Ep. 449: Neil Pasricha Interview with Michael Covel on Trend Following

Neil Pasricha
Neil Pasricha

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Michael Covel interviews Neil Pasricha. Neil is author of the New York Times best seller, “The Happiness Equation.” He is also author of the popular blog, “1,000 Awesome Things.” Neil brings great insights on finding happiness and staying positive.

Neil starts the podcast sharing how his success started. During his first years of gaining notoriety for teaching about happiness, he actually wasn’t happy himself. He was going through a divorce, hardly sleeping, and still working a full time job at Wal-Mart management. His creative output was nothing. He ended up falling in love with a women and that ended up shifting his thinking. He went from observing awesome things, which he is probably most known for, to the application of integrating those awesome things into your life, such as “How do you live a happier life?” “The Happiness Equation” started as notes to Neil’s unborn son. He essentially wanted to write down everything he wanted him to know about life.

Neil details some of his techniques on how he starts writing a book. He is a huge believer of “the note card system.” For a few years he carried note cards around and wrote down any thoughts or tidbits that he would see during the day that were interesting. This is a great example of placing action before motivation which is critical to reaching goals. Neil says that taking small steps is the key to success. Michael brings the conversation back to Neil’s book and happiness. The first thing that pops up on Google search when you type in “how to be” is “how to be happy.” Everyone wants to be happy but they are struggling, searching, stressed, and looking for balance.

The traditional way of thinking is, “Study hard, get good grades, and you will be happy.” Neil says that you should flip that upside down and work on; being happy, then doing great work, and then you will have big success. All studies show that choosing to be happy above all other things leads to a better life. The healthiest societies in the world do not have retirement. Instead they focus on loving what they do throughout life. People need to have a challenge and a way to stimulate the mind and body. Retirement, for most, tends to put an abrupt halt to those things. Michael ends with taking quotes from Neil’s book and having him elaborate.

In this episode of Trend Following Radio:

  • Happiness
  • Retirement is a lie
  • Loving your work
  • The lottery
  • The note card system
  • Criticism
  • Goals are never ending
  • Having less wants in life

“The action proceeds the motivation.” – Neil Pasricha

“Wealth exists not in having great possessions but in having few wants.” – Epictetus

Mentions & Resources:

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Seven-time Lottery Winner Shares Secret to Winning Powerball

Curious how to win the lottery? Seven time lottery winner, Richard Lustig, shares:

Saturday’s Powerball drawing is a staggering $320 million. With such an enormous sum at stake, who better to turn to then Richard Lustig — seven-time lottery grand prize winner and author of “Learn How To Increase Your Chances of Winning The Lottery” — for tips on how to win.

Lustig says he’s been playing the lottery for about 25 years. He claims to play every day, but in the first few years, he says he was not winning very much.

So Lustig decided to come up with a method, which he claims has helped him win seven grand prizes, including his last jackpot of $98,000 two-and-a-half years ago.

Lustig says a guaranteed way to increase your chances of winning the lottery is simply by picking your own numbers versus using the “quick-pick” ticket option.

“It doesn’t matter how you pick your numbers, once you pick your set of numbers, research them to know if it’s a good set of numbers and stick with them. There’s no magic method to picking your numbers, I get emails every day asking. One number doesn’t win the jackpot, a set of numbers does,” says Lustig.

“The lazy way out is to buy quick-picks. The computer picks out the numbers. Don’t play quick-picks. Quick-picks are the worst thing you can do, you are playing with the worst odds,” he says.

Lustig believes that what matters is whether the set of numbers people pick is a good one or not. To know this out however, one has to research the numbers in a method only taught in his book, which, as we found out, he guards very closely … unless you buy the book.

“The research is not that easy, it takes some time. Anything in life that’s worth having takes time,” says Lustig.

Another important part of playing the lottery, Lustig cautions, is setting a budget of how much you can afford on tickets.

“Don’t get lottery fever, don’t use your grocery money, or your rent money. Remember one thing, if there is one winner on Saturday night, there will be millions of losers, don’t be that person Sunday morning worrying about how you can pay back the money you spent,” says Lustig.

One secret Lustig will share is that he believes picking the same numbers regularly, even if you are losing, gives you more edge in the next drawing.

Lustig says he will absolutely be playing Saturday’s Powerball. But when asked what numbers he’ll be playing, he wouldn’t share.

