Subscribe now and watch my free trend following VIDEO.

Ep. 502: Efficient Market Thinking with Michael Covel on Trend Following Radio

Efficient Market Thinking with Michael Covel on Trend Following Radio
Efficient Market Thinking with Michael Covel on Trend Following Radio

Subscribe to Trend Following Radio on iTunes

Are markets efficient? Can you beat the market? Is the market the right price? These are questions Michael answers today. Michael brings in Benoit Mandelbrot to help explain the efficient market hypothesis and where we have all gone wrong in our thinking over the years. Next, he goes to Richard Feynman to explain the scientific method and how one goes about comparing and contrasting. Lastly, Michael lets Gerd Gigerenzer elaborate on the concept of heuristics.

In this episode of Trend Following Radio:

  • Efficient market hypothesis
  • Scientific method
  • What is a heuristic?
  • The market price
  • What if money was no object?

Mentions & Resources:

Listen to this episode:

The Quiz Daniel Kahneman Wants You to Fail

From Vanity Fair:

Plainly put, a “heuristic” is a tool we use to simplify the decision-making process. For example, if you’re driving in the United Kingdom for the first time and don’t know the traffic laws, heuristics might help you correctly assume that a green light means go and a red light means stop. By applying what you already know about driving in America, you won’t have to waste hours reading up on England’s traffic laws. However, that same heuristic could prove harmful if you start driving in the right-hand lane, against traffic. Research psychologist Daniel Kahneman–Nobel Prize winner, and the subject of Michael Lewis’s article in this month’s issue, “The King of Human Error”–spent a great part of his life’s work discovering and cataloging the heuristics people use.

Take the quiz.

Note: Oh, yes, trend following is all about heuristics.

Learn to be a trend following trader.
Sign up free today.