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High Commitment was the Secret to Making Mike Aponte a Great Card Counter

Mike Aponte, Card Counter
Mike Aponte

Caught this great excerpt from Mike Aponte that applies to trend following and or any other life pursuit:

One of the questions I’m often asked is, “What is the most important trait in becoming a professional card counter?” The first thing that jumps to mind for most people is genius mathematical ability. True, being good at math is a plus, but the math involved in card counting is simple, middle school arithmetic. We’re not talking advanced calculus or differential equations. Having trained many people how to count cards at a professional level, there are three traits that are more important than mathematical ability. At the top, I rank high commitment level as #1.

With every person that I have trained that went on to become an accomplished card counter, it was very evident from my first interaction with them, that they were not only willing, but excited about putting in the time and energy necessary to master the knowledge and skills necessary to gain the winning edge. My most successful student to date, “Al”, is someone who barely graduated high school, getting D’s in math. During the time that I spent with AL, it became apparent that he was an underachiever when he was younger, but at the same time Al certainly was nowhere in the math league of Good Will Hunting. But what Al had going for him, was a real, serious commitment to turning his fortunes around at the blackjack tables. And to his credit he did exactly that. Many people have a get-rich-quick mentality, focusing only on the potential upside, not on what it takes to get there. No matter the endeavor, there are no shortcuts to achieving your goals.

Who is Aponte? The bio: “Mike Aponte, also known as MIT Mike, is a professional blackjack player and a former member of the MIT Blackjack Team. Aponte was part of a team of Massachusetts Institute of Technology (MIT) students that legally won millions playing blackjack at casinos around the world by counting cards. He is the basis for one of the main characters, Jason Fisher, in the book, Bringing Down the House, by Ben Mezrich, which inspired the motion picture, 21.”

Mike was one of my earliest podcast guests. You can listen here:

I still remember where we did that interview–great Mexican restaurant on PCH right near the intersection with Newport Coast Drive. Wow what a view! Had to pull a shot from Google:

PCH View in California
PCH View in California

That is exactly how it looks.

Trend Following RadioEp. 605: Interview with Mark Kritzman Interview

Mark Kritzman
Mark Kritzman

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Mark Kritzman is a Senior Lecturer in Finance at the MIT Sloan School of Management, founding Partner and Chief Executive Officer of Windham Capital Management and serves as a senior partner of State Street Associates. Mark has written six books, his latest titled “A Practitioners Guide to Asset Allocation”.

Mark began his career on Wall Street in 1974 and was immediately drawn toward systematic trading. At a time when there were not many quantitative traders, he was affectionately titled a “token quant” within his company.

Over the years Mark has been an advisor to many funds. While working with various companies it became clear fund managers were mixing how they invest with how they would choose asset classes. He decided to break down the most basic and logical ways of organizing the investment process. What are some components of an asset class: stable composition, be investable, internally homogeneous, externally heterogeneous, raise the utility of a portfolio, and you should be able to access it in a cost effective way. From there, depending on a persons risk, different combinations of asset classes would make up a portfolio.

Being in the game as long as Mark has, he has been able to witness the enduring and turbulent nature of markets. He saw one silver lining come out of the 2008 financial crisis – it provided a context where investors could go back to the basics of trading, and in particular, recalibrate how they manage risk. Mark finishes the podcast talking fixed weight portfolios, Peter Bernstein on scaling portfolio risk, dynamic asset allocation and explaining Samuelson’s Dictum.

In this episode of Trend Following Radio:

  • Definition of an asset class
  • Actively managed portfolios
  • Passively managed portfolios
  • Time diversification
  • Portfolio diversification
  • The fallacy of large numbers
  • Leverage
  • Value at risk
  • Risk management
  • Fear and greed
  • Risk and reward
  • Exposure to risk

“Time does not diversify risk.” – Mark Kritzman

“If we just step back, start with the basics and move on from there, that introduces comfort to the investment process.” – Mark Kritzman

Mentions & Resources:

Listen to this episode:

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

Mentions & Resources:

Listen to this episode:

Ep 582: Peter Borish Interview with Michael Covel on Trend Following Radio

Peter Borish Net Worth is thought to be in the region of $14 million
Peter Borish

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Peter Borish is chief strategist of Quad Capital. He works as a trading coach and helps recruit new traders and develop the company’s trading strategy. He also is a founding member of the Robin Hood Foundation. The Robin Hood Foundation has made great strides in their charity work and are continuing to do bigger and better things. Peter believes that the quality of life for those around you is much more important than the material possessions that can be accumulated.

