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Ep. 511: A Zen Money Perspective with Michael Covel on Trend Following Radio

A Zen Money Perspective with Michael Covel on Trend Following Radio
A Zen Money Perspective with Michael Covel on Trend Following Radio

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Building off of last weeks podcast Michael brings another dead guest on his show, Alan Watts. Watts is responsible for introducing eastern traditions to the West, i.e. Buddhism. He has been featured many times on the podcast. Is money the root of all evil? Is money the goal? Why are making mistakes so crucial to your life? Does money equal wealth? These are all topics that are discussed and answered on the podcast.

Before Michael plays a clip from Watts, he shares a story from his recent trip to California. Michael had lunch next to a table that was the quintessential example of money, wealth, and the stereotypes that live in Los Angeles. His opening story is food for thought as you listen to Watts and his wisdom.

In this episode of Trend Following Radio:

  • Liberty
  • Relationship between guilt and gold
  • You don’t learn if you don’t make mistakes
  • Psychological attitude toward money
  • Money is just bookkeeping
  • National debt
  • Money as the circulation of information
  • Changing the psychological attitude toward money
  • The cost of paying income tax
  • Psychologically poor

“I wonder often if there is any relationship between guilt and gold.” – Alan Watts

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Ep. 508: Hysteria with Michael Covel on Trend Following

Hysteria with Michael Covel on Trend Following
Hysteria with Michael Covel on Trend Following

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“If you are in a dead end existence and feel like you need something else, get on a plane.” Fly to a foreign country, go alone, and do not have a plan. The influx of adrenaline from getting away and exploring can break anyone out of their day to day hypnosis.

Michael plays a series of news clips starting from the beginning of the Presidential race. The various clips start off profiling Donald Trump’s campaign as a joke, and then slowly morphing into him inching his way up in the polls and taking the Presidency. Michael then reads an excerpt from “Follow Me and Die” by Cecil Curry.

Michael ends the podcast with a quote from a recent Financial Times article featuring David Harding. The excerpt explains how Harding exploits the failures in the efficient market theory. He says that the markets are a psychological game and should not based off of fundamentals. Bet your money on the price, not what is happening in politics.

In this episode of Trend Following Radio:

  • Trump as President-elect
  • Trading off of price, not politics
  • Nazi’s in America
  • David Harding
  • Efficient market theory

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“Following Me and Die” by Cecil Curry

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China and Free Markets: How Do You See It?

Feedback in:

Hi Michael,

I hope this emails finds you well, and that all is good in Saigon. As always feeling grateful for all the insights and content you share for FREE!

In a recent episode you mentioned China’s greatest achievements in eradicating poverty as a result of free market reforms. With the intention of thinking efficiently, this is my question to you: Do you consider China a “free market” after they arrested dozens of short sellers for shorting the Shanghai Stock Exchange?

I appreciate your answer.

Thanks,
[Name]

China is a very big operation. I can’t define it or position it on one event. From a big macro perspective though … they would not have their success without some semblance of free markets and capitalism. You would surely agree? And beyond government, the people are with a doubt “traders”… going back centuries.

Michael Covel in China
Michael Covel in China


Listen to Jed Rothstein views on China in Podcast episode 649.

Ep. 482: Two Takes with Michael Covel on Trend Following Radio

Two Takes with Michael Covel on Trend Following Radio
Two Takes with Michael Covel on Trend Following Radio

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There are back-to-back monologues on today’s episode. The two episodes consist of the same material, just said a little different. The first take Michael was told was too aggressive with too many F bombs, so he re-recorded but still left it up on the tail end of the podcast. The double header podcast today was inspired by a film Michael recently re-watched called, “Boom Bust Boom”.

Michael talks about Hyman Minsky’s “financial instability hypothesis”. Minsky said that there is instability in capitalism and if capitalism was eliminated, that would help eliminate bubbles. Minsky believed that offsetting the economy is how you eliminate instability. This is where the government came up with zero interest rates, and in some places, negative interest rates. Due to the Minsky mentality, economists think they can control the markets and stop human nature from happening.

