Please enjoy my monologue Correlation with Michael Covel on Trend Following Radio. This episode may also include great outside guests from my archive.
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Dear Terry and Mike,
I just heard the interview the two of you did on Mike’s show, and I really enjoyed it. I’ve known Terry for many years not only because he was a guest on my show in 2011, but also because he was kind enough to endorse my recent book about chess and investing, Rich As A King: How the Wisdom of Chess Can Make You a Grandmaster of Investing. And I know Mike because we had a great conversation a little while back on his show when he interviewed both me and my co-author, Susan Polgar.
I wanted to write to the two of you to say thanks not only because I enjoyed the interview, but because one of the stories that came up reminded me of something that happened to me when I was young and I thought you would get a kick out of it.
When I was in high school and my two older brothers were at Princeton, we decided during winter break that we would use our new Apple computer to write a program to predict the stock market. We thought we were pretty clever and we stayed up late at night programming, watching Star Trek, and going out for midnight runs. We didn’t know how to access data easily in those days, so we went to the library and looked up on microfiche a year’s worth of daily closing values of the Dow Jones Industrial Average.
For weeks and weeks we toiled over our project until finally we figured out an algorithm that if we invested in a certain way, based on our historical review, we would have winning trades about 55% of the time. We realized that advantage, especially if leveraged using margin, could lead to billion-dollar success. Thrilled with our brilliance, we went to bed and dreamed about our future success. Two of us did at least. My oldest brother David, now a professor of aeronautical engineering and the guy who originally planned the mission to crash a satellite on the moon to detect water, stayed up for a few more hours.
Crawling through every line of our code, he eventually realized that we were suffering from information leak, including the next day’s market close in our predictions. So much for prophetic algorithms!
I enjoyed hearing Terry tell his story because it made me think of what happened to my brothers and me 30 years ago. And I love the way that Mike does the interviews because he really asks excellent questions and helps his guests shine.
Finally, Terry, I should thank you (as thousands of investment advisers should) for all the work that you have done because it has helped me guide my clients to handle their portfolios responsibly. I tell them things like, “There’s this professor out in California who did some fantastic research and based on his studies, Mr. Client, I don’t think you should try to trade your own account.”
All the best,
Doug
Thanks!
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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.
My guest today is Nigol Koulajian, the Founder and Chief Investment Officer of Quest Partners LLC. He has been designing and trading short-term and long-term technical systems for over 22 years.
The topic is Trend Following.
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Very stimulating to hear [listen] an “original Turtle” still thrilled and verifying the TF he learned in 1983. Like Jerry Parker, as I read your books, validated in your course, I believed it “hook, line, and sinker.” The rest is hocus pocus, smoke and mirrors. Been there, done that.
Thanks,
[Name]
Thanks!
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.
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Listener: Thanks for your response. I am a great fan of trend following. As [name] always says, “The trend is your friend.” I know nothing about other trend following day traders. What I do know is that I am getting a tremendously high percentage return. It works with any security, but I use only the DOW 30 stocks. I tell all my acquaintances that all they need to know is that 50% is the best results we can get because 51% is a sure thing. If we had those odds in Vegas, we would own every casino there. I developed my own strategy of 2×1. Meaning I follow it foe two periods and then hold it for one period. Why 2×1?, because 50% is the best odds we can get. If you want any further clarification I would glad to detail it. Thanks again.
Covel: You know nothing about others? There should be others, right?
Listener: How would I know about others? I know only what I am doing. I am not concerned about others. Should I be? I do know that I am getting a higher percentage than any other day trader. Is that not enough? Being concerned about others would take my thoughts off of my strategy. Are there others getting the return I am getting? I doubt it.
Covel: How do I know about other long term trend followers and their performance records across my books?
Also consider:
American virologist David Baltimore, who won the Nobel Prize for Medicine in 1975 for his work on the genetic mechanisms of viruses, once told me that over the years (and especially while he was president of CalTech) he had received many manuscripts claiming to have solved some great scientific problem or to have overthrown the existing scientific paradigm to provide some grand theory of everything. Most prominent scientists have drawers full of similar submissions, almost always from people who work alone and outside of the scientific community. Unfortunately, none of these offerings has done anything remotely close to what was claimed, and Dr. Baltimore offered some fascinating insight into why he thinks that’s so. At its best, he noted, good science is a collaborative, community effort. On the other hand, crackpots work alone (source).
That doesn’t mean you are a crackpot, but you should be wondering where everyone else is in the day trading trend following game.
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.
My guest today is Terrance Odean, the Rudd Family Foundation Professor and Chair of the Finance Group at the Haas School of Business, University of California, Berkeley. Odean has extensively researched into the empirical data on active trading. He is very well-known for his work in behavioral finance and is once of the early pioneers.
The topic is his extensive research into the empirical data on active trading.
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My guest today is Robert Seawright, the Chief Investment & Information Officer for Madison Avenue Securities, a boutique broker-dealer and investment advisory firm headquartered in San Diego, California. Seawright is also a columnist for Research magazine, a Contributing Editor at Portfolioist as well as a contributor to the Financial Times, The Big Picture, The Wall Street Journal’s MarketWatch, Pragmatic Capitalism, and ThinkAdvisor.
The topic is his blog A New Kind Of Investment Outlook.
In this episode of Trend Following Radio we discuss:
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