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Ep. 371: Alexander Ineichen Interview with Michael Covel on Trend Following Radio

Alexander Ineichen
Alexander Ineichen

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My guest today is Alexander Ineichen, the founder of Ineichen Research and Management AG, an independent research firm established in October 2009 focusing on investment themes related to nowcasting and risk management. Alexander started his financial career in derivatives brokerage and origination of risk management products at Swiss Bank Corporation in 1988.

The topics are his books Absolute Returns: The Risk and Opportunities of Hedge Fund Investing and Asymmetric Returns: The Future of Active Asset Management.

In this episode of Trend Following Radio we discuss:

  • Seeing through the market forecasting flash
  • The importance of “check box” methodology
  • Simplification as sophistication
  • The concept of nowcasting
  • Understanding the whole, so you know what can be eliminated
  • Learning to watch for trend reversals

“If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.” – George Soros

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The Truth: A Two-Edged Sword

The truth is, almost everything about superior investing is a two-edged sword:

-If you invest, you will lose money if the market declines.
-If you don’t invest, you will miss out on gains if the market rises.

-Market timing will add value if it can be done right.
-Buy-and-hold will produce better results if timing can’t be done right.

-Aggressiveness will help when the market rises but hurt when it falls.
-Defensiveness will help when the market falls but hurt when it rises.

-If you concentrate your portfolio, your mistakes will kill you.
-If you diversify, the payoff from your successes will be diminished.

-If you employ leverage, your successes will be magnified.
-If you employ leverage, your mistakes will be magnified.

HT Howard Marks.

More on stretching the truth.


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Should You Invest in Biblical Finance such as Suggested by Dave Ramsey

An excerpt:

Ramsey is overtly religious, and his for-profit Financial Peace University is billed as “a biblically based curriculum that teaches people how to handle money God’s ways.”

Found this intro:

Please don’t add your religious insights to your investing insights. Ramsey is wise to talk of cutting up your credit cards, but biblical finance such as outlined in the Dave Ramsey Five Foundations, is not the wise path.

Dave Ramsey Photograph
Dave Ramsey preaching the 5 Foundations of finance.

For a more scientific approach to investing and improving your financial circumstances take a look at my books.


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.

Authority v. Tradition Is Central to Your Speculative Decisions

“Because we’ve always done it that way.”

Those are the words of someone likely to lose big–soon. Authority is not a wise foundation for speculative moneymaking decisions. Consider:

Appeal to authority is bad, but appeal to tradition is even worse. Experts aren’t infallible, but at least expertise is usually hard-won and retains some applicability over time. By contrast, tradition is often totally arbitrary or based on reasons that retain no relevance whatsoever. Also, an expert can issue a correction but tradition remains immutable and sacred (source: Jeff Darcy).

I would argue that almost all fundamental style investing falls into a category of tradition. Very few look for an alternative such as trend following. They figure that since it appears that everyone has invested or traded a certain way–that it must be the only way. They forget to dig deeper and forget to look for the truth behind why investing/trading works. Always searching for the “why?” is part of my February 25th presentation in Tokyo.


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.

The Power of Habit Investments

From zenhabits:

How to Create Habit Investments: It’s a fairly simple process that you can repeat with various types of habit investments:

• Pick something desirable. If you repeatedly do this activity, what will it grow into? Is that what you want?
• Do just a minute or two of it. You can’t build it all up in the next few days. That’s a good recipe for failure. Just do 1-2 minutes of it today. Smile as you do it.
• Set a daily reminder. Let’s say you want to do it every day at about 6:30 a.m. Set a reminder for that time, and make it a priority to do it each day, just for a minute or two.
• Watch it grow. If you just do it repeatedly, it will grow. Don’t force it. Keep the repeated activity as small as possible for as long as you can if you want it to grow (it sounds paradoxical, but it works).

Perfect thinking for a new trend follower.


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.

Michael Covel Investing Podcast #2 on iTunes

Rank will ebb and flow, but I will take #2!

Another screenshot:

Thanks for the support!


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.

Sports Betting: Billy Walters the Trend Follower

Insights on Billy Walters:

As a society we have been conditioned to believe that there is a difference between gambling and investing. Of course, this partially true, however, the degree to which we “invest” and “gamble” is smaller than most are likely comfortable admitting. The majority of us have been conditioned to believe that buying a share of Bank of America is vastly different from placing a bet at a roulette table. A closer inspection of “investing” and “gambling” shows that the two are closer than the Wall Street sales machine would like you to believe.

60 Minutes aired an excellent piece this past Sunday about Billy Walters (video attached below). Walters is a Las Vegas gambler widely acknowledged as one of the greatest gamblers Vegas has ever seen. He’s so good that he has to bet anonymously through partners due to the fact that most casinos won’t take the other side of a bet from Walters. The few casinos that do bet with Walters do so mainly because they want to know what he’s thinking. But Walters isn’t truly a gambler. Walters is so good that he feels safer gambling than investing. And ironically, it isn’t the casinos in Vegas that have taken Walters for a ride over the years, but Wall Street. Walters claims that it is not Vegas where the thieves live, but rather the men in suits on Wall Street.

Before we can understand the difference between gambling and investing it’s best to define each. Gambling is placing capital at risk of loss with an uncertain outcome in a system in which the odds are generally unfavorable. Gambling has an inherently negative connotation because it is generally a term used to describe games in which the player is a guaranteed loser over the course of the game’s lifetime. Unlike investing in equities, a bet at a casino generally has unfavorable odds. The game is intentionally devised as such. Investing, on the other hand, is placing capital at risk of loss with an uncertain outcome in a system in which the odds are generally favorable. The primary difference between gambling and investing is the determinability of the outcome. The lottery for instance, is entirely unpredictable. Purchasing government bonds has a high level of predictability. Read the rest of the article.

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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 Podcast Guests
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Performance
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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.

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