Michael Covel speaks with Larry Swedroe on today’s podcast. Swedroe is a Buckingham Asset Management principal. He is also a principal and co-founder of BAM Advisor Services, LLC, and serves as the director of research for both entities. Swedroe has authored or co-authored fourteen books and comes at investing from an evidence-based approach. Covel and Swedroe have different vantage points, but there are some commonalities in their thinking. They discuss forecasters and prediction; the three types of forecasters; confirmation bias; how your political affiliation might change your willingness to listen to forecasts; value perspective vs. momentum perspective; the anomaly of momentum; the evidence-based thinking approach; momentum trading in 2008; how Swedroe prepares for the unexpected; not treating the unlikely like it’s impossible; managing your risk; process vs. outcome; the equity risk premium and bear markets; commonplace crises; planning ahead; and diversification attempts to get outside of equities. Want a free trend following DVD? Go to trendfollowing.com/win.
Today on the podcast, Michael Covel opens up relating a Bob Dylan lyric to uncertainty. You can’t tell what’s going to happen tomorrow; you can’t tell what’s going to happen to people in your life. You can just go with it--you can just keep on keeping on. But predicting tomorrow, thinking that you have an explanation as to how it’s going to actually unfold? You’re kidding yourself if you think you can predict tomorrow. People are paid a lot of money to pretend that they can predict tomorrow. But it is pretending, no doubt about it. Covel moves into his main topic for the day, noting that since March of 2009, stocks have taken off. It’s a massive trend--a trend following dream for stocks. Covel also sees that the fundamental guys look at the all-time highs with justifications. Trend followers have no justifications. There have been millions of words since March of 2009 written by fundamental traders justifying the all-time highs, and people get paid a lot of money to write these justifications. What will all those words count for if the S&P makes another 50% drop? How do you make a fundamental decision in the face of a game where fundamentally, the only thing you really have is “can you predict what the Federal Reserve will do next?” Covel also shares some words of wisdom from trend following trader Jerry Parker that he obtained through a recent email, as well as words from Tom Basso and David Cheval. These traders all agree on one thing: ride the trend. Building on these thoughts, Covel moves into talking about football, Chip Kelly, the Philadelphia Eagles, Hal Mumme, and Mike Leach. Covel uses this as a metaphor for why you can’t be a trend following trader in one market alone. So, if you can’t predict tomorrow, what can you do? You can take what’s given. You can take the trend that arrives. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Richard Lewis. Lewis is the author of When Cultures Collide and When Teams Collide. He is a cross-cultural expert who has been studying language and communication his entire career. He’s traveled to 130+ countries and speaks eleven different languages. Why have a language and communications expert on a trend following trading show? Covel explains: We live in a complete and real world. You’re not just a trend following robot. There are many facets to life and the ability to communicate can’t be ignored. Covel and Lewis discuss how Lewis’ love affair with language started; the best way to start learning a language; travel as a “magic elixir” of sorts; the Lewis model; cultural differences in language, and what Lewis means by linear-active, multi-active, and reactive; the idea of losing face in the context of cross-cultural communication; microculture and macroculture; cross-cultural teams vs. homogenous teams; normal and abnormal in a cultural context; paperwork and punctuality in different cultures; why the linear-active person confronts with logic, the multi-active person confronts emotionally, and the reactive person is never confronting; and why there’s much more to making a deal than just quantity and price. Want a free trend following DVD? Go to www.trendfollowing.com/win.
Michael Covel speaks with Joel Mokyr on today’s podcast. Marc Andreessen, one of the founders of Netscape, tweeted that Mokyr was one of his heroes. This intrigued Covel, and hence his desire to have Mokyr on the show. Mokyr is a economic historian at Northwestern University. He focuses on technological progress, and how it affects growth. From Mokyr’s perspective, we haven’t seen anything yet. He’s not trying to predict what will happen next; he’s just confident and ready that big things will continue to happen. Covel and Mokyr define technology; the notion of playing God with technology; how technology and economic growth are intertwined; why screwing up is part of technology; the acceleration of technology; new ways of measuring growth; anesthesia and antibiotics as technologies and imagining new technologies as revolutionary as them; moving from a wheat and steel economy into an information economy; the factory, the separation between firm and household, and the Industrial Revolution; the death of distance; why technology is often not reflected in the GDP; solving the language barrier through technology; why the global acceptance of the English language is driven by technology; why innovation isn’t natural to us; the declining respect of the writings of previous generations; why the median age will continue to increase; why we are moving into a mass-customization society; changes in material science; and the best way to think about the future. Want a free trend following DVD? Go to trendfollowing.com/win.
