I am absolutely thrilled about your podcast. After a few weeks I have finished all your monologue podcasts and several others with Ed Seykota, Larry Hite, Tom Basso, Jack Schwager, David Harding [monologue], Jerry Parker. Did you ever talk to an interview guest about the “ethical side” of trading basic food (commodities like wheat, soybeans, rice…)? If yes, which interview partner or podcast number is it? On one side cycles and price movements will always occur, with or without speculators. But on the other side without extra money in the pockets there might be less volatile prices and therefore less riots in third world countries if price doubles or triples within a short period of time. Speculators bring extra liquidity to the market and take some risks. These arguments seem too vague to me. I have no answer personally yet but I´d like to have. What´s your opinion on this topic? I am soaking up every piece on money and risk management. It is obvious stock indices are far more volatile compared to all decades in the last century. How do professionals incorporate overnight drops of -30% or more and closed exchanges into their money and risk management? A stop loss of course is worthless in these times which will come again one day. Using out of the money options? If the credit melt down really gathers pace through bonds or whatever else, no one knows what politicians will do (closing all the exchanges, forbidding short selling even maybe on futures contracts…). How do professionals do their stress tests? Or are there even any? For portfolio diversification trading futures clearly you need a minimum amount of money. What is the common opinion of your interview partners the absolute minimum should be? And how many markets can be traded with? I guess it should be at least 100´000 in cash? Sometimes with a small account in volatile markets there are situations you can´t open even an E-mini futures position. The overall risk to the portfolio would be too high. What about trading smaller accounts (only) with CFDs? Despite trading against the broker and maybe getting more slippage or no fills. With CFDs smaller positions are easier to initiate in context to the portfolio. What are your thoughts on this topic? A few weeks ago I requested the free DVD to the address below. Unfortunately, it hasn’t arrived yet. Shall I retype my data into the order form again? Thank you very much for your answers.
DVDs have been delayed too much recently so I put the content here: www.trendfollowing.com/video.
1. Ethical side in what sense? Trading is not bad. Read: read.
2. Starting capital issues: read.
3. Catastrophic losses can only be prevented via diversification. Fundamental to trend following.
4. Minimum number of markets issues: listen.
5. I don’t recommend CFDs. Only futures, ETFs, LEAPs.
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Michael, heard your interview on Masters in Business with Barry, and listened to a few of your podcasts. First of all – thank you for your perspective. Secondly, I am curious if you could shed some light on a debate I recently observed between a few trend following traders? I will caveat by saying that my experience is in the asset management business, which is relevant to the debate. I am familiar with and embrace trend following but not an expert. The debate was that the trend following business was in process of being “disrupted” by technological advances over the years. As a result, it is becoming increasingly difficult to generate alpha, difficult to differentiate, and as a result – difficult to charge the fee’s that trend followers typically charge. As a result, few compression is sweeping the industry. Do you have a take on this trend, and based on your experience, how this may evolve? In asset management, I have seen how this has played out on asset management via the proliferation of ETF’s…does this trend work its way through the trend following universe? Can alpha be arb’d out because of technology? How have the best trend followers have a technological advantage? Thank you in advance for your time in reading and responding to this email.
Thanks for the nice words.
1. I don’t see these debates as new. People said the same things 20 years ago.
2. What is the technological advance exactly? How does it affect weekly bar trading, for example?
3. There are always periods of doubting, misdirection and obfuscation in the fund management arena. Those fees are nice! But what has changed to make Kahneman’s behavioral work invalid?
4. Unless markets go flat forever, unless they are chop forever, I don’t see what’s changed. 2002, 2008 … these trend following boom periods happen. And they change history.
