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Noah Smith: No Thanks

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Dear Mr. Covel,

I want to congratulate you for arranging an interview with Robert Aumann. You are very skilled at arranging interviews with prominent people in the fields of economics and finance and I am looking forward to listening to your future podcasts.

After listening to your podcast titled, Misinformed View on Trend Following, I was not surprised that Noah Smith raised your ire. You are another person in a long line of individuals who have been jolted by Smith’s writings on economics and finance. He is very skilled at writing columns that cause the people who he criticizes to respond vehemently. To give you an idea of how many people and websites have responded strongly to Smith’s writings, I will list some of them for you: Peter Schiff, Mike Shedlock, Robert Murphy, Gary North, ZeroHedge.com, Acting-Man.com, and TheDailyBell.com. Schiff recently interviewed Smith on his radio show. If you listen to the interview, you will hear that Smith is not afraid to debate a person that he criticizes and he is not rude. I encourage you to use your skill at arranging interviews to convince Smith to be interviewed by you. I believe that you will find him troublesome but you will learn that he is an intellectually honest person who simply wants to know what drives financial markets and the economy.

Sincerely,

[Name]

My interchange [with Noah Smith] revealed a petulant brat that deals in ad hominem and straw men [red herring]. Where was the intellectual honesty? Also, he had no clue on the subject [trend following] at hand. Maybe he is good at getting press, and I guess some people like teenage girl temper tantrums, but I don’t get off on that drama.

Posted in Feedback

Don’t Compare Yourself to a Fund

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Hi Michael,

I’ve been listening to all your podcasts–an episode-a-day while driving to work. It’s full of great interviews and I’ll try to get your word out to my world as much as I can.

After listening to your Martin Bergin episode I found myself asking a question. And this is what I want to ask you: is it necessary to use automated (computer-run) systems to follow trends in these days or can it still be done manually by retail investors like me?

I’m not math-phobic but am no PhD in Math either. I do have a computer but it’s a plain old Macbook Pro and not a blackbox kind of supercomputer!

Please help, as I’m struggling to hear how a retail trader can effectively but manually follow trends.

Keep the flag flying!

Warm Rgds
[Name]

Please don’t compare yourself to a billion dollar fund (see Turtle story)! You can absolutely keep track of trades as a retail trader via a spreadsheet (EXCEL or paper). Mind you: you are trading end of day (no day trading) and or end of week bars. That is a very straightforward tracking issue. Can you make it pretty and fancy with automation software? Sure. Do you have to do that? No.

Posted in Feedback

Ep. 269: Robert Aumann Interview with Michael Covel on Trend Following Radio

Synopsis: Michael Covel welcomes Robert Aumann the fourth individual that has received a Nobel Prize in economics to appear on his podcast. Covel and Aumann discuss conflict and cooperation through game theory analysis; Aumann has a very interesting way of looking at the world via his game theory perspective. Aumann and Covel talk about his first experience meeting John Nash and Aumann’s early background; what game theory is trying to accomplish; the economic definition of rationality; the idea of a strategy matrix; the world champions of peace and the best way to maintain peace; the 2008-09 bailouts from Aumann’s perspective and a game theory outlook; behavioral economics; game theory, diplomats, and the Cuban Missile Crisis; the existence of nuclear weapons and the Cold War. Want a free trend following DVD? Go to trendfollowing.com/win.

robert aumann

Posted in Economics, Podcasts

Singapore Calling!

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Dear Michael:

Having just recently finished ‘The Complete Turtle Trader’, I must commend you on a very informative (& readable) analysis on the development, success & continued relevance of the original Turtle program. For guide, I am based in Singapore as part of [Name] derivative trading team. As you spend a fair bit of time in the region, it would be a pleasure to meet for lunch (or dinner) on your next stay here.

Regards,
[Name]

Next time, 100%.

photo

Posted in Feedback

Trend Following Support Feedback

Feedback in on the tail end of a support response:

Overall, I find this to be a great learning experience and am quite satisfied with your [Flagship] and the level of support you’ve provided to me.

Thanks again,
Rich

You are welcome!

Posted in Feedback

Ep. 268: Gregory Morris Interview with Michael Covel on Trend Following Radio

Synopsis: Michael Covel speaks with Gregory Morris on today’s podcast. Morris is Sr. Vice President, Chief Technical Analyst, and Chairman of the Investment Committee for Stadion Money Management, LLC. He also serves as the chairman of the Station Trust Board. In this capacity Greg educates institutional and individual clients on the merits of technical analysis and why Stadion utilizes a technical rules-based model. Greg oversees the management of over $5.5 Billion in assets in six mutual funds, separate accounts, and retirement plans. Investing With The Trend is his new book. Covel and Morris discuss Morris’ history as a US Navy fighter pilot; the checklist and how foundational it is to trading; how Morris had his first exposure and understanding of technical analysis; Russian Roulette and trading; risk vs. uncertainty; process and predictions; having a set of daily actions; and learning lessons through failure. Want a free trend following DVD? Go to trendfollowing.com/win.

Greg Morris

Note: These episodes play by clicking “listen”. You may also want to “save as” each file to your device. All episodes on iTunes too.

Posted in Podcasts

“Listen, I surrender, you beat me Mr. Market, now where do you want to go?”

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Hey Michael,

Recently I started listening to your podcast and have been researching a bit of what you have been saying. I find your podcast I be extremely informative. I think sometimes it’s the kind of kick in the ass the public needs so I am glad you are out there speaking your mind on a lot of important topics.

