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Tag: feedback

“It reminded me of another Singaporean anecdote…”

Posted on by Michael Covel

Feedback in:

Mike…

I loved your story about being recognized by a Singaporean cab driver. It reminded me of another Singaporean anecdote I thought you might appreciate.

I’ve been living in Bangkok for the last ten years and don’t really get out much. But I was in Singapore maybe four or five years ago on a brief visit with a friend who’s quite familiar with that city.

Knowing how much I love books, he took me to a gigantic book store. Place seemed like it was a block long. Easily ten times bigger than any bookstore I’ve ever been in. I had heard some very positive things about your trend following book from a 4X trader. So I walked right up to an employee at the bookstore and asked if they carried your Trend Following book. Guy went right to a computer and twenty seconds later his head pops up. “Yes sir. We have it here.”

And it was in my hands a few minutes later. As I recall, it was quite a walk from where we were in the store!

I don’t know the name of that store. But the next time you’re in Singapore, maybe Rogers knows!

Glad you’re digging Asia. It changes you. It’s all happening here. North America and Europe are comatose in comparison. I don’t think I could live there anymore, anyway. Too many rules!

Appreciate all your contributions. Even if you totally walked away from the podcast, don’t worry about it. You’ve already done plenty. Take care of yourself first with whatever you need and the rest will take care of itself.

Peace out…
[Name]

Thanks!

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Where is the Exit Strategy with Buy and Hold?

Posted on by Michael Covel

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Michael,

I’ve been listening to your podcast and really enjoy it. Thank you for bringing different perspectives on investing, and for all the trend followers you interview who are candid about their processes, advantages, and disadvantages. I really enjoy all the interviews, especially those with Jerry Parker.

I’ve got a question: You disparage buy and hold, but is it the same thing as trend following? Charles Dow (in my mind) is the inventor of trend following. He defined primary trends, that could not be manipulated, secondary trends that could be manipulated, and shorter term trends (daily) that are generally random.

When you think about it, buy and hold (in equities) is just a bet on the longest of primary trends, namely, that the market goes up and down, but it goes up more than it goes down. It is divorced from any fundamental analysis, and has a clear entry and exit points: buy when you have funds throughout your working career and sell when you need money for retirement.

Sure, it has more volatility and drawdowns than something like the turtle strategy, but it has bigger gains at times too – trend following can’t match the gains in large bull markets. Thus, a buy and hold person subjects themselves to more volatility and drawdowns to follow a long-term (and hopefully more lucrative) trend, while a Turtle uses systematic trading rules to trade on the shorter – akin to Dow’s “secondary” – trends to reduce volatility and drawdowns, sometimes at the loss of gain but likely with superior preservation of capital.

The only difference is the length of trend one wants to follow. Otherwise, they’re effectively the same. Entry and exit rules, no fundamentals, seeking to ride a trend.

Agree?

Thanks for keeping the trend following torch burning. Keep up the good work!

Cheers,
[Name]

Where is the exit strategy with buy hold?

Pretty big issue to leave out if making the comparison to trend following.

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“Nate Silver was by far the most accurate forecaster in the 2016 election”

Posted on by Michael Covel

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Nate Silver [my article that generated the feedback] was by far the most accurate forecaster in the 2016 election.

While most modelers pegged Clinton’s chances at greater than 90% (in some cases 99%), Silver had Trump as a 35.2% chance few days before the election. That was pretty darn good handicapping.

You are confusing prediction with handicapping, which is surprising given how much you have talked about poker and probabilities and black swans. If I were grading Nate Silver, I would give him an A+, because that is the grade he earned. I even heard him talk about the possibility of systemic failure in polling and got ridiculed.

What’s the point of his kind of political analysis? The usefulness? There is none. The vast majority of people (who know of him) think he has some predictive up or down power. That’s what he wants (likes), even if not accurate. Then people in the weeds can show up to say “oh no you missed his point, it’s his great handicapping skill.” Yeah, I see how clever this mathturbation is.

How can you move forward immediately to Trend Following profits? My books and my Flagship Course and Systems are trusted options by clients in 70+ countries.

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Trend Following is for beginners, students and pros in all countries. This is not day trading 5-minute bars, prediction or analyzing fundamentals–it’s Trend Following.

