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Becoming a Hedge Fund Titan

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Hi Michael, so I’ve read the book Linchpin and indeed is full of great advice. It reminds me of the book The Leader Who Had No Title, by Robin Sharma, and I totally agree with the philosophy that everyone should do their absolute best and create “art”. Now I understand better your business model of giving so many gifts to the community like your podcast (which I started listening), your PDFs, videos and all that; I wanted to thank you for offering so many valuable information to the world. Now, Linchpin focuses mostly on how an employee should act and think, indeed the ideas can be applied to entrepreneurship as well but the thing is that I want to excel in the financial markets and there’s not much art you can do there. Here’s the thing, I have a vision in mind to make Master of the Universe type of money. I want to become a Market Wizard and I want your advice. My plan for now is to simply learn as much as I can from the experts (like you and [name]) and start growing my account. My question is, is there a better way? should I be looking to go into the money management business, maybe go work for a hedge fund or open one? Or can I achieve my goal just by trading my own account? Which is better? Oh and one more thing, I know you’ve studied Tony Robbins and he kept mentioning that he coached a guy who made $500 million in the 1987 crash, do you know who he’s talking about? Because he never mentioned his name.

Thank you,
[Name]

I believe the trader Tony Robbins is talking about is Paul Tudor Jones. I don’t think working for a hedge fund is necessarily how you become a hedge fund titan. Starting a hedge fund is the path. Right? Trade your own account, then friends and family, then others. That’s the path.

Behind the Curtain

I share many items for free on my websites. Unfortunately, there are some items that must remain behind closed doors:

Michael, first of all, thank you for all of your work. I appreciate your conviction and tireless effort. You referenced an Eckhardt audio speech in your podcast episode with Van Tharp. Would you be willing to share the speech with me? I would be very interested to hear the speech from Mr. Eckhardt. Please let me know at your earliest convenience. Keep up the great work!

Thank you,
Jacob

Unfortunately I can’t share it. Wish I could.

Who Are the Trend Following Heretics?

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To Whom It May Concern, My name is Roger [name] and I am a senior at [name] University in Nashville, TN. Over the past year or so I have learned a great deal about trend following from Michael Covel’s podcasts and other sources. I have been actively trading the market for the last year, and by way of several mistakes and miscalculations I have arrived at trend following as the most comprehensive and profitable strategy that I have ever employed in the market. Having learned a great deal from Michael Covel, Jon Boorman and others, I have cultivated the desire to help others seek profitable opportunities in the market using a systematic trend following and risk management discipline.

As a senior in college, I am currently looking for employment opportunities in the field of trading. While I have had the privilege of meeting professionals who I have great respect for, I have noticed that trend following seems to be “heresy” among certain circles within what Mr. Covel describes as the “system”. While this makes the job search process difficult, it has ironically strengthened my commitment to continue doing what I have been doing. As popular as this methodology is among certain circles, trend following appears to be an untapped market in many ways.

With all of that being said, I appreciate all that you and your company are doing for trading education. I would be honored to be a guest on your podcast and believe that I would bring a unique perspective given my background, age, and my current quest to find a post undergraduate job. I look forward to further correspondence with you and hope to be considered for this great opportunity.

Kind regards,

Roger [name]

Thanks Roger. Maybe we try an episode this year.

BTW, who are the heretics?

Note: For those seeking employment in the trading field read Linchpin and maybe that goal of employment will dissipate.

Ep. 108: Distraction v. Focus with Michael Covel on Trend Following Radio

Distraction v. Focus with Michael Covel on Trend Following Radio
Distraction v. Focus with Michael Covel on Trend Following Radio

