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Ep. 570: Snowflakes Suck with Michael Covel on Trend Following Radio

Snowflakes Suck with Michael Covel on Trend Following Radio
Snowflakes Suck with Michael Covel on Trend Following Radio

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An impassioned intro and an oldie but goodie monologue. Enjoy!

In this episode of Trend Following Radio:

  • Cognitive Dissonance
  • Trend Following

“All a company report and balance sheet can tell you is the past and the present. They cannot tell future.” – Nicolas Darvas

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Ep. 360: Pas de Dough with Michael Covel on Trend Following Radio

Pas de Dough with Michael Covel on Trend Following Radio
Pas de Dough with Michael Covel on Trend Following Radio

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A May 25, 1959 Time Magazine article called “Pas de Dough” was recently forwarded to Michael Covel. It was about a professional dancer named Nicolas Darvas, who had made two million dollars trading stocks. This was probably one of the first trend following articles to appear in a major publication.

Sports metaphors when it comes to trend following work great, but there are clearly others. For example, both trend following and dancing judge the public’s enthusiasm and use that as the indicator for the next move.

In this monologue, Covel talks about the article and Darvas’ book, breaks down the fundamentals of trend following, and explains why the philosophy behind trend following still applies today. He also comments on how trend following can be applied to the current black swan economic situations in China and Greece.

In this episode of Trend Following Radio:

  • What trend following and dancing have in common
  • The philosophical foundations of trend following
  • Stock trading and location independence
  • Why relying on “fundamentals” is fool’s gold
  • What being a silent partner in the trend means
  • Why Darvas’ thinking from 1959 still applies today
  • The importance of having no ego when it comes to trading

“The only sound reason for my buying a stock is that it is rising in price. If that is happening, no other reason is required. If that is not happening, no other reason is worth considering” —Nicolas Darvas

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How I Made $2,000,000 in the Stock Market by Nicolas Darvas

Excerpt:

“Hungarian by birth, Nicolas Darvas trained as an economist at the University of Budapest. Reluctant to remain in Hungary until either the Nazis or the Soviets took over, he fled at the age of 23 with a forged exit visa and fifty pounds sterling to stave off hunger in Istanbul, Turkey. During his off hours as a dancer, he read some 200 books on the market and the great speculators, spending as much as eight hours a day studying. Darvas invested his money into a couple of stocks that had been hitting their 52-week high. He was utterly surprised that the stocks continued to rise and subsequently sold them to make a large profit. His main source of stock selection was Barron’s Magazine. At the age of 39, after accumulating his fortune, Darvas documented his techniques in the book, How I Made 2,000,000 in the Stock Market. The book describes his unique “Box System”, which he used to buy and sell stocks. Darvas’ book remains a classic stock market text to this day.”

How I Made $2,000,000 in the Stock Market by Nicolas Darvas
How I Made $2,000,000 in the Stock Market by Nicolas Darvas
How I Made $2,000,000 in the Stock Market by Nicolas Darvas
How I Made $2,000,000 in the Stock Market by Nicolas Darvas

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Yes, the Darvis Method is a form of trend following.

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