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Category: Trend Following

“It reminded me of another Singaporean anecdote…”

Posted on by Michael Covel

Feedback in:

Mike…

I loved your story about being recognized by a Singaporean cab driver. It reminded me of another Singaporean anecdote I thought you might appreciate.

I’ve been living in Bangkok for the last ten years and don’t really get out much. But I was in Singapore maybe four or five years ago on a brief visit with a friend who’s quite familiar with that city.

Knowing how much I love books, he took me to a gigantic book store. Place seemed like it was a block long. Easily ten times bigger than any bookstore I’ve ever been in. I had heard some very positive things about your trend following book from a 4X trader. So I walked right up to an employee at the bookstore and asked if they carried your Trend Following book. Guy went right to a computer and twenty seconds later his head pops up. “Yes sir. We have it here.”

And it was in my hands a few minutes later. As I recall, it was quite a walk from where we were in the store!

I don’t know the name of that store. But the next time you’re in Singapore, maybe Rogers knows!

Glad you’re digging Asia. It changes you. It’s all happening here. North America and Europe are comatose in comparison. I don’t think I could live there anymore, anyway. Too many rules!

Appreciate all your contributions. Even if you totally walked away from the podcast, don’t worry about it. You’ve already done plenty. Take care of yourself first with whatever you need and the rest will take care of itself.

Peace out…
[Name]

Thanks!

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Where is the Exit Strategy with Buy and Hold?

Posted on by Michael Covel

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Michael,

I’ve been listening to your podcast and really enjoy it. Thank you for bringing different perspectives on investing, and for all the trend followers you interview who are candid about their processes, advantages, and disadvantages. I really enjoy all the interviews, especially those with Jerry Parker.

I’ve got a question: You disparage buy and hold, but is it the same thing as trend following? Charles Dow (in my mind) is the inventor of trend following. He defined primary trends, that could not be manipulated, secondary trends that could be manipulated, and shorter term trends (daily) that are generally random.

When you think about it, buy and hold (in equities) is just a bet on the longest of primary trends, namely, that the market goes up and down, but it goes up more than it goes down. It is divorced from any fundamental analysis, and has a clear entry and exit points: buy when you have funds throughout your working career and sell when you need money for retirement.

Sure, it has more volatility and drawdowns than something like the turtle strategy, but it has bigger gains at times too – trend following can’t match the gains in large bull markets. Thus, a buy and hold person subjects themselves to more volatility and drawdowns to follow a long-term (and hopefully more lucrative) trend, while a Turtle uses systematic trading rules to trade on the shorter – akin to Dow’s “secondary” – trends to reduce volatility and drawdowns, sometimes at the loss of gain but likely with superior preservation of capital.

The only difference is the length of trend one wants to follow. Otherwise, they’re effectively the same. Entry and exit rules, no fundamentals, seeking to ride a trend.

Agree?

Thanks for keeping the trend following torch burning. Keep up the good work!

Cheers,
[Name]

Where is the exit strategy with buy hold?

Pretty big issue to leave out if making the comparison to trend following.

How can you move forward immediately to Trend Following profits? My books and my Flagship Course and Systems are trusted options by clients in 70+ countries.

Also jump in:

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• Frequently Asked Questions
• Performance
• Research
• Markets to Trade
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• Trading Technology
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Trend Following is for beginners, students and pros in all countries. This is not day trading 5-minute bars, prediction or analyzing fundamentals–it’s Trend Following.

Ep. 533: Donald Hoffman Interview with Michael Covel on Trend Following Radio

Posted on by Michael Covel
Donald Hoffman
Donald Hoffman

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My guest today is Donald Hoffman, a cognitive scientist at UC Irvine. He studies how our visual perception, guided by millions of years of natural selection, authors every aspect of our everyday reality. His research is about uncovering the underlying secrets of human perception. Donald has discovered clues that point to our subjective nature of reality. According to Donald, we actively create everything we see. Donald started to learn how to program at a very early age. This is what got him thinking: Are we just machines, or actual humans?

The topic is cognitive psychology.

