“You’ve surrounded yourself with one of the most advanced group of mentors possible…The people on your podcasts, and people in your life, all are people with strong opinions, all people that make you think and make you grow. You just have some kind of an affinity for people like that, and that’s part of what makes you good at what you do.” Ed Seykota, Market Wizard
Michael Covel is the voice behind Trend Following™ Radio. His podcast is the underground alternative hit that has ranked as high as #2 on iTunes investing channel (with 7M+ listens and counting).
Q: Michael, how did this podcast happen? A: During the production of my filminterview skills developed. And after my 4th book I decided on a whim to launch a trading podcast. It has gone far beyond trading to network TV-level-guest diversity. Nobel prize winners on my show? Never expected that, but I embrace it. Check out nice words from the Wall Street Journal:
“Michael Covel’s podcast has had over  million listeners and he’s completed [600+] episodes. He’s probably the most established podcaster on this list—and it shows. Mr. Covel’s podcast is great for those looking for alternative views on the market, those who are tired of hearing the same old stories told on CBNC and other traditional outlets. This is highly recommended if you are looking to expand your mind in investing. Mr. Covel has had some incredible guests, to include multiple Nobel Prize winners and world-famous investors. One of my favorite episodes was when Mr. Covel interviewed Annie Duke, a former professional poker player who has some incredible insights on decision making. Mr. Covel always has me thinking and Annie Duke only amplified my brain-wave activity.”
There are back-to-back monologues on today’s episode. The two episodes consist of the same material, just said a little different. The first take Michael was told was too aggressive with too many F bombs, so he re-recorded but still left it up on the tail end of the podcast. The double header podcast today was inspired by a film Michael recently re-watched called, “Boom Bust Boom”.
Michael talks about Hyman Minsky’s “financial instability hypothesis”. Minsky said that there is instability in capitalism and if capitalism was eliminated, that would help eliminate bubbles. Minsky believed that offsetting the economy is how you eliminate instability. This is where the government came up with zero interest rates, and in some places, negative interest rates. Due to the Minsky mentality, economists think they can control the markets and stop human nature from happening.
Michael ties his documentary film into the discussion and describes the insight he got during ’08 when he happened to be filming. Trend following strategies and behavioral economics have these characteristics in common: 1. People will never be rational. 2. Markets will always trend up, down and sideways. 3. You can’t predict trends. 4. There are ways to make money even though numbers 1-3 are set in stone and will not change.
In this episode of Trend Following Radio:
The tulip bubble
Fall of 2008
Financial instability hypothesis
Trend following philosophy
“The only way to eliminate market bubble’s and crashes is to eliminate people.” – Michael Covel
Today on Trend Following Radio Michael starts the podcast reading an email from a listener. This listener is a fan of the show and agrees with most of Michael’s views. However, he writes Michael asking about his opinion on a fundamental trading strategy that he employs. The listener uses a strategy that can’t be quantified and is not systematic. Michael challenges anyone listening to send their track record.
Next, Michael moves into another trading strategy he is asked about frequently, predictive technical analysis. When you hear predictive technical analysis, you know you are watching a show. It is all made up. Michael throws out the same challenge to any predictive technical analysis trader. Prove that it is a legitimate trading strategy.
In this episode of Trend Following Radio:
Trend following biases
Predictive technical analysis
What is the best strategy?
“Is trend following right for everyone? Only you can know that answer.” – Michael Covel
Michael Covel has an “out of the box” interview today with Amy Herman. In 2000 Amy started a program called, The Art of Perception at The Frick Collection in New York City. She helps her students figure out how to fix big picture problems by looking at the small details. Her new book is “Visual Intelligence: Sharpen Your Perception, Change Your Life.”
Amy starts the podcast off sharing a story referred to by Michael as “the soap story.” It is about a man from Uganda who was moved by how wasteful the hotel industry is. This man jump started a movement that changed the way the hotel industry operates by being more mindful of the how much needless waste they are creating. It was a small detail that changed a big picture problem.