Michael and Peter change gears from charity work, to trading and Quad Capital. Quad Capital has had only 5 or 6 down months since inception about 42 months ago. What does their multi-strategy approach consist of? They look at alpha generating, capacity constrained strategies. They also believe investors are looking at liquidity, therefore that is exactly what they provide in their funds.

Peter is the business of managing risk, not just being right. Another way of putting it is, “Are you interested in making money or are you interested in being right?” We should all be in the business of making money, over being right. That being said, is Quad Capital open to other strategies that could make them money? As long as the strategy fits within their trading philosophy, then they are always open to new talent. Michael and Peter finish the conversation talking sports analogies. A lot of traders think they are Michael Jordon, but are they Michael Jordon on the Bulls? Or are they Michael Jordon on the White Sox?

In this episode of Trend Following Radio:

  • Politics
  • Robin Hood Foundation
  • Risk management
  • Discretionary trading
  • Having objectivity in your trading
  • Kelly criteria
  • Own up to your mistakes

“Everyone trades too large relative to their perceived edge.” – Peter Borish

Mentions & Resources:

Listen to this episode:

Other Recommended Listens and Reads:

Simon Black Interview

Against the Gods

Peter Borish, a View

Ep. 534: The Swan Problem with Michael Covel on Trend Following Radio

The Swan Problem with Michael Covel on Trend Following Radio
The Swan Problem with Michael Covel on Trend Following Radio

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Black swans arrive as a surprise. Rare stuff happens. Surprises walk up and punch you in the gut. They smack you upside the head. There is no exact preparation for the timing of a black swan, but you can position yourself. Michael plays an excerpt from Nassim Taleb explaining black swans. Taleb is of course responsible for popularizing the term.

In this episode of Trend Following Radio:

  • Knowledge is therapy
  • Black swans
  • Uncertainty
  • Probability
  • Global warning

“History does not glide, it leaps.” – Nassim Taleb

Mentions & Resources:

Listen to this episode:

Ep. 512: Tim Price Interview with Michael Covel on Trend Following Radio

Tim Price
Tim Price

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Tim Price has worked in capital markets for over 25 years across three management firms. His book is “Investing Through the Looking Glass.”

Tim thought Brexit would be the biggest thing in politics during his lifetime, until Trump. People love a narrative and those behind Brexit and Trump produced a great one. People were so fed up with the establishment that even though they may not have agreed with the idea of Brexit or the agenda of Trump, they wanted a vote against the establishment.

“What was the driving force behind wanting to write your first book?” The seminal event for him was the collapse of Lehman Brothers, which led him to think: “How on earth did we end up in this mess?” Interest rates are still at zero eight years post crisis and central banks are still printing money out of nowhere. He has spent the years since 2008 researching what the causes were and essentially the “Who done it” in the bailouts. Michael and Tim talk about the economy and the avalanche that is building on the horizon. Michael asks, “How did we get to the point where so many of us have just accepted that there are these show figures making decisions for us that we have no choice in?”

In Tim’s work he takes people on a detailed journey through the banking system, bailouts, bond market, stock market and the solutions. “What other options in trading exist after you have value, momentum and gold?” Michael and Tim discuss why there aren’t really any other options beyond those.

In this episode of Trend Following Radio:

  • Trusting central planners
  • Going against the establishment
  • Banking system
  • Owning gold
  • Lehman Brothers collapse
  • 2008 bubble
  • The Brexit and Trump narrative

“Mankind has survived because of our ability to believe in things that do not actually exist.” – Tim Price

Mentions & Resources:

Listen to this episode:

“Given that you’re taking a risk, what kind are you up for?”

Great post by Seth Godin:

Here’s an interesting choice that most people leave unmade:

How comfortable are you engaging in projects where there’s a likelihood that you’ll lose by just a hair?

What makes a project worthwhile and interesting is that it might not work. All the this-is-sure-to-work projects are taken.

Given that you’re taking a risk, what kind are you up for?

Are you seeking out areas where there’s no competition, true longshots where few people see you fail?

Or are you okay with the daring near misses?

That’s the trend following ethos too.

Risk
Risk

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