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Ep. 389: Joey Yap Interview with Michael Covel on Trend Following Radio

Joey Yap
Joey Yap

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Today on Trend Following Radio Michael Covel has a conversation with Joey Yap, Feng Shui expert, founder of the Mastery Academy of Chinese Metaphysics and self-made entrepreneurial millionaire. Feng Shui, as Joey explains it, is “about how your environment supports you”. Further digging into the subject, Joey and Michael examine the world as a network of positive and negative energies.

After explaining some of the core principles of Feng Shui, Joey discuss how the practice has been “bastardized” by the West. Westerners believe it’s the items themselves that project energy – resulting in an entire trinket industry that has developed – when nothing could be further from the truth. The items exist merely for the energy to flow around because, as Joey explains, flow is everything.

Joey then goes on to discuss the myriad ways in which the tenets of Feng Shui apply to the business world. Think of a bustling office as a closed environment of continually crossing positive and negative energies. Collectively, this energy is called the “corporate culture.” But each individual environment is governed by a dominant energy, and that energy is determined by the company leaders. And, as you’d expect, an overall positive energy flowing throughout an environment will always produce better results. Many of the core principles seen in behavioral economics, trend following and Zen shine through in this episode, but from another perspective.

In this episode of Trend Following Radio:

  • Experts: get close to them and learn
  • You can’t predict the future, you can only see patterns
  • If you don’t like your destiny, go the other direction
  • Change your environment, change your life
  • Corporate culture: an energy determined by leaders
  • You don’t have to invent – fix something

“There are two kinds of people. People who make things complex, and people who simplify.” – Joey Yap

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Ep. 388: Logic Over Faith with Michael Covel on Trend Following Radio

Logic Over Faith with Michael Covel on Trend Following Radio
Logic Over Faith with Michael Covel on Trend Following Radio

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On today’s episode of Trend Following Radio Michael Covel opens the conversation by taking a look at the concept of faith, and how it has no place in the trading world. In trading, logic and reason trump faith. If you can’t “grow” up and use reason to gather information and form strategy, Michael notes, then you have no place at the “adult” table.

Next, Michael outlines core decision-making precepts. Sometimes making the right move means going against your instincts, and it’s at these times that you need to force yourself to make a decision – even if it means quitting. People tend to equate quitting with failure when the truth, as Michael points out, is that sometimes quitting is what keeps you in the game. This line of thinking is again linked to logic rather than faith – the erroneous faith that if you necessarily stick it out (i.e. a losing trade in the markets) success will follow.

Other topics covered in this episode touch on how financial advisors primarily exist to push mutual funds and buy and hold orthodoxy, why investing without a plan dooms you before you begin, and why embracing the challenge of how the world and investing really works makes you a smarter investor.

In this episode of Trend Following Radio:

  • Logic over faith
  • Financial advisors: there to give mutual fund advice
  • Adapting your strategy
  • How quitting can keep you in the game
  • Forcing yourself to make decisions
  • Risk and reward

“What I say is, at what price? If low interest rates were just that simple of a panacea, we would never have recessions. We would never have these crises, we would never have these panics.” – Carl Icahn

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Ep. 385: Paul Slovic Interview with Michael Covel on Trend Following Radio

Paul Slovic Interview with Michael Covel on Trend Following Radio
Paul Slovic

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This time on Trend Following Radio, Michael Covel talks with Paul Slovic. Paul is president of Decision Research and a professor of psychology at the University of Oregon, and today he talks with Michael about the science behind risk perception.

To demonstrate how people tend to conflate actual risk with their perceptions of risk, Michael and Paul discuss a topic that’s always been a hot button issue in the public consciousness, nuclear power. In the early days of this industry, people were rightfully concerned with the possible mismanagement of such a potentially dangerous technology – concerns seemingly crystallized by the partial meltdown at Three Mile Island in 1979. Similar concerns continue to be raised today, particularly in light of the Fukushima disaster of 2011. But as Paul explains, neither of these tragedies can completely outweigh the obvious benefits of nuclear power. It’s a case of risk perception to overcome the actual risk posed.

