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Ep. 973: Trend Following and Covid with Michael Covel on Trend Following Radio

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How does Trend Following and Covid connect? A big time connection. Also includes a bonus chapter from The Complete TurtleTrader to make the point.

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Ep. 607: Robert Carver Interview with Michael Covel on Trend Following Radio

Robert Carver
Robert Carver

 

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Robert Carver got his start in finance working at trend following firm AHL in 2001 during his final year of college. He was introduced to quantitative trading while at AHL and for the first time began thinking of finance in a systematic way. He later went back to AHL, working there from 2006-2013. His newest book is “Smart Portfolios: A Practical guide to building and maintaining intelligent investment portfolios.”

It took a lot of research and digging for Robert to decipher which financial tools available to traders were appropriate for him. He knew he was not the only trader with this problem so he decided to write a book laying out what he had found through his research. Robert gives actionable tips and guidelines for others who may need help finding what trading instruments are right for them. Robert also wanted “Smart Portfolios” to be a book for the average investor. He wrote it in a way that is not over complicated. Any trader, new or professional, can pick it up and find it useful.

Robert bases portfolio selection around three questions: 1. What should you invest in? 2. How much of your capital goes into those investments? 3. Do you make changes to your portfolio along the way? Whenever he receives questions from people, those questions usually fall into one of the above categories. There is never perfection when trying to predict how a portfolio will perform but Robert stresses that if you start your investing answering the above questions, you will be on the right track. After the right portfolio and financial tools have been selected it’s necessary to understand different types of returns. Michael and Robert finish the podcast discussing differences between geometric and arithmetic returns.

In this episode of Trend Following Radio:

  • Portfolio selection
  • Benchmarks
  • International investing
  • Fundamental trading
  • Warren Buffett trading
  • Expected average performance
  • Leveraging a portfolio
  • Luck vs. Skill
  • Venture capitalism

“Most people probably spend much less time thinking about their portfolio’s than they do thinking about getting their car fixed.” – Robert Carver

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Ep. 592: Don’t Curb Your Enthusiasm with Michael Covel on Trend Following Radio

Don’t Curb Your Enthusiasm with Michael Covel on Trend Following Radio
Don’t Curb Your Enthusiasm with Michael Covel on Trend Following Radio

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Larry David is one guy who is totally OK with the unexpected. He wrote and starred in the hit show, Curb Your Enthusiasm. He wanted total control of writing the show and didn’t want HBO looking over his shoulder. However, the show has no script. The actors are comfortable going into the unknown and winging it. So much of our modern world is pre-packaged and scripted down to the last syllable. Larry David knows that life is all about the surprise, and people value that surprise factor.

What do these examples have in common with the stock market? Markets are unpredictable. Yes, it is necessary to have a game plan but with constant unexpected changes, you need to know what to do when things deviate from the plan. Chaos exists, there is no getting around it. To be successful in the game you must look past the chaos and know how to profit from it.

In this episode of Trend Following Radio:

  • Luck in life
  • What happens when plans deviate
  • Chaos is not a pit
  • The realm

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The Babe Ruth Effect in Venture Capital and Trend Following

Consider from The Babe Ruth Effect: Frequency vs Magnitude (PDF):

“Building a portfolio that can deliver superior performance requires that you evaluate each investment using expected value analysis. What is striking is that the leading thinkers across varied fields — including horse betting, casino gambling, and investing — all emphasize the same point. We call it the Babe Ruth effect: even though Ruth struck out a lot, he was one of baseball’s greatest hitters.”

Chris Dixon adds:

…about ~6% of investments representing 4.5% of dollars invested generated ~60% of the total returns. Let’s dig into the data a little more to see what separates good VC funds from bad VC funds.

Further from Dixon:

The home runs for good funds are around 20x, but the home runs for great funds are almost 70x. As Bill Gurley says: “Venture capital is not even a home run business. It’s a grand slam business.”

Speculation is not about a consistent 1% a month. That’s fantasy.

More TF resources.

The Babe Ruth Effect
The Babe Ruth Effect

Check out the resources page for Trend trading for dummies pdf.

Ep. 577: Art Collins Interview with Michael Covel on Trend Following Radio

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Art Collins is author of “Beating the Financial Futures Market: Combining Small Biases Into Powerful Money Making Strategies”, “When Supertraders Meet Kryptonite”, “Market Rap: The Odyssey of a Still-Struggling Commodity Trader” and “Market Beaters.” He has been trading systematically for the past 30 years.

How was Art Collins able to get Richard Dennis, Bill Dunn, Bob Pardo, Mike Dever and Larry Williams (to name a few) to talk? He made the interviews more like a partnership, than an interview. He made an impressive name for himself which led to positive word of mouth spreading.

