Michael Covel speaks with Ben Hunt on today’s podcast. Hunt is the Chief Risk Officer at Salient Partners. Salient is a 19B AUM manager based in Houston, Texas. As Chief Risk Officer, Hunt writes the Epsilon Theory, viewing capital markets through the lenses of game theory and history. Covel and Hunt discuss the power of the crowd watching the crowd; game theory; having a profound agnosticism about what the future holds; the difference between risk and uncertainty in the context of game theory; the Panopticon and the chilling effect of being watched; the “common knowledge game” and the missionary; the island of the green-eyed tribe. For more information on Ben Hunt, visit epsilontheory.com. Want a free trend following DVD? Go to trendfollowing.com/win.
Today on the podcast, Michael Covel speaks with Andrew Huszar. Huszar is a Senior Fellow at Rutgers Business School and also a former Morgan Stanley managing director. In 2009, he managed the Federal Reserve’s 1.25 trillion dollar mortgage-backed security purchase program. Covel and Huszar talk about looking at the short term; black swans; Huszar’s history and how he came to work for the Federal Reserve; the changing of the banking model in the US from the 1980’s to the late 2000’s; quantitative easing; why Huszar ultimately left the Fed at the beginning of 2011; how the Fed has become over five times bigger in recent history; the current source of Wall Street money; the idea of an overly financialized US economy; and the need for long-term structural changes in the US. You can follow Andrew Huszar on Twitter at @AndrewHuszar. Want a free trend following video? Go to trendfollowing.com/win.
Michael Covel speaks with Hersh Shefrin and Arvid Hoffmann on today’s two-part podcast. Hersh Shefrin has done pioneering work in behavioral finance and is the author of Beyond Greed and Fear. Hoffmann is a colleague of Shefrin. He is a Professor of Finance at Maastricht University in the Netherlands. Shefrin and Hoffmann’s paper, Technical Analysis and Individual Investors, came out February 2014. The paper is concerned with short-term technical analysis and retail traders. Covel and Shefrin discuss how Shefrin came to know that behavioral finance was his path; the two-system framework; the connection to behavioral and eating disorders; the disposition effect; when emotion and reason are in conflict; “transferring your assets” vs. “selling a loss”; distinguishing between rules and discretion; how we stick with rules for ourselves given the context of our humanity; the psychological pitfalls of the 2008 financial crisis; the inevitability of market crises; Minsky and Keynes; the psychology of Keynesian economics; and human ideas surrounding uncertainty. With Arvid Hoffmann, Covel discusses the paper Technical Analysis and Individual Investors; the inspiration for the paper; Hoffmann’s definition of technical analysis; the narrow focus of the paper to short-term trading; technical analysis and trend following; “invest as if the market was efficient”, and “restrict your attempts to beat the market”. Want a free trend following video? Go to trendfollowing.com/win.
Michael Covel opens up by discussing a 2011 David Harding appearance on CNBC in his book Trend Commandments. The other day, now in 2014, Harding appeared on CNBC again with Joe Kernen. Covel goes over the clip, discussing CNBC’s policy of prediction and picks, their ignorance of Harding’s style and outlook, and the talking heads in general. Covel then went onto Twitter and posted, eliciting a response from Joe Kernen. Covel analyzes their Twitter exchanges, noting there are plenty of questions beyond what Kernen asked. Why does Harding enter? Why does he exit? How much does he bet each trade? Behavioral finance? Black swans? Trading only price action? It’s always fun to put a lance into the boil of the system and watch it pop, as Covel shows here. Covel surmises that either Kernen was not prepared, or there’s an agenda--it’s an acting job. Want a free trend following video? Go to trendfollowing.com/win. SPECIAL NOTE: I welcome all of my listeners to join this debate on Twitter. My Twitter is @Covel and Joe Kernen is @JoeSquawk. Check out our conversation and please add smart feedback. However, please keep the conversation above board.
