Trend Following in China with Michael Covel on Trend Following Radio
Please enjoy my monologue The Trends of China with Michael Covel on Trend Following Radio. This episode may also include great outside guests from my archive.
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Hey there Mike. Today’s market moves (The collapse of Gold in particular) reminded me of a disagreement I recently had with a truck driver I happened to cross paths with. We ended up discussing the markets and he mentioned that he happened to recently come into a ton of money. He starts telling me all the reasons why the metals is the place to go. I never revealed to him that I have experience as a trader and I happen to watch many many markets on a daily basis. I knew that what he was saying was nonsense because I knew by heart the approximate price of Gold and that it was in a steady downtrend. When I explained this to him, he rudely corrected me and told me that actually Silver is the place to put your money. I then informed him that Silver and Gold are highly correlated markets and that the two move almost in tandem. When Gold goes down, Silver usually goes with it. He then rudely corrected me again, adding in that “he has actually had schooling on these matters” thinking that that would shut me up because he “knows what he’s talking about”. I then told him that if he has had financially schooling then he should well know that the two markets are highly correlated and that any school that teaches fundamental investing will teach you that the long term [buy and hold] track record for the metals is horrific. I then told him that if I were to pull up a chart of Silver and another of Gold and put them side by side covering the names and prices, I bet he couldn’t even tell me which was which because they look nearly identical. Anyway Mike I just wanted to share that story with you to illustrate the difference between the fundamentalist mentality and mentality of traders and even aspiring traders. The fundamentalist trucker is still thinking about the meteoric rise in the metals in the past and is now riding it into the dirt. Traders on the other hand already made our money on the rise, and now we are all short and trying to determine whether we should cover on today’s break or move our stop down and lock in some profits or add to our current positions. When will the fundamentalists learn Mike?
My guest today is Jerry Parker. In 1983, Parker was accepted into the Turtle Program, a select investment training program developed by successful Chicago portfolio manager Richard Dennis. He appears in Covel’s “The Complete TurtleTrader” and has been the most successful TurtleTrader. Parker founded Chesapeake Capital Corporation, a global investment manager headquartered in Richmond, Virginia, in 1988.
The topic is Trend Following.
In this episode of Trend Following Radio we discuss:
Mistake of combining different strategies with trend following, and the importance of having a concentrated strategy that you can rely on
How discretionary moves can get in the way of your system, and “systematized discretion”
The psychological effect of following a trend following strategy for decades
The idea of going for positive expected value over what’s least risky
Why Parker doesn’t like to use the term “managed futures”, and why it doesn’t really tell the story of trend followers
Trend followers performing well at different points in time compared to long-only
Using trend following as another strategy for investors who only invest through a long-only value-based system
The importance of not letting your views on politics and society influence your trading, and maintaining a systematic and disciplined approach
The growth of news media since 1984, information overflow, limiting your variables, and using price as your primary indicator
How Parker has learned over the years to deal with drawdowns, loving your losses, and the importance the Turtle program played in his education on drawdowns
Why governments are the ultimate counter-trend traders
Why buy and hold is not a good place to be even if people are saying it’s turned around
Parker’s stock-only trend following program, and why the diversified program will do better than the stock-only system
Leverage as a tool
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Distraction v. Focus with Michael Covel on Trend Following Radio
Please enjoy my monologue Distraction v. Focus with Michael Covel on Trend Following Radio. This episode may also include great outside guests from my archive.
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Be Water My Friend with Michael Covel on Trend Following Radio
Please enjoy my monologue Be Water My Friend with Michael Covel on Trend Following Radio. This episode may also include great outside guests from my archive.
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Personal Responsibility with Michael Covel on Trend Following Radio
Please enjoy my monologue Personal Responsibility with Michael Covel on Trend Following Radio. This episode may also include great outside guests from my archive.
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Hong Kong, Tokyo and Beyond with Michael Covel on Trend Following Radio
Please enjoy my monologue Hong Kong, Tokyo and Beyond with Michael Covel on Trend Following Radio. This episode may also include great outside guests from my archive.
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