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Greetings Mr. Covel, I am writing this email in support of you swearing more often in your podcasts. If you click on the following link, you can read an article about how swearing is a sign of intelligence. In the movie, Good Will Hunting, the main character is a math genius that swears a lot. One of MLB’s greatest managers, Earl Weaver, swore a lot. Smart people swear. You swear because you know that is one way to make people remember important concepts such as, “You are going to F***ING die! So what are you going to do right now to get ahead.” Your audience doesn’t realize how much you want them to achieve their goals. Of all the personalities on the internet that teach self-improvement, how many personally answer as many emails as you do. You could probably still earn the same amount of money and never personally answer one email. I believe that you swear because you are trying to convey to your audience the raw nature of making money. You are a no bulls**t type of person. Unlike MSNBC, you are not portraying investing as a form of entertainment. Investing is about making money and you are trying to explain one of the most efficient (i.e. only analyzing price data) means of making money; namely trend following trading. You are doing your best to inform your audience that they are either making money or not making money. As Yoda said to Luke Skywalker in Star Wars: The Empire Strikes Back, “Do or do not, there is no try.” You should say to your audience, “Make money or don’t make money, there is no third option.”
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Hi Michael, It’s been a while since we have had contact and I was reminded by a friend to visit your podcasts again. Nice touch moving away from pure trend-following specialists – some very interesting characters. Have you ever interviewed anybody from Millburn Ridgefield Corporation (NYC)? Listening to these guys that have played the game for decades is fascinating. I gather from the latest podcasts I’ve heard, you’re enjoying the East.
All the best
I interviewed Grant Smith (Millburn) in person years back, but so far not on the podcast. Always game!
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Hi Michael, I am fairly new to your ideas and currently made a review on an interesting podcast on iTunes. I wish I had listened to this ten years ago… I would be light years ahead right now. I am currently reading [your] Trend Following book right now and I am finding it to be just as interesting as your other material. I am a long time Agora Financial newsletter reader and have signed up to your work you will be doing with them as a lifetime subscriber and look forward on your input to the Agora Financial family. I see you did a podcast with Jim Rickards who I am a subscriber to as well and will be listening to it on my hour ride to work tonight to cut over a phone system for Everbank in Mt. Laurel, New Jersey. Keep it all coming and I hope you never burn out from to much to do.
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Hi Michael, attached is the review for Trend Following that I just posted on Amazon. I hope it does well for you. I am enjoying tremendously your podcasts, thanks much for all the great insights and info. I just listened to your latest on nerd fitness and thought it funny that as your guest described traveling to Peru I was walking down the streets in Miraflores, Lima, Peru. It’s funny that so many of us in the US can’t get our heads around the fact that we live in a big and very connected world. Once you break free of the concept life changes, much in the same way my life changed when I gave up my illusions of hold and hope for investing.
Best to you,
I think of Michael Covel’s book as the natural next step for folk that caught the trading bug by reading the original Market Wizard books. Here Michael takes the reader systematically through the important points that the aspiring trend follower needs to master in order to succeed at the craft. Like the Wizards books, I found that Trend Following served to demystify much of the practice of successful traders.
The emphasis throughout the book was on the right practices to master. I found this somewhat of a tease but I can appreciate that it is necessary in order for Michael to achieve his goal of empowering people to be independent thinkers on the subject. For those that just want the answer Michael includes a thorough appendix that supplies a case study of trend following in stocks and trend following using an automated tool.
As a result of reading this book my perspective on trading/investing has changed dramatically. I find that I am much less concerned with trying to guess/develop ideas of where the market is going and more concerned with reacting to what the market is presenting in terms of opportunities. In the short time that I have begun to apply my new perspective the approach in Trend Following has already yielded results.
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Hi Michael, just finished reading Trend Commandments. I am a physician not someone who works in the financial industry. I found your book refreshing, smart and funny at times. For those of us who do not want to spend our day watching CNBC while our real life goes on, or spend our night watching a stock show host yelling Booyha, and are tired of reading about the next great ten stocks for spring, Trend Commandments offers a great new way to look at investing. My one criticism is you offer no examples of how to look for a trend or ways to go about trend trading for the individual investor who doesn’t want to let money managers skim off the top, and leave our life savings to rot in a fund.
Thank you for a good read,
Thanks! Best place to start digging in for more? Right here.