Today on the podcast, Michael Covel welcomes Guy Kawasaki. For those of you that pay attention to being an entrepreneur, Kawasaki’s books have been invaluable over the last decade. Currently, he is the chief evangelist of Canva, an online graphic design tool. Formerly, he was an advisor to the Motorola business unit of Google and chief evangelist of Apple. Covel and Kawasaki discuss a lesson learned from Steve Jobs: “Some things need to be believed to be seen.” Covel and Kawasaki also discuss why being a consultant or an investment banker are two of the worst first jobs you can get; working in sales, and Kawasaki’s early experience in the jewelry business; some of the most valuable attributes of a good salesman; marketing, social media, and why you’d want to have a rabid fan with fifteen followers rather than just another blurb on the back of your book from the so-called big name; why a book review in The New York Times isn’t as important as it used to be; the Amazon and Hachette conflict, and why Amazon is still the best thing to happen to authors in a long time; the two types of people in the world--baker vs. eater; how Kawasaki manages his time; looking at your social media presence as core to your existence; disruptive high growth opportunities; introversion and getting better at standing on stage. For more information on Guy Kawasaki, follow him on Google Plus. Want a free trend following DVD? Go to trendfollowing.com/win.
Today on the podcast, Michael Covel speaks with Rande Howell. Sometimes new and experienced traders only want to focus on the system--the rules. They forget the psychology and the mental aspects of trading. Howell has a therapeutic background combined with personal coaching in the fields of human potential and leadership. He has fifteen years of practice as a licensed professional counselor with a Masters in Counseling. Covel notes: if your mind is messed up, it doesn’t matter what system you have--you’re going to fail. Covel and Howell present an interesting conversation to get you in the spirit of the mind. Their topics include what the performance mind is in regards to trading; trading, emotions, and uncertainty; why irrational pessimism is deadly in trading; emotional regulation and mastering emotions; the blurry line between the casino and trading, particularly in Asia; euphoria vs. fear in a trading context; why what you’re afraid of owns you; Jungian archetypes; the Myers-Briggs instrument; biological threat vs. psychological discomfort; the mistake of using trading to measure your worth; getting your emotions right but your strategy wrong; why success in one endeavor doesn’t necessarily mean success in trading; the importance of patience; and the panther vs. the African lion. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Dan Buettner and John Ratey on today’s podcast. In this two part episode, Covel explains that these two individual’s research is as important for your investing, trading, and entrepreneurial success as any one system, technique, or way of living you might have. Buettner is an American explorer, educator, author and public speaker. He holds world records for endurance bicycling. He is also involved in “blue zone” research and looks at demographics and longevity. John J. Ratey, MD, is an Associate Clinical Professor of Psychiatry at Harvard Medical School, research synthesizer, speaker, and best selling author. His book is called Spark: The Revolutionary New Science Of Exercise In The Brain. Bottom line, everything in your life can change with exercise. If you want to be a fantastic investor, trader, or entrepreneur and your body and mind is not in shape, you have to take a second look. With Buettner, Covel explores age and longevity; “blue zones”; epiphanies and lightbulb moments; “forgetting to die”; loneliness; stress; sacred daily rituals; napping and happy hour; sacred places; relationships and sex. For more information on Dan Buettner go to bluezones.com. With Ratey, Covel discusses exercise as the magic elixir for the brain; prescription drugs and anti-depressants; the joy of movement; exercising the mind; autism; BDNF (brain-derived neuropathic factor); and ADHD and exercise in children. For more information about John Ratey, go to johnratey.com. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel starts off today’s podcast by playing “Soothe Me”, a classic song. There’s no doubt about it: it’s soothing to have all-time highs in the equity market. Today, Covel wants a different perspective from what is out there in mainstream media. First, Covel talks about the S&P 500 index. The S&P is a trading system. It is a specific grouping of stocks put together with certain weightings and certain rules, and it trades in a certain way. And it has to stick to those rules. Covel talks about how the S&P is a system despite most people not knowing that it is one. Covel compares this system to a trend following system (and notes how trend following is applicable to stocks too). Covel talks about the dangers of correlation if you apply your trend following strategy to only equities, and the importance of diversification across different markets. Next, Covel looks at the S&P system vs. trend following systems in the context of crisis, and questions where the S&P would be without zero interest rate policy and Fed intervention. Is the S&P trading system that good that it will be at all time highs forever? Covel moves on to talk about black swans and anti-fragility in the context of the S&P trading system. Finishing up, Covel discusses absolute risk and relative risk. Want a free trend following DVD? Go to trendfollowing.com/win.
Michael Covel speaks with Laurie Santos on today’s podcast. Santos is a professor of psychology and cognitive sciences at Yale University. Her research explores the evolutionary origins of the human mind by comparing the cognitive abilities of human and non-human primates. Santos is able to look at monkeys and their behavior in markets and money, and see the similarities with humans. Covel and Santos discuss some of Santos’ early “ah-ha” moments; teaching monkeys about currencies; whether the monkey economy is as irrational as ours; the endowment effect; how monkeys’ behavior in markets quantitatively matches human behavior; whether some monkeys took to the experimental economy better than others; mistakes and predictable errors; why humans might be uniquely irrational when it comes to enjoying what we pay more for; Vernon Smith’s work; relationships between Santos’ work and the financial crisis of 2008; bubbles, monkeys, and Daniel Kahneman; the “G.I. Joe fallacy”; and why we have trouble accepting cognitive limitations rather than our biological limitations. For more information on Laurie Santos visit www.yale.edu/caplab. Want a free trend following DVD? Go to trendfollowing.com/win.