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Ep. 478: Desert Island Prices with Michael Covel on Trend Following Radio

Desert Island Prices with Michael Covel on Trend Following Radio
Desert Island Prices with Michael Covel on Trend Following Radio

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“We all avoid reality non-stop. We don’t know where it starts and where it ends. We don’t like to look at facts. We don’t like new information. We have biases that are non-stop.” Michael goes down a reality tour of market prices today. He talks about past prices in the market and the present all time highs we are experiencing right now. He makes listeners think about prices and how they move rather than voices at Bloomberg and CNBC. Michael says, “Just focus on price action and look at markets from a ‘desert island approach’.” Trading price is the only information you can trust. He gives examples from the past including the dot-com bubble, housing crisis, 1989 NIKKEI crash, Gold in the 1970’s, and possible current bubbles.

Michael emphasizes to put away all the noise and just look at the numbers. He is not saying when there will be the next market crash, just that there will be another one. Historically we are due for a significant decline. What are the odds that the S&P losses 50%? If you are going to retire soon, or are in retirement and the S&P drops, how will your life be? Will you be able to ride it out? Do you have an alternative strategy? Big questions.

In this episode of Trend Following Radio:

  • Black Swans
  • Anti-fragile
  • Market Crashes
  • Price action analysis
  • Shutting out the noise
  • Island trading
  • Price distribution
  • No free lunch

Mentions & Resources:

Listen to this episode:

Making Money on the Desert Island

Some news can be interesting and entertaining. The majority of news completely wastes your time. But all news does have something in common… It will not help with your trading. Consider the following:

Mike, did you see this? I know you do not like following the news, and I heed your comments you made previously on “it’s in the price”, but if markets such as currencies are zero sum games, if certain parties are colluding to rip money out of the market illegally, then doesn’t this mean that the markets are not zero sum, particularly when adding to the cost of transacting?

Kind regards,
Nick

I don’t understand what this has to do with trading price? Imagine you are on a desert island and you have no news…except price data. Now what? You can make money on that desert island.

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