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Tag: statistical thinking

Ep. 468: Irrationality with Michael Covel on Trend Following Radio

Posted on by Michael Covel
Irrationality with Michael Covel on Trend Following Radio
Irrationality with Michael Covel on Trend Following Radio

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Please enjoy my monologue Irrationality with Michael Covel on Trend Following Radio. This episode may also include great outside guests from my archive.

In this episode of Trend Following Radio:

  • Law of demand
  • Behavioral economics
  • Experimental economics
  • How do you make bubbles go away
  • Using algorithms over emotions
  • Noise reduction
  • Statistical thinking
  • Understanding the difference between risk and uncertainty
  • Probability theory
  • Risk Communication
  • Unconscious things that make us fearful

At the beginning of the 20th century, the science fiction author Herbert H. Wells made the following prediction, ‘If we want efficient citizens in a modern technological society we need to teach them three things: Reading, writing and statistical thinking.’ That is, a good way to deal with risk and certainty. Now, today almost 100 years later we have taught in the investment world almost everyone to read and write, more or less, but not to think with risk and uncertainty. – Gerd Gigerenzer

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Ep. 440: My Sins My Own with Michael Covel on Trend Following Radio

Posted on by Michael Covel
My Sins My Own with Michael Covel on Trend Following Radio
My Sins My Own with Michael Covel on Trend Following Radio

Subscribe to Trend Following Radio on iTunes

Please enjoy my monologue My Sins My Own with Michael Covel on Trend Following Radio. This episode may also include great outside guests from my archive.

In this episode of Trend Following Radio:

  • Process vs. outcome
  • Sports and trading analogies
  • Statistical thinking

“Think through all the possibilities, know the probabilities and be ready.” – Michael Covel

“Progress was not in the result, the progress was in the poise.” – Brad Stevens

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Ep. 377: Annie Duke Interview with Michael Covel on Trend Following Radio

Posted on by Michael Covel
Annie Duke
Annie Duke

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My guest today is Annie Duke, an author, corporate speaker, and consultant in the decision-making space. As a former professional poker player, Annie won more than $4 million in tournament poker before retiring from the game in 2012. Prior to becoming a professional player, Annie was awarded a National Science Foundation Fellowship to study Cognitive Psychology at the University of Pennsylvania. Annie is the co-founder of The Alliance for Decision Education, a non-profit whose mission is to improve lives by empowering students through decision skills education. She is also a member of the National Board of After-School All-Stars and the Board of Directors of the Franklin Institute.

The topic is trading and gambling.

In this episode of Trend Following Radio we discuss:

  • Focusing on the process instead of the outcome
  • Understanding that it’s about your return, not you winning percentage
  • Recognizing that in investing, consistency is unnatural
  • Thinking probabilistically
  • Maximizing your expectancy
  • Understanding that a loss doesn’t necessarily reflect bad thinking

“When you focus on outcome over process you actually reduce innovation in your company.” – Annie Duke

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Ep. 375: Mark Sleeman Interview with Michael Covel on Trend Following Radio

Posted on by Michael Covel
Mark Sleeman
Mark Sleeman

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My guest today is Mark Sleeman, the managing director and founder of M.S. Capital Management Limited (“MS”). Mark lives in Auckland, New Zealand and holds an honours degree in Mechanical Engineering (1985) from Auckland university. With over 30 years of trading and research, Mark has extensive experience in trading system design and implementation. Mark is registered with the Commodity Futures Trading Commission and is a member of the National Futures Association, as the principal and associated person of MS.

The topic is Trend Following.

In this episode of Trend Following Radio:

  • The fallacy of “buy low, sell high”
  • The psychology of trading
  • Keeping your losses small
  • The importance of maintaining a life
  • Focusing on the strategy, not the instrument
  • Understanding that patience has to be learned

“You’ve gotta be robust because you’re gonna see good markets and you’re gonna see bad markets. I’ve certainly seen both, and expect to see more of both.” – Mark Sleeman

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Ep. 374: The Death Cross with Michael Covel on Trend Following Radio

Posted on by Michael Covel
The Death Cross with Michael Covel on Trend Following Radio
The Death Cross with Michael Covel on Trend Following Radio

Subscribe to Trend Following Radio on iTunes

Please enjoy my monologue The Death Cross with Michael Covel on Trend Following Radio. This episode may also include great outside guests from my archive.

In this episode of Trend Following Radio:

  • The importance of ignoring old concepts
  • Trend Following is about taking action
  • Why no one can predict where the market is headed
  • Incorporating the Death Cross into a diversified portfolio
  • Understanding momentum trading
  • The idea of “heuristics”

“Woe to the unwary trader who relies on the urban legends to inform an outlook.” – Barry Ritholtz

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Ep. 373: Lasse Pedersen interview with Michael Covel on Trend Following Radio

Posted on by Michael Covel
Lasse Pedersen
Lasse Pedersen

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My guest today is Lasse Pedersen, a finance professor at Copenhagen Business School, principal at AQR Capital Management, and author of the new book “Efficiently Inefficient”. Pedersen earned his Ph.D. in finance from Stanford University and has over a decade of experience in the industry.

The topic is Trend Following.

In this episode of Trend Following Radio:

  • Discretionary vs. quantitative trading
  • The importance of sticking to your financial plan
  • The various investment styles of the successful
  • How reflexivity affects market prices
  • Backtesting to identify effective investment strategy
  • The role of hedge funds

“I think that good quant investment managers can really be thought of as financial economists who’ve codified their beliefs into a repeatable process. They are distinguished by their diversification, sticking to their process with discipline, and the ability to engineer portfolio characteristics.” – Cliff Asness

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The Truth: A Two-Edged Sword

Posted on by Michael Covel

The truth is, almost everything about superior investing is a two-edged sword:

-If you invest, you will lose money if the market declines.
-If you don’t invest, you will miss out on gains if the market rises.

-Market timing will add value if it can be done right.
-Buy-and-hold will produce better results if timing can’t be done right.

-Aggressiveness will help when the market rises but hurt when it falls.
-Defensiveness will help when the market falls but hurt when it rises.

-If you concentrate your portfolio, your mistakes will kill you.
-If you diversify, the payoff from your successes will be diminished.

-If you employ leverage, your successes will be magnified.
-If you employ leverage, your mistakes will be magnified.

HT Howard Marks.

More on stretching the truth.

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