I stumbled upon your TurtleTrader book without knowing what I was walking into and read it with an open mind. The more pages I turned more hooked I got to the idea that the book was trying to send across.
A little background on myself, I have been in the tech side of the financial world since last 10 years. Worked for Goldman, Merrill and Bank of America during the stint. I used to work with the Commodities trading desk, even though didn’t get to trade myself, always tried to figure out the logic behind the orders that went through my system. Things that looked completely random at first started showing patterns when you looked at the market data (had no clue yet about trend following yet). But more and more I correlated the orders with the market it all started making sense. Working for banks always had the restriction on employee trading, so I left the banks and started on my trading journey.
Initial years were hard, trying to digest every piece of information that media threw at me. I was putting the time but my trades were not improving. I was about to give up thinking trading was not for me when I stumbled upon Turtle Traders. Your book was like a lifeline to a drowning man.
I tried some of the strategy you mentioned in the book and started seeing improvements. I was not great but certainly better. Then I came across your next book Trend Following which enlightened me more and made more adjustments to my process. I just finished the new edition of Trend Following and was blown. Really great insights in the book.
Philip Maymin is an Associate Professor of Analytics and Finance at the University of Bridgeport Trefz School of Business. He is the managing editor of Algorithmic Finance and the co-editor-in-chief of the Journal of Sports Analytics. He has been an analytics consultant with several NBA teams and is the Chief Analytics Officer for Vantage Sports.
Philip brings the perspective of “Moneyball” to basketball. The Celtics, for example, have done a great job of putting players in positions that play to their strengths. They do this by analyzing the data of their players better than most other teams. High frequency data is in sports now, not just in trading. There are cameras in every professional basketball arena that produce play by play data showing summary statistics that coaching staff and in some instances, the public, can see.
Teams are producing models for how each player moves in combination with the other players on the court. The two most basic questions you ask of a player is “What does he do really well?” And “What does he do often?” Sometimes what players do often, doesn’t correlate to what they do well. Philip also discusses outlier players like Marcus Smart. He doesn’t have amazing scoring stats, blocking stats or anything else particularly extraordinary, yet when he is on the court, his team has a dramatically higher chance of winning.
How could we start going down the path of using data to create and put a team together? The myth is that GM’s are brilliant and have foresight on who to draft. If that were the case wouldn’t they be making dramatically more money? Also, how are they making decisions? GM’s mostly rely on their gut. Philip believes that EVERYTHING should be put in a system. If you take scouts opinions, analytics, GM’s opinions, etc. and put it all in a soup then you are just trading off your gut. You have essentially de-systematized the system.
In this episode of Trend Following Radio:
Celtics basketball team
Technology to measure players
“The gut [feeling] is an excuse for rationalization.” – Philip Maymin
I was looking to parlay some motivational quotes from one of your podcasts about asymmetric returns and the valuation of oneself into increased motivation to make a change… A Google result led me to this link, which not on the subject of Trend Following™, has similar threads of taking small losses to achieve the desired ‘big gains’: here. Maybe you can incorporate this into a podcast. Maybe this isn’t something that is publicly consumable. The parallels are interesting to me, none the less.
Trend following has more in common with Jeff Bezos, blackjack or horseracing than Elliot Wave or Gann. Michael uses a dating example to show the edge gained in dating when approaching total strangers and the correlation to trading random markets. If you play the system right and stick with it, odds are, you will come out on top. Is this the way to play the game? It doesn’t sound romantic, but the playing field is messy whether it be in seduction, black jack or venture capital – you have to play it different.
Roy Baumeister is a social psychologist known for his work on the self, social rejection, belongingness, sexuality, sex differences, self-control, self-esteem, self-defeating behaviors, motivation, aggression, consciousness, and free will. Roy has also authored over 20 books throughout his career. He likes to start his research with the premise that he doesn’t know the right answer–trying to have an open mind and clean slate.
Roy started his career studying the idea of self-control. He looked at some of the major crutches people deal with–dieting, quitting smoking, controlling emotions. Roy found that everyone has a limited amount of energy and using that energy toward will power had a limited source of regulation. When people used their energy toward gaining self control in one area, they lost it in another. One way Roy found to boost energy and restore self control in patients was to give a patient glucose. It seemed to restore self-control in the patient, giving them a boost of energy.
