started to learn how to program at a very early age. This is what got him thinking: Are we just machines, or actual humans?

Donald began to be bothered by the reality that we might not be seeing what our eyes are seeing. Do we see reality as it really is? Almost all of us have a belief that we see the world as it is. Michael and Donald go in depth about certain illusions and truths that may be hidden from the main public. Illusions are everywhere when you start looking. Evolution shaped us with certain perceptions and interfaces that we, as humans, evolved to keep us alive. Whether or not those perceptions are real or fake is irrelevant. As long as they keep us feeling happy and alive, that is all that matters. Natural selection has also led us to the reality we see. The only thing that matters in natural selection is fitness. Fitness according to natural selection is not based on physical fitness but rather if you are able to reproduce. That is the only criteria.

Michael and Donald end the podcast posing the question: Do humans have the capacity to even understand what the true reality is?

In this episode of Trend Following Radio:

  • Are we robot or human?
  • Evolution
  • Reality vs. Perception of reality
  • Natural selection
  • Pushing theories to their limits

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