Today on the podcast Covel gives us a peek into the presentations he’s been giving and the responses of audiences abroad. Since February 25th he has been in Tokyo, Hong Kong, Singapore, and Kuala Lumpur (Malaysia). He’s given 23 presentations–anywhere from 60 to 90 minutes long–spread over 4 cities. Covel speaks to us today from Kuala Lumpur where he was only supposed to stay for two days. However, Covel was so taken by the city that he decided to stay for three or four weeks. Covel weighs in on the food, the culture, and the experiences surrounding his recent travels before getting into the kind of presentations he has been giving abroad and the investment style of the people to whom he has been speaking. Unsurprisingly, many of the largest fund managers in Hong Kong, Singapore, and Kuala Lumpur are unfamiliar with trend following; they have the a similar understanding of many in America and Europe. Most of the fund managers Covel sat down with were long-only, fundamental and value-based. Perhaps they used some predictive technical indicators on top, but that was it. Covel would go through the big picture differences between trend following and what his audience was doing. While most of these investors were unlikely to wholly adopt trend following, if you can bring a trend following strategy in-house that produces returns at a different point in time than your typical fundamental value returns–that’s extremely useful information. Covel also discussed behavioral finance aspects, the idea of the black swan, and outlier move issues. Ultimately, it’s about this scenario: you wake up tomorrow and you’re on a desert island. You’ve got nothing except the closing price of the 75 most liquid global markets (which somehow magically appear in the sand), and a phone to your broker to make the trades. You have nothing else–no Bloomberg, no Wall Street Journal, no CNBC. Can you look at that data–and only that data–over time, and figure out a way to make money? That’s the challenge. Can you find a positive mathematical edge in that stew of data from all those different markets? You don’t even need to know the names of the markets you’re trading. All you need are the prices. Can you find a positive mathematical edge in the great spirit of Ed Thorp and “Beat The Dealer”? That is the rallying cry of the trend following world–the desert island trading scenario. Even if someone elected not to make an allocation to a trend following firm (or did not want to trade as a trend follower themselves) Covel invited them to create a model portfolio. That way, you can at least know when trend following is doing well. That piece of information can be a useful piece of fundamental data for your fundamental trading shop. Some criticisms? The idea that Covel is not revealing the “secret sauce”, holding back, or not revealing the “new thing”. You have to ask yourself: Can you look at a trend following system? Test it? Look at professional trend following managers and see how they have performed? Compare it all? And believe in it? Or do you allow yourself to be distracted by other peoples’ comments? Distracted by society? Ultimately that might be the big picture issue that Covel is seeing in his journey. Distraction kills focus.

Listen to this episode:

Most Financial Advisors Should Not Be Allowed to Even Administer a Foot Massage!

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Michael … I recently started listening to your podcast. Very informative and entertaining. Cool to see Godin and Zen Habits colliding with trading insights. The guests are great but the show is at its best when it’s just you riffing on a topic. And the humor is greatly appreciated (e.g. The comment in episode 51 about someone you would not let wash your car but that you would let massage your feet had me chuckling out loud while out on a morning walk.)

Thanks for cranking out the content!

Todd
Seattle, Washington

Thanks Todd.

Trend Following, Yoga and Meditation

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Michael

Hi, I hope you are well today and managing to keep away from the election hooha.

I have started to listen to your podcasts during my commute to and from work everyday (utilizing my dead time so to speak), anyway this morning I finished episodes 17 & 18, where you speak about your yoga lessons and the zen habits website.

I thought they were most intriguing and I wanted to ask you if you have ever tried meditation? I started about 6 months ago with a small group once a week, mainly to help me deal with the daily stress from my current job, but I have found that meditation has really helped me over various parts of my life, and also helps you to get into the now, which is obviously a theme for you and also many trend follows, most notably Ed Seykota. If you get the chance I would very much encourage you to try it.

As a side note, I had a meditation class last night, and we were speaking about fear and how it stops you from achieving all that we as individuals could possibly achieve, and how being in the now and trusting that situations will work out, and not forcing things is a much better way. How coincidental then that this morning I heard your 2 podcasts that were talking about the exact same things.

Releasing fear and embracing trust I feel are two areas that most of us would do well to try and deal with and understand much more. I did think about this this morning and you can see fear everywhere and if you actually stop you can see how it drives people and is responsible for so many decisions made, many on a subconscious level, as an example – even down to the person pushing to get on the train first as they are fearful of not getting a seat.

I would like to thank you for the time and effort that you put into all areas of your work, that allows someone like me to begin connecting the dots.

I have found that listening to your podcasts on a daily basis really fires up my motivation to do well and succeed at trend following.

I hope you have a great day.

Kind Regards,

— Clare

Thanks Clare! Just getting started on meditation. Learning!

“Everytime I listen to your Trend Following Manifesto podcasts it’s like a Yoga breathing exercise for my brain and my thought process.”

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Michael, Thank you for what you do. Evey time I listen to your Trend Following Manifesto podcasts it’s like a Yoga breathing exercise for my brain and my thought process. After a week long of being bombarded and being brainwashed by large number of ads and by people who are wearing masks, listening to you in these pod cast centers me every time as if I am doing Yoga. You straight forward and presentation without hiding anything or being ashamed of who you are reflect my optimism and reality for sanity in this day and age. Einstein said “insanity is doing the same thing over and over again and expecting different results.” Well you are definitely teaching that lesson to people. Whether it’s an episode or an interview, you’re doing a great job at being an example for others to not hide and be real, speak the truth, and figure out what’s really going on in their brain. People who listen to you just need to be a little bit open minded and the truth shines through. There is a right and wrong, no doubt about it but whether people agree or disagree with what you say the way you go about presenting your data, using actual facts and data is something to aspire for.
Thank you, Altan
A trend follower researching a system with a long term edge.

Thanks Altan!

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