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Warren Buffett Reaps $10 Billion From Crisis-Era Investments

A comment from Warren Buffett:

“In terms of simple profitability, an average investor could have done just as well investing in the stock market if they bought during the panic period. You make your best buys when people are overwhelmingly fearful.

Without bailouts Buffett’s firm doesn’t survive.

Ep. 145: Bubble Pop with Michael Covel on Trend Following Radio

Bubble Pop with Michael Covel on Trend Following Radio
Bubble Pop with Michael Covel on Trend Following Radio

Michael Covel’s bubble is about to burst when it comes to arguments that appeal to emotion; logical fallacies. Straw men, appeals to authority, anecdotal arguments, and the like have all been on the rise. Covel gives some examples: Where is the proof and track records for predictive technical analysis? Trend following, which is a reactive strategy, has a mountain of evidence. A ton of performance data that gives an idea of how many traders across decades, markets, and economic climates both up and down, made money–and it’s on file with the CFTC. There are a lot of people out there pushing this predictive TA. Where is the evidence? Yet, they came out swinging for Covel with the logical fallacies. There just aren’t decades of track records like trend following. Another commenter tied trend following to his religion, even though trend following doesn’t care about your religion–it’s agnostic. Trend following is only about the rules, the process. Covel also talks about the phrase “active trader”. Covel moves on to a clip from Pink Floyd frontman Roger Waters, discussing an argument over the song “Comfortably Numb” to illustrate his point. Next, Covel plays a clips from Ed Seykota and a clip from TED about Chinese one-party government. If you’re listening, the threads connect.

Listen to this episode:

Think About the Random Nature of Trends

Trends either up or down are random. You never know when one will hit, but you have to be ready for their unexpected arrival. Here are some recent trend examples:

Chart 1
Chart 2
Chart 3
Chart 4

However, it’s not about one winning chart or two or three. It’s about a portfolio of markets in the context of a complete trend following system. And yes there will be losing charts too.

Financial Literacy: Not on the Horizon

Just saw this headline and article from Associated Press:

New financial rules might not prevent next crisis. Sweeping financial overhaul will change many rules, but loopholes could allow another crisis.

When you read that you are left with one of two choices:

1. The author(s) have no idea what they are talking about.
2. The author(s) are purposefully not telling the truth.

Bubbles (read: “crisis”) are a part of human condition. They will never be eliminated. Government rules will NEVER keep human beings from building financial bubbles. Why is this such a simple concept to outline, but seemingly beyond the comprehension of all journalists?

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