In this episode of Trend Following Radio we discuss:

  • Are we robot or human?
  • Evolution
  • Reality vs. Perception of reality
  • Natural selection
  • Pushing theories to their limits

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Ep 532: No Systematic Fear with Michael Covel on Trend Following Radio

Posted on by Michael Covel
No Systematic Fear with Michael Covel on Trend Following Radio
No Systematic Fear with Michael Covel on Trend Following Radio

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Please enjoy my monologue No Systematic Fear with Michael Covel on Trend Following Radio. This episode may also include great outside guests from my archive.

In this episode of Trend Following Radio:

  • Black box investing
  • Quantitative trading
  • Quants vs High frequency trading
  • Value based trading
  • Momentum trading
  • The dirty words of finance
  • Statistical arbitrage
  • Quant macro
  • Managed futures

“The hedge fund manager has to use what I call the dirty words of finance: Leverage, derivatives, and shorting.” – Cliff Asness

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Want to learn more Trend Following? Watch my video here.

“Nate Silver was by far the most accurate forecaster in the 2016 election”

Posted on by Michael Covel

Feedback in:

Nate Silver [my article that generated the feedback] was by far the most accurate forecaster in the 2016 election.

While most modelers pegged Clinton’s chances at greater than 90% (in some cases 99%), Silver had Trump as a 35.2% chance few days before the election. That was pretty darn good handicapping.

You are confusing prediction with handicapping, which is surprising given how much you have talked about poker and probabilities and black swans. If I were grading Nate Silver, I would give him an A+, because that is the grade he earned. I even heard him talk about the possibility of systemic failure in polling and got ridiculed.

What’s the point of his kind of political analysis? The usefulness? There is none. The vast majority of people (who know of him) think he has some predictive up or down power. That’s what he wants (likes), even if not accurate. Then people in the weeds can show up to say “oh no you missed his point, it’s his great handicapping skill.” Yeah, I see how clever this mathturbation is.

How can you move forward immediately to Trend Following profits? My books and my Flagship Course and Systems are trusted options by clients in 70+ countries.

Also jump in:

• Trend Following Podcast Guests
• Frequently Asked Questions
• Performance
• Research
• Markets to Trade
• Crisis Times
• Trading Technology
• About Us

Trend Following is for beginners, students and pros in all countries. This is not day trading 5-minute bars, prediction or analyzing fundamentals–it’s Trend Following.

Ep 531: Mark Rzepczynski Interview with Michael Covel on Trend Following Radio

Posted on by Michael Covel
Mark Rzepczynski
Mark Rzepczynski

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My guest today is Mark Rzepczynski. Prior to co-founding AMPHI, Mark was the CEO of the fund group at FourWinds Capital Mgmt. Mark was also President and CIO at John W. Henry & Co., an iconic Commodity Trading Advisor. Mark has headed fixed income research at Fidelity Management and Research, served as senior economist for the CME, and as a finance professor at the Univ. of Houston Baer School of Business.

The topic is Trend Following.

In this episode of Trend Following Radio we discuss:

  • Controlling volatility
  • Style diversification
  • Long term vs. Short term managers
  • Simplicity beats complexity
  • Quant trading

“Price is primal.” – Mark Rzepczynski

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Noah Smith: Troll Following Troll

Posted on by Michael Covel

Caught this write-up from Nassim Nicholas Taleb. That name sounds familiar. This same guy Taleb rips, I also dealt with him a few years back over his severely misinformed take on trend following. I responded on my podcast here. More for Noah Smith. Read more about Nassim Nicholas Taleb quotes.

How can you move forward immediately to Trend Following profits? My books and my Flagship Course and Systems are trusted options by clients in 70+ countries.

Also jump in:

• Trend Following Podcast Guests
• Frequently Asked Questions
• Performance
• Research
• Markets to Trade
• Crisis Times
• Trading Technology
• About Us

Trend Following is for beginners, students and pros in all countries. This is not day trading 5-minute bars, prediction or analyzing fundamentals–it’s Trend Following.