“Not telling. Good try though,” said Lustig.

The analysis: 100% bullshit.

Note: Shout out to Steve Peterson for the find.

Why Is the EMF Theory So Widely Advocated?

Consider (source) an excerpt:

Why is the EMF theory so widely advocated? Academics love EMH because they can claim that they have mathematics-based formulas which can predict the future even though the underlying assumptions (borrowed from physics) are provably false. For a professor, the ability to create beautiful mathematics is important since it means that they are less likely to be teased by physicists in the faculty club. Life is infinitely more interesting for an academic if they can create beautiful mathematics in their papers.

Charlie Munger adds:

“I have a name for people who went to the extreme efficient market theory—which is “bonkers.” It was an intellectually consistent theory that enabled them to do pretty mathematics. So I understand its seductiveness to people with large mathematical gifts. It just had a difficulty in that the fundamental assumption did not tie properly to reality.”

More Munger:

“The possibility that stock value in aggregate can become irrationally high is contrary to the hard-form “efficient market” theory that many of you once learned as gospel from your mistaken professors of yore. Your mistaken professors were too much influenced by “rational man” models of human behavior from economics and too little by “foolish man” models from psychology and real-world experience.”

More Munger:

“Efficient market theory [is] a wonderful economic doctrine that had a long vogue in spite of the experience of Berkshire Hathaway. In fact one of the economists who won — he shared a Nobel Prize — and as he looked at Berkshire Hathaway year after year, which people would throw in his face as saying maybe the market isn’t quite as efficient as you think, he said, “Well, it’s a two-sigma event.” And then he said we were a three-sigma event. And then he said we were a four-sigma event. And he finally got up to six sigmas — better to add a sigma than change a theory, just because the evidence comes in differently. [Laughter] And, of course, when this share of a Nobel Prize went into money management himself, he sank like a stone.”

I will add more to this on today’s podcast (will be episode 51).

Episode: The Wishing/Doing Gap

Synopsis: Michael Covel sometimes feels like he’s floating above and looking down like the protagonist in David Bowie’s “Space Oddity“. In today’s episode Covel closes this alienating gap with his explanation of the “lottery society“: The idea that you don’t have to work–you simply make a small bet of your time and money and your your entire world can change through one single action (even though the odds say there is no chance). We’ve pushed aside the notion of purposeful, driven, consistent effort and work. You can see the concept of a “lottery society” beyond the notion of buying a scratch-off: the idea that the Presidential election will change your life, reality shows and American Idol’s instant fame fantasy and drugs and alcohol as the quick fix. It all sounds well and good, but the lottery mentality doesn’t work. It sucks the life out of you. How did we even get to the point where being “picked” has replaced the notion of good, consistent hard work and creating something from scratch? It’s the gap between wishing and doing. We’re in a fantastic world of distraction and the lottery mentality is a perfect example of that distraction. Covel goes on to explain the parallels between fundamental analysis and the lottery mindset; perspectives on the lottery mindset from writer Seth Godin; the perils of watering down a clear trend following trading strategy with short term trading strategies, fundamental analysis, and media input; and the illusion that tools such as the iPhone make us more productive. Next, Covel notes how many want a hero these days (instead of viewing themselves as heroes). Currently, the “hero de jour” is Ben Bernanke, chairman of The Federal Reserve–except most don’t have a grasp why his current rate policy is so problematic. When you have rates artificially reduced to zero it forces people to invest in the stock market. Covel offers commentary regarding current Fed policy by giving context via an exploration of recent tech and real estate bubble histories. As Charles Hugh Smith (www.oftwominds.com) has noted, “If you prop up an artificial economy long enough, does it become real?”. Covel gives his personal view of the current situation: You know it’s bad, you know it’s eventually going to pop, but what do you do? That’s the hard question. So how can you profit in the face of such uncertainty? Trend following is the profit answer when the black swan swims in. Special offer: Receive a free DVD here: https://www.trendfollowing.com/free.html.

The Lottery Debate? No Debate. The Lottery is the Stupidity Tax

The lottery has long been a debate of mine. From Texas press:

An excerpt from my film Broke:

Dan Gilbert opines:

“Forgive me, for those of you who play the lottery — but economists, at least among themselves, refer to the lottery as a stupidity tax, because the odds of getting any payoff by investing your money in a lottery ticket are approximately equivalent to flushing the money directly down the toilet.”

Indeed.