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Looking to Buy a Money Machine?

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I have just finished reading your communication on the “why sell system..” Here is my take on it. It is perfectly honorable to sell [a] system. I think there are two broad groups of people who buy systems.

One group who buys these with expectation that they are buying a machine to print money tomorrow are set up for immediate disappointment. They can’t/don’t follow it and experience it in real life and do only in bits and pieces and eventually abandon it.

The other group buys system as first step towards their education and if it works out for them they work on improving the system to match their needs and personality. Eventually they end up with something that has basic foundation they started with but totally different parameters etc.

So both group ends not using system they started with but they have entirely different outcome in the process. It is like attending High School: some people finish that and some don’t.

This is a complete hypothesis on my part, so do let me know if you have any insight on what happens after people buy your or any other system.

I can’t see how people think that if they buy anything from me that it is a machine to print money. Unless they are delusional. In terms of ‘system learning’ the Turtle experiment proved rules could be taught. Sure, you can modify, but it’s still trend following.

Insight after they buy?

Of course, I am sure some don’t trade for any number of reasons. However, trying to figure that out is like studying fundamentals–a never ending futility.

If You Want A Guarantee Buy A Toaster!

A question arrived today:

Will your book ‘Trend Following’ help me develop a trading system to become profitable?

I replied: For some people yes, and for some people no. Feel free to follow-up. He replied:

Will your other books help me?

All of my books will help some people. My books will not help all people. There are reasons for this.

The Fundamentalist Trucker

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Hey there Mike. Today’s market moves (The collapse of Gold in particular) reminded me of a disagreement I recently had with a truck driver I happened to cross paths with. We ended up discussing the markets and he mentioned that he happened to recently come into a ton of money. He starts telling me all the reasons why the metals is the place to go. I never revealed to him that I have experience as a trader and I happen to watch many many markets on a daily basis. I knew that what he was saying was nonsense because I knew by heart the approximate price of Gold and that it was in a steady downtrend. When I explained this to him, he rudely corrected me and told me that actually Silver is the place to put your money. I then informed him that Silver and Gold are highly correlated markets and that the two move almost in tandem. When Gold goes down, Silver usually goes with it. He then rudely corrected me again, adding in that “he has actually had schooling on these matters” thinking that that would shut me up because he “knows what he’s talking about”. I then told him that if he has had financially schooling then he should well know that the two markets are highly correlated and that any school that teaches fundamental investing will teach you that the long term [buy and hold] track record for the metals is horrific. I then told him that if I were to pull up a chart of Silver and another of Gold and put them side by side covering the names and prices, I bet he couldn’t even tell me which was which because they look nearly identical. Anyway Mike I just wanted to share that story with you to illustrate the difference between the fundamentalist mentality and mentality of traders and even aspiring traders. The fundamentalist trucker is still thinking about the meteoric rise in the metals in the past and is now riding it into the dirt. Traders on the other hand already made our money on the rise, and now we are all short and trying to determine whether we should cover on today’s break or move our stop down and lock in some profits or add to our current positions. When will the fundamentalists learn Mike?

Thanks! They won’t learn. Guaranteed.

Are You Throwing Your Children Under The Bus?

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Hi Michael,

Just listened to your podcast on the universal kick-in-the-ass known as the death of the McJob. I couldn’t agree more. What people do not realize, however, is that through osmosis we pass our attitudes on to our children. If we are afraid to get out from under the weight of societal expectation to be another drone zombie with the rest of them, what message does that give to our children? A child looks up to its parents for guidance and reassurance. We see it during, say, a thunder storm, where our children are nervous and instinctively glance over at us to see if WE are afraid. Well what if we are and we show it? What do we communicate to our children if we show our fear? The obvious answer is that they then become afraid because they rely on the parent to show them the things they should be afraid of.