I did find a lot of research verifying that trend following is a valid strategy and one where a lot of people have made a decent amount of money. However, I couldn’t find very good information as far as annual returns over the long-term goes. Can you send me some of this?

The trend following system, in general, makes a lot of sense. Trends happen, obviously. Those who want to be a passenger can be and can make a lot of money. Intuitively I like the idea. It appeals to my sense of logic. You’re not trying to figure out anything. You’re merely saying, I don’t know where this will go, it seems to be going somewhere, and you buckle your seat belt. The seat belt is the stop-loss in this analogy.

Anyhow, just wanted to send a kudos your way. Keep up the good work. Would like to hear you talk more about a lot of people that are in boats they never thought they’d be in. For instance, in my case, I got myself into a lot of debt via students loans. It’s not an easy ride in this economy to have a degree no one cares about (I have an MBA). Agree with the entrepreneurial lifestyle. I worked a dead-end job for a bit of time and now am ready to move on to something new and try to get out of the “zombie-like” mindset.

I have subscribed to a while to value investing and found lots of research to show it does work. The problem with value investing, compared to trend following, is that it takes a tremendous amount of work to try to figure out something the market doesn’t already know or find where the market differs from the underlying value of a company. Trend following seems to hold up the white flag and say, “Listen, I surrender, you beat me Mr. Market, now where do you want to go?”

Regards,
Larry H.

Thanks! Data? See.

Posted in Feedback

Ep. 267: Dennis Gartman Interview with Michael Covel on Trend Following Radio

Synopsis: Michael Covel speaks with Dennis Gartman on today’s podcast. Gartman is the editor and publisher of The Gartman Letter. Gartman appears on CNBC, ROB-TV and Bloomberg television, discussing commodities and the capital markets, and speaks before various associations and trade groups around the world. Covel and Gartman discuss how Gartman first got started; Chicago trading in the late 70’s to the mid 80’s; why you should never add to a losing position; buying strength and selling weakness; systems from Gartman’s perspective, and keeping your systems simple; being patient with winning trades and impatient with losers; Gartman’s daily grind and process; mass psychology, efficient markets, and behavioral economics; Gartman’s thoughts on the market today and geopolitical events; and how we hear about geopolitical events today compared to the past. For more information on Dennis Gartman, visit thegartmanletter.com. Want a free trend following DVD? Go to trendfollowing.com/win.

dennis gartman

Posted in Podcasts

The Narrative as Valuation

Aswath Damodaran writes:

If one extreme of the numbers/narrative spectrum is inhabited by those who are slaves to the numbers, at the other extreme are those who not only don’t trust numbers but don’t use them. Instead, they rely entirely on narrative to justify investments and valuations. Their motivations for doing so are simple.

1. Story telling is a powerful attention getter/keeper: Research in both psychology and business point to an undeniable fact. Human beings respond better to stories than to abstractions or numbers, and remember them for longer. After all, the Harvard Business School has taken story telling almost to an art form with its cases, tightly wound narratives that are supposed to convey larger lessons.

2. Unrestrained creativity: “Creative” people through the ages have always fought back against any restraints on their creativity, especially those imposed by those that they view as less imaginative than they are.

3. The Creative Superiority Complex: Just as numbers people intimidate with mounds of numbers, good narrators can browbeat “bean counters” with superior story telling, especially if they can back their stories up with personal experience.

Don’t trade off storytelling. Just don’t do it.

Posted in Holy Grails

Podcast Making Waves II

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Hi Covel,

I was listening to your last podcast (the best ones are the monologues), and finally, you spoke about the subject of you making money selling systems and books on the subject.

Before going forward, I must say that I’ve been in the markets professionally since 1996 and as a CMT, I’ve listened and studied everything there is about technical analysis, fundamental analysis, psychology. I come to point where there is nothing more to see, and I have to agree to a point that the only thing valid to make money in the market is a trend following approach. I’ve been doing it for a long time and I have a track record with real money to prove my point to myself. It’s frustrating that after all the time and effort put in technical analysis, trend following is all there is. That makes life boring, but at the end the day it’s not about the thrill and emotion, but the money and the growth of your wealth.

Moving forward, I think that any intelligent character out there can have doubts about the validity of trend following, and ask you the most obvious question, that is – If it’s so good, why are you selling books and systems? – don’t bother to answer because I have been asked a lot the same question from newbies that sit beside me to learn about the market.

I’ve read all your books and others on the subject, and the most important thing that separates you from the rest is that you focus on modeling the mindset of the person. You are not giving them the rules because like someone said, if you only published the rules then no one would follow. It’s the mindset that we have to shape; the rules are not important, because if your mind isn’t there, then the rules have no value whatsoever.

So, this is all to say, that you have the right to sell and be paid well for your services because if you gave it for free, then no one would place and effort to follow. If I’m paying I sure will spend some time on it, even if it’s only to get my money back.

I’ll probably try to get in touch with you if I happen to be in the same location, even if it’s for a quick coffee and to thank you for keeping this alive.

One last thing, I tried to trade client’s accounts, but it’s very difficult. People want returns big and for yesterday; they don’t want sideways and drawdowns periods, which makes your account the only profitable in the group. People want the get rich fast theme CNBC format, and this is not what this is, so I gave up. Today it’s only my account.

Keep posting and podcasting,

Cheers,

[name]

Thanks.

Posted in Feedback, Podcasts
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