What does robustness mean to Art? He uses four rules for prudent testing: 1. Don’t settle on your best result if it is a “diamond in the rough”. 2. Strategies should test well in various markets, particularly similar ones. 3. You don’t want your results to be bunched up in limited time frames. 4. Stay focused on testing concepts you understand in the markets.

Throughout the years Art wasn’t only focused on trading markets. He also studied how to beat the blackjack table and how to skew the odds in his favor when betting on sports. Trading football lines, and trading the price of stocks – what’s the difference? There isn’t much of a difference when you take a technical and systematic approach to them. It’s about keeping emotions out of it. He never wanted to be a cowboy trader or thought of as a “genius”, he just wanted his systems to work. Michael and Art spend the rest of this episode diving into card counting, mechanical systems, gambling on football, data mining and the fools errand of making $1,000 a day.

In this episode of Trend Following Radio:

  • Systems trading
  • Richard Dennis
  • Card Counting
  • Mechanical systems
  • Robustness
  • Data mining

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Ep. 552: Mega Eclectic Number Two with Michael Covel on Trend Following Radio

Mega Eclectic Number Two with Michael Covel on Trend Following Radio
Mega Eclectic Number Two with Michael Covel on Trend Following Radio

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Today is another mega episode featuring Douglas Emlen, Toby Crabel, Robert Aumann, Ryan Holiday, Sally Hogshead and Michael Mauboussin.

Douglas Emlen is a professor at the University of Montana. He is the recipient of the Presidential Early Career Award in Science and Engineering from the Office of Science and Technology Policy at the White House. He has also earned multiple research awards from the National Science Foundation, including their five-year CAREER award.

Toby Crabel is founder of Crabel Capital Management. His approach is very different from Covel’s, but there are some commonalities: price action driven, systems, models, risk management. Crabel works on a whole different timeframe than the typical trend follower, typically turning his portfolio over in less than a day. Crabel, a former pro tennis player, has a philosophical nature and discusses how he executes these philosophies in the trading world.

Robert Aumann is an Israeli-American mathematician and a member of the United States National Academy of Sciences. He is a professor at the Center for the Study of Rationality in the Hebrew University of Jerusalem in Israel. Aumann is the 4th Nobel Prize Laureate in economics to be a guest on the podcast.

Ryan Holiday is an American author, writer, and marketer. He is the media strategist behind authors Tucker Max and Robert Greene, the former Director of Marketing for American Apparel and an editor-at-large for the New York Observer.

Sally Hogshead is an American speaker, author, former advertising executive, as well as the Chief Executive Officer of Fascinate, Inc. Hogshead’s newest book is “How The World Sees You: Discover Your Highest Value Through The Science of Fascination.”

Michael Mauboussin is an author, investment strategist in the financial services industry, professor at the Columbia Graduate School of Business, and serves on the board of trustees at the Sante Fe Institute (an independent, nonprofit theoretical research institute). He is managing director and head of Global Financial Strategies at Credit Suisse, where he advises clients on valuation and portfolio positioning, capital markets theory, competitive strategy analysis, and decision making.

In this episode of Trend Following Radio:

  • Humans and animals
  • International hacking
  • Game theory
  • Economics
  • World champions of peace
  • The book writing process
  • Flow state
  • Personal branding
  • Multi-disciplinary thinking
  • Luck vs. Skill
  • Outcome bias

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Ep. 551: Jack Schwager Interview with Michael Covel on Trend Following Radio

Jack Schwager
Jack Schwager

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Jack Schwager is author of the Market Wizards series and just completed his second edition of A Complete Guide to the Futures Markets: Fundamental Analysis, Technical Analysis, Trading, Spreads, and Options. Jack has gone into great detail updating his 1984 original edition with over 600 pages of educational insights.

At the beginning of his trading career technical analysis never made much sense. However, as he worked in markets over the years, he came to see that those who used charts and technical analysis tended to make more money. He also saw that fundamental analysis almost goes against the idea of money management. He found that the same went for risk management: How does risk management work with a truly fundamental perspective? It doesn’t for most.

The basics of futures trading for most is fuzzy. Jack gives a short summation of the basics: 1. Futures are very liquid. 2. They trade for every type of instrument you could think of. 3. You can go short or long just as easy. 4. Futures are truly a zero sum game. 5. They are real markets and have real fundamentals pushing trends. 6. Basic trends do have some sort of rational behind them in futures markets and the skilled fundamental players will beat the unskilled players if they are good at assessing probabilities. Michael and Jack finish talking about trading as an art vs. science, whipsaws, failure to exploit major trends, drawdowns and the efficient market hypothesis.

In this episode of Trend Following Radio:

  • Fundamentals vs. Technical analysis
  • Risk management
  • Contrarian view on fundamentals
  • Charting
  • Science vs. art in trading
  • Whipsaws
  • Exploiting trends
  • Sharpe ratio
  • Efficient market hypothesis

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