Those are the words of someone likely to lose big–soon. Authority is not a wise foundation for speculative moneymaking decisions. Consider:
Appeal to authority is bad, but appeal to tradition is even worse. Experts aren’t infallible, but at least expertise is usually hard-won and retains some applicability over time. By contrast, tradition is often totally arbitrary or based on reasons that retain no relevance whatsoever. Also, an expert can issue a correction but tradition remains immutable and sacred (source: Jeff Darcy).
I would argue that almost all fundamental style investing falls into a category of tradition. Very few look for an alternative such as trend following. They figure that since it appears that everyone has invested or traded a certain way–that it must be the only way. They forget to dig deeper and forget to look for the truth behind why investing/trading works. Always searching for the “why?” is part of my February 25th presentation in Tokyo.
A Love Affair with Apple with Michael Covel on Trend Following Radio
Please enjoy my monologue A Love Affair With Apple with Michael Covel on Trend Following Radio. This episode may also include great outside guests from my archive.
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Kacher is the co-founder of TriQuantum Technologies, holding company for KJA wherein he is lead portfolio manager. Dr. Kacher’s metrics have called every major top & bottom in bitcoin since 2011 to within a few weeks of the top. He was up in 2018 vs the average performing crypto hedge fund at -54% (PwC).
Morales was personally recruited by Bill O’Neil himself to join William O’Neil + Company, Inc. as a Vice -President and Manager of the Institutional Services Division, responsible for advising over 600 institutional investor clients, and as an internal portfolio manager responsible for managing a portion of the firm’s proprietary, internal assets. From 1997 to 2005 he achieved a return of approximately 2100% in his portion of the firm’s proprietary account. In 2004 he was named Chief Market Strategist at William O’Neil + Company, Inc.
The topic is their book In The Trading Cockpit with the O’Neil Disciples: Strategies that Made Us 18,000% in the Stock Market.
In this episode of Trend Following Radio we discuss:
The “O.W.L.” ethos, and the story behind it
Reversion to the mean mentality, and how it can often be the kiss of death for traders and investors
Trading psychology, the idea that “you must lose to win”, how the least important statistic is your percentage of gains v. losses in your trading account
Dealing with emotionalism and why clients often want to hear something that will make them feel better
Teaching people to let go of the news and simply watch the price action
Why people think that “this time is different”, put their trust in the central economy, and why trend following will survive into the future
Understanding that investing is always a process of changing along the way
What mental clutter in the way of fears, biases, concerns and more can build up in the mind and get in the way of clear and decisive decision-making
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My guest today is Tushar Chande, a trader, author,co-founder and head of research at Rho Asset Management in Switzerland. Chande has had a long and distinguished career in technical analysis; he brings a unique perspective on how to look at the markets as a trend following trader. He came to America and earned his Ph.D. in metallurgical engineering from the University of Illinois in 1984.
The topic is Trend Following.
In this episode of Trend Following Radio we discuss:
Early influences, and chart the journey from his days as an engineering student to his accomplishments as a systematic trend following trader
Analogy between sports and trading, how the best sportsmen rely on having a stable and predictable environment (unlike the markets)
Evaluating performance within the context of the market
Discretionary trading v. systematic trading
Learning through “trial and terror”
The Rho Trend Barometer and the ability to quantify the environment
The problem of indexes
The Sharpe ratio
The importance of market movement to trend following trading
“The black box disease”
Trusting your system
Cognitive biases
The benefit of the “black swan” and outlier events and why these events are so beneficial to a trend following system
Whether “one-hundred Ph.D.’s are better than one”
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1. What is the state of the market?
2. What is the volatility of the market?
3. What is the equity being traded?
4. What is the system or the trading orientation?
5. What is the risk aversion of the trader or client?
Regardless of how you trade or invest … you better have those answers in advance of betting real money. Thank William Eckhardt for those perspective pearls. And yes–you answer with a number.