Michael ties his documentary film into the discussion and describes the insight he got during ’08 when he happened to be filming. Trend following strategies and behavioral economics have these characteristics in common: 1. People will never be rational. 2. Markets will always trend up, down and sideways. 3. You can’t predict trends. 4. There are ways to make money even though numbers 1-3 are set in stone and will not change.

In this episode of Trend Following Radio:

  • The tulip bubble
  • March 2000
  • Fall of 2008
  • Financial instability hypothesis
  • Trend following philosophy
  • Behavioral economics

“The only way to eliminate market bubble’s and crashes is to eliminate people.” – Michael Covel

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Surprise, Surprise, Surprise: Prediction Doesn’t Work

Excerpt:

“This has basically never happened before in my whole life. I can remember 1½ percent rates. It certainly surprised all the economists. It surprised the people who created the life insurance industry in Japan, who basically all went broke because they guaranteed to pay a 3% interest rate. I think everybody’s been surprised by it, including all the people who are in the economics profession who kind of pretend they knew it all along. But I think practically everybody was flabbergasted. I was flabbergasted when they went low; when they went negative in Europe – I’m really flabbergasted. How many in this room would have predicted negative interest rates in Europe? Raise your hands. [No hands go up]. That’s exactly the way I feel. How can I be an expert in something I never even thought about that seems so unlikely. It’s new territory…

“I think something so strange and so important is likely to have consequences. I think it’s highly likely that the people who confidently think they know the consequences – none of whom predicted this – now they know what’s going to happen next? Again, the witch doctors. You ask me what’s going to happen? Hell, I don’t know what’s going to happen. I regard it all as very weird. If interest rates go to zero and all the governments in the world print money like crazy and prices go down – of course I’m confused. Anybody who is intelligent who is not confused doesn’t understand the situation very well. If you find it puzzling, your brain is working correctly.”

Shout out to Charles Munger, age 91, vice chairman of Berkshire Hathaway.

Adopting a Proper Psychological Attitude: Michael Mauboussin Wisdom

Excerpt:

In 2013, the Nobel Prize in economics went to three men. One of the recipients, Robert Shiller, is a professor at Yale University known for showing that markets are inefficient. Another was Eugene Fama, a professor at the University of Chicago known for his advocacy of market efficiency. (The third was Lars Hansen, also at the University of Chicago.) This leads to the first point worth stressing: to be an active investor, you must believe in both inefficiency and efficiency. In other words, you have to think that both Shiller and Fama are right―just not at the same time. Naturally, if markets are perfectly efficient there’s no reason to try to beat them through active management. But it’s also true that there’s no reason to try to beat the market through active management if you think markets are always inefficient. That’s because even if you are savvy enough to buy a dollar for fifty cents, there’s no reason to believe that the price and value will ever converge in a perpetually inefficient market.

How can you best deal with this? Trend following.

Ep. 470: Objective with Michael Covel on Trend Following Radio

Objective with Michael Covel on Trend Following Radio
Objective with Michael Covel on Trend Following Radio

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Michael takes the podcast back to 1959 with an interview between Mike Wallace and Ayn Rand. Wallace and Rand focus on her ‘revolutionary’ view on the world. Rand capsulizes her views as a philosophy based on objective reality. She expands on a new code of morality centered around mans life as a standard of value. This means that a mans highest moral purpose is the achievement of his own happiness and each man must follow his own rational self interest.

Atlas Shrugged demonstrates Ayn Rand’s philosophy in human terms. Rand and Wallace briefly touch on many subjects such as; self sacrifice, love, altruism, the democratic system, and welfare.

Michael wraps up the podcast by summarizing the interview and comparing it to life in 2016. He talks about the importance of leaving his own impact on the world and how necessary logic and reasoning is to being successful.

In this episode of Trend Following Radio:

  • Man’s morality
  • Altruism
  • Self sacrifice
  • Free and unregulated economies
  • Capitalism with government help
  • Welfare
  • Depressions due to government interference
  • Strategic decision making

“Man is entitled to his own happiness but he must achieve it himself. He cannot demand that others give up their lives to make him happy.” – Ayn Rand

“I have no faith at all, I only have convictions.” – Ayn Rand

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