Michael Covel speaks with Mark Miller. Miller is a computer scientist at Google. He has done early work in hypertext, and today is heavily involved in digital rights. His conversation with Michael Covel is wide-ranging, and especially interesting as they look to the future--perhaps even a future after Singularity. Covel and Miller discuss property rights; Hernando de Soto; Bitcoin and digital trust; “smart contracts”; why a contract is like a board game; game theory; 3rd World infrastructure; how program code can become a contract; a closer look at “possession is nine-tenths of the law”; whether the Turing Test was just passed; defining the term “singularity”, and the multiple singularities of the past; A.I. and nanotechnology; how Miller’s work relates to markets; the history of hypertext. For more information on Mark Miller, visit erights.org. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel interviews Van Tharp on his second visit to the show. Van Tharp runs the Van Tharp Institute and is the author of four acclaimed books published by McGraw Hill: Super Trader, Trade Your Way to Financial Freedom, Safe Strategies for Financial Freedom, and Financial Freedom Through Electronic Day Trading. His new book is called Trading Beyond the Matrix. He was also featured in Jack Schwager's Market Wizard's: Interviews with Great Traders. Van Tharp received his Ph.D. in psychology, is a certified Master Practitioner of Neuro Linguistic Programming (NLP), a Certified Master Time Line Therapist, a certified Modeler of NLP, and an Assistant Trainer of NLP. He has used his expertise in NLP to create the successful models of trading and investing upon which so much of his work is based. Covel and Van Tharp discuss beliefs in the context of trading and investing; the moment of now, and the Navajo’s belief of a never-ending present; the belief examination paradigm; “big money” and what it means to Van Tharp; the idea of “trader jail”; fear of the unknown; the importance of sleep; and the difference between spirituality and religion. Want a free trend following video? Go to trendfollowing.com/win.
Michael Covel speaks with David Ryan on today’s podcast. Ryan was famously first featured in Jack Schwager’s “Market Wizards” book. He is a protege of William O’Neil. Covel and Ryan discuss how Ryan got his start walking up to the front door of O’Neil’s offices; how Ryan would describe his approach to trading today; CAN SLIM trading, and buying the breakout vs. buying the dip; enjoying trading without clients; some good CAN SLIM winners in the past two to three years from Ryan’s perspective; big picture-wise, the max loss that Ryan is willing to take on a position; the type of winning percentages that Ryan really sees; the uneasiness about the overall market system since the 2008 financial crisis and how Ryan looks at how the situation has unfolded; high frequency trading; how the market can be humbling; and getting your ego out of the market. Want a free trend following video? Go to trendfollowing.com/win.
Michael Covel talks with Jerry Parker on his third visit to the podcast. Parker is an original Turtle, trained by Richard Dennis. However, since then he has very successfully run a managed money firm called Chesapeake Capital. Covel and Parker discuss mean reversion trading; what the definition of momentum trading is compared to trend following; why “good enough” is more rigorous than any metric; how the intervention of the Fed has broken up trends and made volatility drop in markets; how the idea of uncertainty and talking in probabilities makes people uncomfortable; the difference between managed futures and trend following; why buy and hold is predicated on trust of the Fed; and why trend followers don’t look to “beat” the market. Want a free trend following DVD? Go to trendfollowing.com/win.
Today on the show, Michael Covel talks with Dr. Walter Williams. He’s an American economist, commentator, and academic. He is the John M. Olin Distinguished Professor of Economics at George Mason University, as well as a syndicated columnist and author known for his libertarian views. Covel and Williams discuss why Williams calls himself a radical; the morality of markets; the welfare state and bailouts; how Williams didn’t "think poor" growing up; the nefarious aspect of minimum wage; how Williams stayed positive and avoided bitterness despite opposition; Malcolm X. and Martin Luther King, Jr.; why there’s no poverty in the United States; how Williams felt about the Fall of 2008 and the bailouts that took place; how we got to the point where people want to trust the state so much; and how Williams has developed a thick skin to deal with the criticism of his radical nature. For more information on Walter Williams, go to walterewilliams.com. Want a free trend following video? Go to trendfollowing.com/win.
Michael Covel speaks with John Mauldin of Mauldin Economics. Mauldin is a noted financial expert, a New York Times best-selling author, a pioneering online commentator, and the publisher of one of the most widely read investment newsletters in the world. Mauldin and Covel discuss credit card rates and zero interest rate policy; the improper use of credit; debt spirals; central bank policies that keep whipsaw periods going; the actions in Japan and how they can spread across the world; the justifications that Mauldin sees behind the scenes; black swans and boom-bust periods; how the 2008 financial crisis wasn’t a true black swan event; the “why” behind zero interest rate policy; and the specter of Keynesianism over the world. For more information on John Mauldin, go to mauldineconomics.com. Want a free trend following video? Go to trendfollowing.com/win.