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Ep. 452: The Seduction of Fundamentals with Michael Covel on Trend Following Radio

The Seduction of Fundamentals with Michael Covel on Trend Following Radio
The Seduction of Fundamentals with Michael Covel on Trend Following Radio

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Michael Covel breaks apart Bill Ackman and Valeant Pharmaceuticals. He reads from a MarketWatch article that highlights documents that came from a Senate committee investigating the Valeant scandal, and the various reactions of top people involved. Michael also outlines and comments on various interchanges between Bill Ackman, Warren Buffett, Charlie Munger, and news outlets.

This episode is a “behind the curtain look” at billionaire traders and the seduction of fundamentals.

Just a little attitude in this episode…

In this episode of Trend Following Radio:

  • Fundamentals
  • Valeant vs. Enron
  • The Deep State
  • Fixing the media
  • Trading off price

“You have to fight back with intelligence. You have to fight back with smarts. You have to fight back with a good strategy. You can’t just sit there and accept what the system gives you because the system is going to give you exactly what it wants to give you.” – Michael Covel

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Ep. 438: The Big Short Never Ends with Michael Covel on Trend Following Radio

The Big Short Never Ends with Michael Covel on Trend Following Radio
The Big Short Never Ends with Michael Covel on Trend Following Radio

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Today on Trend Following Radio Michael Covel discusses scams and what can be learned from them. Any scam that takes place today, we have seen before. In the early 2000’s Enron was at the height of its game. Turns out they had a fake trading floor set up just to convince Wall Street they were real. At Enron’s peak, their company was trading at $90 a share. When it crashed, their stock traded around $0.50 a share. And that story brings us up to current day with the latest Enron.

Michael continues to read more feedback, but this time from a listener of his podcast seguing him into the current blowup of the pharmaceutical company, Valeant. Valeant’s share prices went from $250 to $30 in short order. Even as the stock was crashing people were buying the hype and false fundamental information. Michael reads from sources such as Jim Cramer, Morgan Stanley, and Valeant themselves. He then connects articles from Enron’s press releases back in 2001 before their crash and press releases from Valeant in 2016. Quotes from both companies CEO’s have strikingly similar comments on their companies as events led up to their falling apart.

Bottom line, if you are in a stock that goes from $250 to $30…You screwed up. There is no reason for that except you. When the numbers say exit, you exit. Ego must be left out of your trading. Michael ends with excerpts by Steve Sjuggerud. Check your ego at the door, have a stop loss, and stick to your plan.

In this episode of Trend Following Radio:

  • Ponzi schemes and scams
  • The Enron scandal
  • Valeant meltdown
  • Ego in trading

“Limit the impact of your bad decisions to small loses. Limit your downside and don’t ever make an excuse that you are smarter in ‘just this one trade.’ There is no excuse.” – Dr. Steve Sjuggerud

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What Do Blackberry & Enron Have in Common?

Feedback on the class action law suit against Blackberry:

Mike, a class action lawsuit has been launched in New York against BlackBerry and its top two executives for misleading investors over the last 13 months. Anyone who looks at the chart will realize that none of the plaintiffs are trend followers. In fact, if you had been trading BlackBerry for the last eight years as a trend follower, you’d be sending them a bouquet rather than suing them.

Regards,
DG

Thanks. Great point. Reminds me of Enron.

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