Michael takes the podcast back to the 1960’s with a talk from Milton Friedman. Throughout the presentation Friedman outlines the role of government in a free society. He emphasizes the different variations of “free”. The first is freedom with the absence of coercion. The second is free in the sense of a “free lunch”. They have two very different very different meanings and Friedman goes in depth on the two.
Michael wraps the podcast up summarizing Friedman’s talk with a slightly more pessimistic view. Michael thinks that politics and government will never be straightened out. He loves Friedman’s thinking but has a hard time thinking that human nature will ever change. “I have a hard time imagining, with the irrationality of human nature, that anything will ever change. As long as we keep dying and keep replenishing with a whole new group of useful idiots and sheep…we can have our fantastic view of change, but…” Michael stresses that the key thing that’s important is building capital and the only person you can count on is yourself.
In this episode of Trend Following Radio:
Unanimity in government vs. Majority rule
Principles vs. Expedients
The meaning of property
Responsible individuals vs. Irresponsible individuals
Freedom of speech
Government failure on a large scale
3rd party benefits for society
Government failure vs. Market failure
“With a little market and a free enterprise sector it is hard to do good. But by the same token it is hard to do evil. In a society of imperfect human beings, with the experience we have had, it is worth paying a big price. Reducing the chances of doing good in order to avoid the chances of doing evil especially when one mans good is another mans evil.” – Milton Friedman
Dear Mr. Covel, My name is [Name] and I just finished reading “The Complete TurtleTrader” for the second time. I recently graduated college as a psychology major but I am determined to work in the finance/investment world. Therefore, two quotes from page 15 and 16 really spoke to me:
“I think it’s far more important to know what Freud thinks about death wishes than what Milton Friedman thinks about deficit spending.” “Go down to Wall Street today after work with the hot-shot traders all earning $500,000 a year at the big banks and you’ll find very few who talk about Freud being the ticket to making millions.”
I’m writing this email to get your advice. I’ve applied to many big investment firms and haven’t even gotten a call back. I’ve even applied to Vanguard as a lowly Client Relationship specialist just to get my foot in the door. I did get a call back from them, but it’s been two months.
How can I secure the career I desire? It seems as if nobody recognizes the importance of psychology in finance. I’ve read well over 100 investment books in the past two years, I’ve beaten the market and I’ve even started an investment/personal finance website. I’ve included this in my cover letters and there’s STILL nothing. Right now I plan to go at it on my own and take my Series 65 soon, but I wonder if there’s a better way.
Because your work really affected me and it seems as if you (and Richard Dennis) understand how I feel, what should I do?
Thanks a lot. I appreciate your time, keep up the amazing work!
But you missed a big issue. The role of entrepreneur in investing, trading. Trading has a few stories of working for someone else, but the real way to freedom and success in the space is DIY. I would recommend a non-trading book: Linchpin by Seth Godin. 50 pages in I suspect you might see the flaw in your pursuit.
As America approaches Thanksgiving this week Michael Covel is feeling reflective. He plays a speech by author and philosopher Alan Watts asking, “What would you do with your life if money was no object?” Covel shows you how you can make money, but asks: What will you do with it once you have it? It’s about freedom, it’s about finding options. It’s not just about protecting it once you have it. So once you have the money you need what are you going to do with it? Covel goes on to discuss the importance of making something of yourself; of not sitting there and completing the dry obligations of the day. You need a shake-up in your life. It’s time to find something different. Next, Covel plays a talk by author and blogger Seth Godin. Covel riffs off Godin’s Q&A session noting the importance of finding something you truly feel passionate about, but knowing that it might not necessarily mean you’ll be the next Apple. The important thing is to start now; don’t wait until you finally realize the industrial revolution is over. You don’t have to have a plan–just put yourself into motion. That’s what Covel did: Start with your passion, and figure out how to pay the bills around that. Whether it’s investing, building a business, entrepreneurship, or anything else (like trend following). Godin is great at explaining that accepted systems are dead. You have to create and use your own microphone to get your message out. Covel also discusses resistance, being able to survive to play the next hand, the importance of bet size, and diversity in your betting. Don’t become emotionally invested in one idea; you might have to adjust within the place that you love. Next, Covel talks about a recent experience he had with government bureaucracy with regard to an international deal and how his experience might hint at future ills.
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