Speculation has become a pejorative for some in recent times. A quick search yields the following definition of speculation: “forming a theory about a subject without firm evidence.” Yet if we look at the origin of the word, “speculor” means “to observe” in Latin. To speculate is to observe, and to make decisions based on those observations.
In business and in life, there are ultimately two choices: to speculate or to gamble. The difference between the two is simple: the first has a strategy behind it; the second does not. The first relies on predetermined parameters for making decisions; while the second leaves decisions up to circumstance or emotion.
In this monologue, Michael Covel talks about the philosophical foundation of success: speculation. This episode features many notable quotes from famous economists and traders, going back as far as the 1800s. The wisdom of these men is the foundation of trend following, and is as relevant today as ever.
In this episode of Trend Following Radio:
- Why speculation is such an important concept
- The philosophy behind trend following
- Watching results rather than causes
- Cutting short your losses
- Timeless excerpts from as early as the 1800s
- The early beginnings of Wall Street
“Cut short your losses, let your profits run on.” – David Ricardo
Mentions & Resources:
- David Ricardo
- Stig Osgaard’s paper “On the Nature and Origins of Trend Following”
- Stig Osgaard, turtle trader
Want a FREE trend following DVD? Get it here.
Get the foundation to making money in up, down and *surprise markets on the Trend Following mailing list.
Have a question or comment about this episode? Post it below.