Roy also has studied differences in people with high self-esteem as opposed to those with lower self-esteem. Improving self esteem didn’t seem to help make life better or lead to later success but improving self control did. Working on self control was shown to be more important for success than IQ or self esteem. Asian countries, for example, have much more discipline built into their culture than American culture. Roy’s studies have shown that Asians therefore require a lower IQ to be successful because their self control overpowers other inhibitors.
Michael and Roy finish their conversation talking sex. Is it more nature or nurture? Roy has found that female sexuality is more cultural and male sexuality is more nature. Do sex norms change based on female to male ratios? Yes. When you look at populations where there is an un-equal amount of men to women and visa versa the desire for one sex to acquire the attention of the other sex is shifted. Standards are lowered/heightened. Michael includes a 30 minute bonus presentation from Roy expanding on the topics discussed on today’s podcast.
I have been an relentless listener of your podcast since the Fall of last year. I’ve listened to all the new episodes since then, and I’m quickly making my way backwards to take in the years I’ve missed. I cannot tell you how much you have helped me with my mindset and goal setting. Every episode you always say to reach out and you’ll provide the necessary steps to get started in trend following. Well I never have, until now.
I was just listening to Episode 559 where you interview Daniel DiPiazza. I can relate to the conversations you had with Daniel because I am a 26 year old, with a useless degree, and working a 9-5. So actually, I can relate to most of it besides the levels of success you both have achieved (but I’ll get there). I was particularly drawn to when you gave your story about reading Unlimited Power by Tony Robbins. You talked about how Spielberg had repeatedly gone to the Universal Lot to watch how movies were made and to be close to the action. You went on to explain your path of reaching out to specific fund managers for advice, which have now become some of your best friends. Your small, but BIG story has inspired me to follow in your footsteps down this path of discovery.
Michael, I do have two things to ask. Would you graciously provide me with any material or insights that would get me going in the right direction and continue my learning. I’ve attached a document which outlines my notes from Chapter 5 of The Complete TurtleTrader. I wanted to show you this because this chapter is gold. This chapter has provided me an excellent foundation for risk management, position sizing, making decisions, etc. Secondly, you spoke about needing a creative approach in reaching out to fund managers. What was your unique approach and do you have a particular mistake that you learned from?
Thank you for your time.
Start here. Then read every link in the nav bar and footer.
Subscribe now and take my free trend following eCourse.
Information on the Trend Following™ network of sites may not be copied, reprinted, or redistributed without written permission from Michael Covel and or Trend Following (but written permission is easily and typically granted). The purpose of this website is to encourage the free exchange of ideas across investments, risk, economics, psychology, human behavior, entrepreneurship and innovation. The entire contents of this website are based upon the opinions of Michael Covel, unless otherwise noted. Individual articles are based upon the opinions of the respective author, who may retain copyright as noted. The information on this website is intended as a sharing of knowledge and information from the research and experience of Michael Covel and his community. Information contained herein is not designed to be used as an invitation for investment with any adviser profiled. All data on this site is direct from the CFTC, SEC, Yahoo Finance, Google and disclosure documents by managers mentioned herein. We assume all data to be accurate, but assume no responsibility for errors, omissions or clerical errors made by sources. Trend Following™ markets and sells various investment research and investment information products. Readers are solely responsible for selection of stocks, currencies, options, commodities, futures contracts, strategies, and monitoring their brokerage accounts. Trend Following™, its subsidiaries, employees, and agents do not solicit or execute trades or give investment advice, and are not registered as brokers or advisors with any federal or state agency. Trend Following™, TurtleTrader®, TurtleTrader.com® are trademarks/service marks of Trend Following. Other trademarks and service marks appearing on the Trend Following network of sites may be owned by Trend Following or by other parties including third parties not affiliated with Trend Following™.
Reminiscences of a Stock Operator by Edwin Lefèvre PDF
"If you want the chance for big returns in bull, bear and black swan markets, THIS is where you want to be. But this ain't clipping coupons. No risk, no return."