So when a parent does not follow your message, does not get out there and make something happen, and instead retreats into the illusory safety of corporate zombi-ism, they have let down their child in a way that goes far beyond not giving them the latest toy or a ride to the mall. They have basically told them that there is safety to be had by huddling in a collapsing building. So if people won’t take your words to heart for themselves, then they should at least do it for their children.

By the way, Mike, I’m writing this from my hotel room overlooking The Bund in Shanghai. I’m here visiting my daughter who graduated last year as a top-notch high school student and winner of a couple significant citizenship awards. She has read all your books and has the Trend Following mentality. Last summer she made the decision to head to China to learn Mandarin and to see more of the world before going to university. And in case everyone thinks that what you’re saying is all about money, she is volunteering for a charity that helps Chinese kids make a difference in their world because she herself wants to make a difference. Because of her can-do attitude, the money is already there; it’s a given, because once you are there mentally, the results are inevitable. She has had no trouble accumulating the money she needs to achieve her goals, but she’s taking this year to go beyond the money, and as you probably guessed, I couldn’t be more proud of her. She not only thinks it, she does it.

Thanks Michael, keep up the message!


Thanks Dale. I couldn’t have said it better myself.

If you want to live a life of complacency, a life that is run by what the masses are telling you to do, then that is your choice. Just know that your children will be subject to the same kind of ruling over their lives. Don’t lead them to believe that “there is safety to be had by huddling in a collapsing building”.

Finding A Starting Point

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Mr. Covel, I just ordered your free DVD. Have you written a book that goes over your early beginnings in trading, your early thought processes, your early tinkering and experimenting and the steps you went through to that got you to your goals? I am so overwhelmed in my goal of being a successful trader I feel I need to start from the beginning. Just this weekend finished a ‘Rich Dad’ seminar and I am one of quite a few that did not ‘buy in’ right away. Not taking anything away from his program, it was just too much too quick to think about and do and I decided to wait awhile and do more of my own research. We are going to start an investment club here locally. I am tired of thinking “The Machine” is going to take care of me. I have committed to taking my own retirement funds to a new level. And the good thing is I still have a little time (I am 55). Let me know if you have written the above, or something close. Thanks a lot.
Tom G.
Colorado Springs, CO

Tom, all 4 of my books have bits and pieces of a story in them. See here.

If You Want to Connect with Anyone … You Already Know How

A reader writes:

Are any of the big guys in trend following: Marcus, Ed, Kovner etc., open to an email or call? We are starting to market the new fund and getting very good reception. Goldman is our prime broker and they are introducing us … I just want bend someone’s ear who is a senior guy, show/send him the presentation etc. Any thoughts?

My general answer: If you want to talk to someone you will. If you don’t you won’t. Very Seykota-esque response. And my answer is exactly how my career has run. I don’t have another answer that would fit with generally accepted methods, etc.


The White Rabbit put on his spectacles. “Where shall I begin, please your Majesty?” he asked. “Begin at the beginning,” the King said gravely, “and go on till you come to the end: then stop.”

The Alchemist: Skeptics Would Miss It Under Their Nose

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Hi Mike, my eyes have definitely been opened by your books, and lately listening to the podcasts as well… great interviews thanks!

This week I was listening to an audiobook of a classic novel “The Alchemist” by Paulo Coelho. It’s about a mentor relationship between an alchemist and a boy, but its really full of metaphors for lessons in life. It seems very appropriate to the philosophy behind trading, particularly having to constantly make many hard decisions just to follow a long term goal.

There was also passage which struck me as fitting to your general podcast sentiments. The two characters in the book are stopped and searched, and in the alchemist’s pockets they find a piece of the philosopher’s stone and some of the elixir of life. When asked the alchemist tells them exactly what they are, and that they can turn any metal into gold and make you life forever, and then they all just laugh as if he’s obviously joking. As they walk away the boy asks why he told them the truth. The alchemist replies, “It is often the case when you tell people the absolute truth they rarely believe you”.

Keep up the good work!

Cheers, Mike Blain

Great connection Mike. Thank you. EXACTLY the case for trend following skeptics.

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