The conversation also focuses on the role of the media in influencing people’s decision-making processes. Why is it, you might ask, that the media spends so much more time pushing negative stories than positive ones? The answer, according to Paul, goes back to biology. It’s a survival mechanism in human beings that we’re affected far more by negative stimuli than positive stimuli. This makes sense when you consider the external dangers we’ve faced in our evolution. So today, we tend to harp on the bad things that happen while ignoring the good.

In this episode of Trend Following Radio:

  • The psychometric paradigm of risk perception
  • Balancing risk vs. reward
  • The concept of affect heuristics
  • How the media sways the public’s risk assessment
  • Fast vs. slow thinking
  • Risk in the context of decision making

“Bad is stronger than good. If something goes wrong in a system it decreases our trust in the management of that system more than when something goes right. Something goes right, it doesn’t really boost our trust and confidence. It’s the negative that outweighs the positive, and the negative is being conveyed to us much more frequently and forcefully through the media than the positive is.” – Paul Slovic

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Ep. 383: Lawrence McMillan Interview with Michael Covel on Trend Following Radio

Lawrence McMillan
Lawrence McMillan

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Today on Trend Following Radio Michael Covel talks with Lawrence McMillan of McMillan Analysis Corporation. The topic of discussion is options, their value in terms of overall strategy, and how their trading has evolved over the preceding decades.

The conversation opens with Lawrence talking about his days at historic Bell Labs – a research company founded in the 19th century by Alexander Graham Bell – and the initial difficulty in working with options due to their complicated nature and the level of technology required. Later, Michael asks Lawrence to talk about the CBOE Volatility Index (VIX) and how, since the subprime crisis of 2008, many are looking at the VIX as long-term insurance for the future. One of the problems with that strategy, as Lawrence points out, is that many people fail to take into account that VIX only measures market expectations for the next 30 days.

Also discussed today are leverage as a financial tool and the concept of the black swan – unforeseen events that have a major impact, but only rationalized after the fact. Lawrence brings decades of experience and wisdom, gain perspective.

In this episode of Trend Following Radio:

  • American vs. European-style options
  • The logic behind VIX
  • Leverage as a tool
  • Understanding puts and calls
  • Long and short selling
  • Examining the subprime mortgage crisis of 2008

“I’m not counting on disaster. I don’t want there to be disaster. I don’t want my house to burn down, but I do want insurance in case it does. That’s our basic strategy.” – Lawrence McMillan

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Ep. 379: John Casti Interview with Michael Covel on Trend Following Radio

John Casti
John Casti

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Today’s guest is prolific author, mathematician and entrepreneur John Casti. John talks with Michael Covel about social mood, and how ultimately the events that urge populations to move in one direction or another are largely unpredictable.

John discusses the concept of socionomics – the idea that the collective beliefs of a society about its future will influence the kinds of social events to occur in that future. And while these triggers, which John refers to as X-events, can’t be predicted, John explains that they can absolutely be prepared for by understanding the greater social context of the region.

As an example, John cites the so-called Arab Spring. As he points out, no one could have predicted the single event that moved millions in the Arab World to take to the streets in protest. But it wasn’t hard to see that the region had long been primed for something big. Charles Faulkner recommended John as a guest (even though he only knew his work). Good tip from Charles!

In this episode of Trend Following Radio:

  • The fundamentals of socionomics
  • The science of surprise
  • Understanding that social mood is time-dependent
  • How X-events can trigger mood reversals
  • Isolating the collective social belief
  • The mindset of “the crowd”

“So you’re gonna have a lot of small losers. But, hopefully, you have a few homeruns that pay for the losers and leave you something extra for your efforts.” – John Casti

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The Psychology of Losing

Feedback in:

Mike. Are you ever returning to San Diego? How is yoga and world travels? Here is a quote from a guy that has sold millions of books and truly just about sums up the masses and the psychology of losing: “If you made money in 2008, you did something wrong” from Ben Stein. Ok, thought you would get a kick out of it.

Joe C.

I used that quote to start my Little Book of Trading released summer 2011.

I’m in Asia now and the yoga is great!

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