Noah Smith: Troll Following Troll

Posted on by Michael Covel

Caught this write-up from Nassim Nicholas Taleb. That name sounds familiar. This same guy Taleb rips, I also dealt with him a few years back over his severely misinformed take on trend following. I responded on my podcast here. More for Noah Smith. Read more about Nassim Nicholas Taleb quotes.

How can you move forward immediately to Trend Following profits? My books and my Flagship Course and Systems are trusted options by clients in 70+ countries.

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Trend Following is for beginners, students and pros in all countries. This is not day trading 5-minute bars, prediction or analyzing fundamentals–it’s Trend Following.

“Best back to back shows you’ve put on…”

Posted on by Michael Covel

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For sake of feedback–the last two episodes of the podcast (525, 526) have been awesome. Possibly the best back to back shows you’ve put on….and I’ve heard em all. Hopefully I’m one of many who has this sentiment. Keep up the great content.

Thanks!

How can you move forward immediately to Trend Following profits? My books and my Flagship Course and Systems are trusted options by clients in 70+ countries.

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Trend Following is for beginners, students and pros in all countries. This is not day trading 5-minute bars, prediction or analyzing fundamentals–it’s Trend Following.

Nate Silver and the Problem of Prediction

Posted on by Michael Covel

Check out my new piece on “Nate Silver and the Problem of Prediction” over at the Observer:

Wall Street always overflows with Holy Grails—those predictions, strategies, secret formulas, and genius interpretations that promise otherworldly knowledge and riches if you just trust. They are most often delivered in the investment world through a black box—a closed system where the inputs and outputs are known, but the internal analytical workings are left top secret, only for the high priests’ consumption. Black box positioning goes far beyond markets, however. It is not surprising in a modern, interconnected age that when you take a very smart guy, rows of computers, proprietary formulas, and code that only the one smart guy can see, and then add a string of successful forecasts, boom—you end up with a nerdy, made-for-social-media superstar who suddenly makes prediction cool for the proletariat.

Nate Silver is that guy. Consider… [Read whole article]

Nate Silver
Nate Silver

How can you move forward immediately to Trend Following profits? My books and my Flagship Course and Systems are trusted options by clients in 70+ countries.

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Trend Following is for beginners, students and pros in all countries. This is not day trading 5-minute bars, prediction or analyzing fundamentals–it’s Trend Following.

Volatility as the Measure of Risk; Not Wise

Posted on by Michael Covel

Feedback in:

Greetings Mr. Covel,

During one of your recent podcasts, you and Wesley Gray were discussing how the academic community considers the volatility of an asset’s price to be its risk while you and Gray consider the permanent loss of the capital invested in an asset to be its risk. Many years ago, I read an interview of Harry Markowitz where he stated that he used volatility to measure the risk of an asset because “it made the math easy.” I was completely shocked. The father of Modern Portfolio Theory chose his measure of risk based on its mathematical convenience.

I searched for the interview again because I wanted to send a link of it to you so that you could read it for yourself. Unfortunately, I could not find the interview but I still remember the feeling of complete shock that I felt when I read that Markowitz chose volatility as the measure of risk because “it made the math easy.”

What is your understanding of how volatility became the primary measure of risk in finance?

Regards,
[Name]

I don’t believe Markowitz believed that as you state, but rather was designing for theory. As you might recall he was surprised that modern finance was built off his work. He wrote the PhD paper, and others extrapolated his work into something else. Markowitz, himself, stated that “semi-variance is the more plausible measure of risk.”

But I have also see this:

“I would’ve created CAPM around semi-variance, but no one would have understood the math and I wouldn’t have won Nobel Prize…” –Harry Markowitz

Harry Markowitz
Harry Markowitz

How can you move forward immediately to Trend Following profits? My books and my Flagship Course and Systems are trusted options by clients in 70+ countries.

Also jump in:

• Trend Following Podcast Guests
• Frequently Asked Questions
• Performance
• Research
• Markets to Trade
• Crisis Times
• Trading Technology
• About Us

Trend Following is for beginners, students and pros in all countries. This is not day trading 5-minute bars, prediction or analyzing fundamentals–it’s Trend Following.