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Category: Trend Following

Financial Predictions v. Weather Predictions

Posted on by Michael Covel
Cuter than CFAs
Cuter than CFAs

Feedback in:

Michael, I just wanted to take a moment to thank you for your work. I have read most of your books and they are exactly what I needed. You see I am a veteran of the brokerage business (30 Years) and I have always known intuitively that something about the entire business was, and is, a lie. Analysts have no skin in the game, management doesn’t care if you make money, it’s all about assets under management that’s why they will never say sell. “Just buy more.” You see I used to look at CFA’s as the smartest people in the room. Now I know that they are really just financial weathermen trying to predict the future. Something that can’t be done. I have adopted for my clients a simple trend following rules based strategy, and it amazes me how hard it is to change minds. It is so simple they somehow think it can’t work. But I will keep plugging away and I know you will to. The business needs to change even the other brokers in my office look at me like a freak when I tell them to stop listening to analyst’s and “stop buying stocks that are going down.” Old habits die very, very hard. Just wanted to say thanks.

Thanks!

Looks like this feedback was inspired by my recent interview here.

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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. 457: Amy Herman Interview with Michael Covel on Trend Following Radio

Posted on by Michael Covel
Amy Herman
Amy Herman

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My guest today is Amy Herman. In 2000 Amy started a program called, The Art of Perception at The Frick Collection in New York City. She helps her students figure out how to fix big picture problems by looking at the small details. Her new book is “Visual Intelligence: Sharpen Your Perception, Change Your Life.”

The topic is her book Visual Intelligence: Sharpen Your Perception, Change Your Life.

In this episode of Trend Following Radio we discuss:

  • Undoing perceptions
  • COBRA methodology
  • Listening to your sixth sense
  • Situational awareness
  • See something say something
  • Pertinent Negative
  • Critical inquiry

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Social Security Drama; It Never Dies!

Posted on by Michael Covel

Consider an excerpt from Trend Commandments [Update: Audio book now available!]:

Social Security is dead? Easier said than done.

On Meet the Press, one United States governor appeared confused: “If you care about democracy and what the everyday citizen believes, and you want to empower them, they don’t want the Social Security system to be dismantled, and they don’t want the Medicare system to be dismantled… this is a compact between generations to be able to make sure that all of our seniors have the funds when they retire, that they’re not going to be homeless, so they’re not going to have to go to a shelter.”

Did she know that the inflation adjusted return of Social Security is just 2 percent? A United States Senator on Meet the Press apparently did not: “Social Security is a program that works. It is fully funded for the next 40 years. Stop picking on Social Security. It’s not a crisis. Social Security is fine.”

Those politicians are not stupid; rather, they have ceased to think. Or, do they just need to tell a certain story to ensure power for whatever party with which they are affiliated? Waiting or hoping for your politician, on the right or the left or anywhere in between, to win an election is an investment strategy of your ignorance.

Behind the scenes and in the halls of Congress; drunks, perverts, and losers addicted to fame and power. Both sides. You can’t make money from them or social security. There are other options.

Process v. Outcome
Process v. Outcome

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.

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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 456: Josh Hawes Interview with Michael Covel on Trend Following Radio

Posted on by Michael Covel
Josh Hawes
Josh Hawes

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My guest today is Josh Hawes, the Risk Officer and Investment Manager of Hawking Alpha. He is a trend following trader now who started off at Goldman Sachs. Josh breaks apart the trading industry, highlighting many of the cons associated with the mutual fund space. Josh has always had a passion for math. He started looking at the performance of different funds within Goldman. As soon as he started to look at returns of some, he began to see a disconnect. They would judge themselves off “beating the index” but they were still losing massive amounts of money. They would also have access to CEO’s of top companies and still not be able to make money off of the information they would share. This is when he began to transition out of the company and turn to other forms of trading, not just long only.

The topic is Trend Following.

In this episode of Trend Following Radio:

  • Trading off fundamentals
  • Keeping up with the Jones’s
  • Smooth equity curve’s
  • Concept of an Index
  • Mutual fund industry
  • 10,000 hours
  • Arbitrage
  • High frequency trading

“Every trading system starts with an idea. The idea is a concept that describes some aspect of the way a particular market or all markets work.” – Hawking Alpha

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Tim Pickering: “Investments can be broken down into essentially two types: Convergent and Divergent”

Posted on by Michael Covel

Tim Pickering of Auspice Capital offers wisdom:

Investments can be broken down into essentially two types: Convergent and Divergent.

Convergent risk tasking strategies are characterized by many small gains but also occasional devastating losses. These strategies are generally based on market fundamentals and the human tendency for logical sense. The returns look a lot like the equity markets. Convergent strategies are comfortable for people because many small gains feed the human need for constant gratification (ex. Yield, making returns every month, quarter, year). Most traditional and alternative asset are convergent. See Chart.

Divergent strategies [like Trend Following] do something different. They are characterized by many small losses but also with occasional big wins. These strategies are generally based on a systematic, repeatable investment process that has no fundamental bias. They are agnostic to market direction. The returns look like paying option premium or time value before the hockey stick gain of a call option. The most common way to achieve this return stream is trend following (CTA / Managed Futures). Divergent strategies go against human need as they feel like a lot of small paper cuts before the payoff. They are hard to get your head around as we all want constant gratification.

But the real beauty of the 2 strategies is that the losses in one often get covered by the gains of the other. The power is using both. They are not only non-correlated, they are negatively correlated at critical times. Ask yourself – what is Divergent in my portfolio?

Great explanation of Trend Following.

Convergent v. Divergent
Convergent v. Divergent

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
• 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. 455: Ryan Holiday Interview with Michael Covel on Trend Following Radio

Posted on by Michael Covel
Ryan Holiday
Ryan Holiday

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My guest today is Ryan Holiday, an American author, public-relations strategist, bookstore owner and host of the podcast The Daily Stoic. He is a former director of marketing for American Apparel. Holiday is the author of several books and has written for Forbes, Fast Company, The Huffington Post, The Columbia Journalism Review, The Guardian, Thought Catalog, Medium.com, New York Observer, New York Times and Texas Monthly. Books he has authored have sold more than three million copies combined.

The topic is his book Ego Is the Enemy.

In this episode of Trend Following Radio:

  • Letting other people win
  • Being seen not heard
  • Only the paranoid survive
  • Dealing with failure
  • Dealing with success

“You control the effort that you put into the work, you don’t control the reception to the work.” – Ryan Holiday

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Trend-following hedge fund strategies lead performance in 2016

Posted on by Michael Covel

From FT.com:

“If you believe we are going to have a bear market, CTAs [aka trend following] will have a chance to make money in that environment, and in the meanwhile they offer non-correlated returns.”

And:

Such “systematic” funds [aka trend following], which surf trends using financial models and algorithms, do well whenever there is a clear direction for markets. Down markets are as good as uptrends, so long as they are clear, and in January and most of February, financial uncertainty proved profitable.

And:

Ewan Kirk, chief investment officer for Cantab Capital, said “while there is no such thing as a ‘typical’ systematic manager, many managers in our space have been short energies and long bonds since the beginning of the year”.

Full article. Making money in a Black Swan Market.

Leda Braga
Leda Braga’s Systematica, which oversees $10.2bn, returned 9.9 per cent through the end of February, fuelled by bets on fixed income and against energy and equities.

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.