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John Kenneth Galbraith on Euphoric Times

One:

John Kenneth Galbraith noting that in euphoric times, “past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.”

Two:

Here’s a great observation on the subject from Berkshire-Hathaway’s 2010 letter to shareholders: We agree with investment writer Ray DeVoe’s observation, “More money has been lost reaching for yield than at the point of a gun.”

Shout to Howard Marks for the finds.

Ep. 536: The Most Important Thing with Michael Covel on Trend Following Radio

The Most Important Thing with Michael Covel on Trend Following Radio
The Most Important Thing with Michael Covel on Trend Following Radio

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Howard Marks is a billionaire value investor with four decades of success. Although a value investor, his thought process mirrors trend following in many aspects. Michael plays an excerpt from Howard covering his thoughts on price, the lack of value in forecasting, efficient markets, surviving market randomness, and high yield bonds. Trend following and value investing may be two different worlds, however, there is a lot of overlap in how Howard trades and how trend followers trade.

In this episode of Trend Following Radio:

  • Price action
  • Forecasting
  • Value investing
  • How to think about investing
  • Black swans

“You should not act as though the things that should happen will happen.” – Howard Marks

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Ep. 398: Investing and Sports Parallels with Michael Covel on Trend Following Radio

Investing and Sports Parallels with Michael Covel on Trend Following Radio
Investing and Sports Parallels with Michael Covel on Trend Following Radio

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On today’s episode of Trend Following Radio Michael Covel talks critical thinking and behavioral finance. He begins with an article excerpt about locker room etiquette and loops around to the parallels between sports psychology and trading psychology. Michael argues that critical thinking has gone by the way side in the general populace and if you have an alternate way of thinking, one that is not with the masses, then you have a leg up.

Digging in Michael explores excerpts from a paper by Howard Marks titled, “Inspiration from the World of Sports.” The paper outlines the consistencies between sports and trading. Michael discusses bullet points from the article; 1. Trading and sports are competitive. Some succeed and some fail, and the distinction is clear. 2. In the long term the better returns go to superior investors. 3. An investment career can feel like a basketball or football game with an unlimited number of quarters.

Michael also explores from Howard Marks the career of Yogi Berra, his achievements and his baseball philosophy. Howard points out how consistent Yogi was in his performance and how that is exactly what he likes to see in his investing. Howard then compares Yogi Berra and Reggie Jackson (Reggie was far less consistent then Yogi). Howard says that he would rather have returns like Yogi, nice and consistent. Michael argues the case for trading like Reggie’s baseball performance. He says the Reggie Jackson home run model is more in line with venture capital, film financing, the MIT blackjack team, and trend following trading, for example. The point being that home runs will pay for the strike outs. Michael ends the podcast by pointing out that Reggie and Yogi are ultimately in the same game, but it is up to you to decide what style of trading you want.

In this episode of Trend Following Radio:

  • Consistency vs. the home run
  • Quarterly performance
  • Trend following performance
  • Emotion in human nature
  • Irrationality in investing

“The market is made up of people and to beat it you have to know them as well as you know the thing you are considering investing in.” – Howard Marks

“The future ain’t what it use to be” – Yogi Berra

“Consistency and minimization of error has always ranked high among my priorities and they still do.” – Howard Marks

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