Next, Amy shares an “aha” moment she had in college about art. She went from practicing law to studying museum education which led to her founding The Art of Perception. The program began with teaching medical students about art and how to translate it into their own profession. She started the program in 2000 and in 2004 she was having dinner with some friends which sparked the idea of expanding the program to the police field. It was wildly accepted and in no time, the program was expanded to just about every other professional field. Her students have been able to apply her teachings to everything from helping diagnose patients to solving crimes.
Amy says her program has been so successful for two reasons; art is powerful and art is not threatening. All that is needed is your eyes, brain, and your ability to communicate. She doesn’t want to teach people how to see art, but rather teaches what she refers to as the five “A’s”: Assess, analyze, articulate information, adapt your behavior, and become accountable for your decisions.
Amy talks about listening to your sixth sense but also being able to articulate what you are feeling so you can act on it. She stresses that precise and consistent communication is paramount and gives some real life examples of why it is so important and what could happen when that ground work is not laid down.
My educational background is in physics and economics and professionally I own an internet advertising and online publishing business. So I’m comfortable with numbers and fairly entrepreneurial.
Since reading your books and listening to your podcasts I’ve been busy programming and developing a trend following trading strategy all with set conditions on: when to open positions, how to manage funds and risk exposure, rules for what to do when a trend breaks out, and a stop loss system that defines when to exit at all times win or lose. All done programmatically and connected into the trading platforms API’s. I now feel confident in the process being put in place to be successful with my trading (regardless of whether this particular strategy back tests well or not) and I’m excited for what 2016 and further into the future have in store. An amazing change in less than 6 weeks.
It has been a fantastic learning process for me and it is a process that is on-going and one that I feel has changed my life forever. Without your efforts I don’t think I would have come across any of this and it is for this this reason that I felt I needed to email you to let you know how your work has impacted me.
Mike, I picked up your podcast [feed] a month ago or so and have really been enjoying the content. I have since ordered a couple of your books and look forward to reading them. Thank you for sharing your thoughts & creating a platform for such objective, honest, and critical thinking across a broad range of topics. I ran across a book that you might find interesting by Jordan Ellenberg, “How to Not Be Wrong: The Power of Mathematical Thinking”. If you have read it, I would be interested in your thoughts or reflections. If not, I hope you get the chance to read it.
Thank you again for sharing!
Have not seen it. Will take a look! Thanks for the nice words.
Hello Michael, I trust this email finds you in good spirits! My name is Gabriel. I have taken the time to read through and listen to various audio recordings on Trend Following written by Michael. It is a very intriguing area and I thoroughly enjoy the teachings it espouses. I am taking the time to write this note as I am currently at a critical stage in my life. I am currently 36 years old and have just had my third child. We have a 7, 2 and now 2 month old child. This is the reason I write this letter to you. My whole life I have been in commission only and/or independent contract/sales positions. So basically I have always “eaten what I killed”. Over the last 4 years I have expanded my operations and managed upwards of 60 of my own staff and personnel in an attempt to experience exponential growth within our business. Slow sales and non-producing sales reps along with non-paying tenants within some of our rental properties has inevitably caused a downward spiral for us, however we are still working hard to rebuild after these hiccups. Admittedly my partner would like to add more stability to our lives. I am an entrepreneur, sports enthusiast and competitor in everything I do. Hence the difficulty in me going out to work a “9 to 5” where I may or may not control my own destiny under someone else’s watch. I have had a desire to get into Trend Following for several years now but just never found the opportunity to say “I am ready, let’s do this.” I know you have spoken to many people across various walks of life all with varying levels of expertise, experience and life goals. I strongly believe in your message, and see this as a leap of faith to put my head down and study/work within all that I can in the Trend Following space. I just don’t know where to start. Admittedly, financial independence is a goal for me to achieve to give my family. I will never stop working, but most importantly love to win! I just don’t know what I should do, when I should do it or what is the best way to get started. II look forward to any feedback you can give me on this opportunity and working within the space.
There is no quick answer. Best bet? Focus on you, and not working for someone else in the trend following space. How to make the focus on you? Three ways: