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Ep. 507: Lanny Bassham Interview with Michael Covel on Trend Following Radio

Lanny Bassham
Lanny Bassham

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Olympic gold medalist Lanny Bassham is on today’s podcast. After falling short in the 1972 Olympics winning the silver medal rather than gold, Lanny went home and re-applied himself. He returned to the 1976 Olympics and won the gold medal in rifle shooting.

Lanny was the kid in school that nobody wanted on their team. He was slow, short and uncoordinated. He worked hard, but he was never going to be able to compete against others that were taller, faster and more coordinated. He shares a story about being in school and one of his classmates saying that he would be the least likely person to become an Olympic gold medalist. This prompted him to go home and learn all he could about the Olympics. This began his journey in finding his place in Olympic history.

Lanny moves on to share how much practice and work he had to put in to become an elite performer. He never felt like practice was something he had to do, it was something he got to do. He loved rifle shooting not just because of the action of it, but because he was good at it. He took obstacles and turned them into opportunities.

Next, Lanny says there is a big difference between winning silver and winning gold. When you go back home and everyone asks how you did, they always ask who won the gold, not who won the silver. Lanny relates winning silver saying, “It is like going to the super bowl and losing.” Doesn’t matter that you made it there if you don’t win. He quickly realized the reason he won silver wasn’t because of his shooting capabilities, it was his mental game. He teaches people how to have a mental process and tap into it when they need it the most.

Lanny breaks performance down as a function of three mental processes: the conscious mind, subconscious, and self image. He goes into depth explaining the balance between all of these psychological functions. He says that you need to focus on your process rather than outcome. When you are 100% in control, then you will be much more mentally consistent. Outcome will always follow process. Lanny finishes up the podcast asking the question, “Do you really want it to be easy?”

In this episode of Trend Following Radio:

  • Creating a mental process
  • Changing your self image
  • How the top 5% think
  • Hard work in practice vs. Hard work in tournaments
  • Thinking of process not outcome
  • Valuing performance not just participation

“A lot of people chase the ‘skill’ thinking that is all they need.” – Lanny Bassham

“Outcome will always follow process.” – Lanny Bassham

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Ep. 437: Anders Ericsson Interview with Michael Covel on Trend Following Radio

Anders Ericsson
Anders Ericsson

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Michael Covel interviews Anders Ericsson. His new book is “Peak: Secrets from the New Science of Expertise.” Starting around high school, Anders became interested in how he could best improve himself. When he got to college he studied how people could achieve above average performance. He did a study showing the number of digits average people could repeat back correctly. The average number was about 5-7 digits. After an hour of practice they were able to repeat about 20 digits correctly. With even more training one student was able to get 70 digits in a row. This showed Anders that the mind can improve with the right kind of practice. Performance is trainable and purposeful practice is key. One major component of successful practice is immediate feedback on whether you are accurate or not.

Michael moves onto a study Anders did on taxi drivers in London. They have to go through extensive training to drive the streets of London. They are average people, but train for many years to be able to pass this taxi driving test. After learning over 10,000 streets and different connections there brains actually changed. He compared bus drivers in London, who did not have to go through the same training, to the taxi drivers. The same changes did not occur in bus drivers brains like the taxi drivers. They did not have to master all the streets but rather just master certain routes. Michael asks, “If they stop their taxi driving profession, does the brain regress?” Anders says that yes, without practice your mind will revert back to the old state.

Next, Michael and Anders use Mozart as an example of nature vs. nurture. His father was a musician and taught young children how to play instruments. Mozart was able to learn many of the musical distinctions that he was famed for because he started so early, around age 3-4. Any child at that age is able to learn the things Mozart learned, however it is virtually impossible as an adult. This moves into the idea of brain plasticity. It is important to realize that you can’t push your child to learn longer than they want to learn for. About 30 minutes is their limit. Beyond that, they lose their capability for deliberate practice. Deliberate practice helps raise the bar and get you better than you were before.

The next example of extraordinary talent brought up are master chess players. They don’t look at pieces individually, but rather base their actions on pattern recognition. They see structure and see where attacks may be successful. Grandmaster chess players are able to play blindfolded and against 25 or so people simultaneously. These are skills that are acquired and practiced. Stephan Curry is also used as another great example of an extraordinary achiever. If you understand the practice an individual does then you can see their improvement over time. Michael asks, “Has anyone said that their improvement was easy?” Anders said that he has been studying this subject for over 30 years and about 50 people have said that improvement came easy, but after talking for a few hours, their answers change. Michael then asks about the validity of the idea that 10,000 hours makes you an expert. Anders says he hasn’t seen that 10,000 hours is a magical number. You need a lot of practice, but there are no magical boundaries. When people count the number of hours that they have done something, and it happens to add up to 10,000 hours, then that doesn’t make you an expert. For example, if you have driven 10,000 hours, that doesn’t make you an expert.

Lastly, Michael circles back to the importance of deliberate practice asking about the difference between youngsters and older people seeing the benefits of deliberate practice. Anders says that unfortunately most younger people that are so focused as a child in their performance don’t go on to have careers in the field they were pushed into. Those who chose and want to be in the sport they are in usually go on to continued success. Deliberate practice alone doesn’t make you successful. You need to have a sincere desire for what you are doing.

In this episode of Trend Following Radio:

  • Discipline and practice
  • Solo and group practice
  • Flow state
  • Social Motivation
  • The late birthday rule
  • 10,000 hours of practice
  • Nature vs. nurture
  • Brain plasticity

“To optimize the benefits of deliberate practice you have to be in control of your own training.” Anders Ericsson

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Ep. 436: Tom Bilyeu Interview with Michael Covel on Trend Following Radio

Tom Bilyeu
Tom Bilyeu

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Michael Covel interviews Tom Bilyeu. Tom is the co-founder and president of Quest Nutrition. He is the consummate entrepreneur who went from running a successful tech company to starting all over and developing Quest Nutrition. He has created his own narrative for entrepreneurial greatness.

Tom started out as what he would describe as a “good employee,” with never questioning the system. He didn’t take high school seriously but when he started college he buckled down. He heard that the brain doesn’t stop developing until the age of 25 and that helped shape a large part of his 20’s. Watching ‘The Matrix” at age 22, he realize that he wanted to be in control of his own life. Around age 26 he met his business partners with whom he would start his first company.

In 2012 his tech company was named the 42nd fastest growing tech company in North America. Soon after that, he had a talk with his partners letting them know he wasn’t happy, wasn’t having fun anymore, and wanted out. His partners felt the same way, and they proceeded to sell their company at the height of their success. Quest Nutrition came out of the folding of their prior company. They chose to go into the nutrition business by asking themselves “How can we deliver value to people.” Tom and his partners were told over and over again by factories that they were not able to produce the product they wanted to make, and the factories were right. They ended up buying their own equipment and re-engineering it to produce a nutrition bar unlike any other on the market.

Tom says that the combination of unbelievably good tasting food coupled with horrific ingredients makes for the worst kind of drug. Sugar affects the brain just like dopamine. Evolution has instilled a need for sugar in our brains and has brought us where we are now. Tom spent a long time learning about, from a metabolic state, what is nutritious for your body. The “auto pilot thought process” is one thing that Tom really works with people on. He works with people to focus on what their subconscious is telling them to do, and decipher what is right from wrong.

Michael asks Tom to go into international regulations. He says that dealing with all the different regulations can make a person go crazy. He doesn’t think that we should legislate sugar or saturated fat out of people’s diets. People should be able to have free choice. Tom’s life has been based on mastering one baby step after another and accomplishing everything with discipline and practice. Whether you are trying to get better in leadership, finance, or in relationships, everything is a learning experience. The more you attack something the more it continues to get better.

Lastly, Tom talks about letting go of the need to be right. He got to a point where he built his self esteem around being right. He soon realized that, that was actually helping him move further away from his goals. He switched his belief system over to focusing on identifying the right answer faster than anyone. There are so many that just want to protect their ego with being right, but as soon as they learn to let that go, a whole world opens up.

In this episode of Trend Following Radio:

  • Discipline and practice
  • The Quest belief system
  • Escaping the Matrix
  • Tom Bilyeu’s ultimate reading list
  • Being authentic
  • Obesity
  • Autopilot thought process
  • International food regulations
  • Letting go of being right
  • Reaching your true fans

“Do that which moves you towards your goals. Do not do that which moves you away from your goals” – Quest belief system

“You can learn what you need to learn, and if you are willing to accumulate enough skills, there really is no limit to what you can do.” – Tom Bilyeu

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The Trend Following Mindset

In the San Antonio Spurs’ locker room, there is a quotation on the wall from Jacob Riis:

“When nothing seems to help I go back and look at the stonecutter hammering away at his rock perhaps a hundred times without as much as a crack showing in it. Yet at the hundred and first blow it will split in two, and I know it was not that blow that did it, but all that had gone before.”

Spot on trend following mindset.

Jacob Riis

Practice, Patience and Perseverance

Trend Following is a lifestyle. It is a way of thinking, acting and doing. It does take determination, however. It isn’t easy to make money from the markets, just as it isn’t easy to become an Olympic athlete. Think of all the factors about yourself that would need to be altered if you were to train for the Olympics. Your diet, fitness routine, coaches, psychology and so much more would have to be worked on tirelessly to make it to the top. Your whole lifestyle and way of being would need shift. You would have to put the time in.

Now lets put that into trend following terms. You cant expect to read only a book (even though mine are a great first step), with no work on your end, and magically make millions in the markets. If it were that easy everyone would be making the big money. It takes practice, patience and perseverance. You can memorize algorithms or imagine the “perfect” system all you want, but until you master your psyche you will never reach your full potential. This is why Charles Faulkner (listen) has been on my podcast three times and is easily one of the most popular guests.

How Does One Get to Be a Trend Following Trader? A Great One?

Consider wisdom from author Seth Godin:

Wouldn’t it be great to be gifted? In fact…It turns out that choices lead to habits. Habits become talents. Talents are labeled gifts. You’re not born this way, you get this way.

Start. Find an edge somewhere (anywhere) and start.

Too Simple: A Big Reason Many Investors Miss Trend Following

An unexpected source explains why many miss understanding trend following trading:

If the explanations you’re demanding for what works aren’t working, perhaps it’s because you’re avoiding nuance in exchange for simplicity.

[For example], your boss keeps asking you to explain your whole plan in three Powerpoint slides. The VC who allocates one minute to understand why your business will work has done everyone no favors. The blog reader who clicks away after a paragraph wasted his time visiting at all.

Skip the complicated, time-consuming part at your own risk…If it were obvious, everyone would do it. Wait, that’s too simple. How about this: Nuance and subtlety aren’t the exception in changing human behavior. They’re the norm.

A great example of how some miss understanding trend following by avoiding the subtle? They see one losing month and panic. If you work with that type of quick judgement you would be better off taking the blue pill and going back to sleep. Seriously! That excerpt connected well with this article sent by a reader in Australia that pumps the mistaken notion that investors can predict trends:

He’s adapted Nate Silver’s model very unscientifically to the global news cycle, using it to compile a handpicked store of knowledge, which he then aggregates to get a feel for where markets are heading.

The system requires at least five or six different news sources ranging across left to right leanings to provide the sort of radar that will give an accurate fix.

You may think you don’t have time to manage this, but there are apps that make it easy. Pulse is one I use because it enables the collection and collation, in chronological and subject order, of top news of the day from nominated sources. My friend’s favourites include Salon, Slate, The Atlantic, Bloomberg, CNN and Huffington Post.

He spends part of every morning trawling through headlines and reading only what he deems relevant to provide a snapshot of where the world is at any given moment. Over time this has helped him develop an accurate read on how he might reposition himself across sectors.

“If you’re reading a variety of news sources, you definitely start seeing trends, especially as everyone’s saying the same thing just in different ways,” he says. Lots of cautionary stories generally mean something bad is about to happen.

“If you’re hearing the same thing from multiple sources, that’s generally when something’s going to happen,” he says. “Which is why I’m out of stocks. There’s no way they’re going to stay where they are. They have to come down.”

Isn’t this akin to timing the market?

“No. I’m just trying to predict a medium- to long-term trend. If you want to get rich quick, this isn’t the way to do it because it’s very macro.”

He admits his method is not totally straightforward, and that there may be quite a wide margin for error depending on nominated reading material and how clever the reader is it at distilling it. But do it for long enough and you will get better at it.

Read, absorb, think and learn. Then do it again, then again. And eventually you’ll be smarter, too.

If you think tracking news sources to predict market trends might possibly make you rich, then you will probably get exactly what you want from the process. What is that? To have the feeling of losing money! For those of you who want the subtle from me, the nitty gritty, read.

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