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Finding Opportunity Means Taking Shots: Same for Football, Same for Trend Following

Excerpt from here:

In finding Leach, an alumnus and fellow acolyte of BYU, Mumme stumbled upon the Paul McCartney to his John Lennon. Neither one of them gave a damn about college football’s hallowed traditions. Both cherished the lessons you could learn from heroic iconoclasts like Davy Crockett or Geronimo. And both liked getting in the car, blasting Jimmy Buffett and driving to any football practice in the country where they thought they could snatch up another crazy idea and make it part of their oeuvre.

More:

Well before Gus Malzahn and Chip Kelly were riding their wide splits and hurry-up offenses all the way to the BCS championship game, Mumme and Leach were running the concept on a small practice field in Mount Pleasant, Iowa. “The more shots on goal you get, the better,” Leach says. “That’s how we saw it. And with so many people touching the ball, it elevates the enthusiasm of the whole team.” In their three years at Iowa Wesleyan, the Mumme and Leach show went 25-10 and led the nation in passing once and finished second twice.

“The more shots on goal you get, the better” is the reason why you CAN’T be a trend follower on one market alone. You need opportunity. Trade one market, you are limited to one opportunity. It’s like running the fullback straight ahead for 3 yards every play. Bad strategy. You need diversity in opportunity.

Bruce Lee on Opportunity

Posted in Psychology, Trading 101

Ep. 275: Joel Mokyr Interview with Michael Covel on Trend Following Radio

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

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joel

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Posted in Economics, Interviews, Multimedia, Podcasts, Trading 101

Can I be a Full Time Trend Follower?

Feedback in:

Hi Michael and Team,

Hope everything is going well — Since starting my new job at JP Morgan in the operations sector, I have come across different sections within the company and I have recently discovered trading and the potential benefits if you follow a process.

With more research this has led me to yourself (Michael) and your Trend Following website. I have since become fascinated as to how I can become a successful trader using your guidance and knowledge, I have a full time job as I said previously, but I want more from my life rather than the ‘cubicle’ in which people seem to be content with there ‘average’ lives.

I am an ambitious 21 year old from United Kingdom — if I purchase your Trend Following Premium Flagship Systems and Training and dedicate myself to the process will this give me the information to transform myself from a complete novice with relatively small capital to becoming self sufficient and be able to work for myself.

Further questions — I can’t day trade due to working within a bank, do you believe that I can still be profitable if I have this full time job if I can work out a schedule in which to trade?

Look forward to hearing from you and keep up the good work!

Kind regards,
[Name]

Yes, you can. Trend following works on end of day prices and even end of week prices. One price a week? Yes, you can do it. No day trading.

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Posted in Feedback, Trend Following

Picking a Favorite Child… Can it be Done?

All of my podcast guests offer unique perspectives on trading, or whatever field of expertise they reside in. Picking one that exemplifies trend following the best is like picking a favorite child. Consider some feedback:

Hi Michael, It is my goal to listen to all your podcasts this year. I am trying to explain the essence of trend following to a friend. If you were to choose an interview that does an exemplary job of explaining trend following to a lay person, which one would it be?

Many thanks!
[Name]

I don’t know. I really don’t know. If they were serious, they would start with episode one and work through. If not, there is always facebook or selfie stuff for them to do, right?

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Posted in Feedback, Interviews, Podcasts, Trend Following

Flagship Product: Trend Following Research and Systems

My current trend following product: Flagship. Also, FAQs.

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Posted in Trend Following

What is My Personality Type?

What is my Myers Briggs personality type?

Greetings Mr. Covel, during your most recent podcast, you stated that you are classified as an introvert according to the Briggs Myers Type Indicator. I am curious as to what is your four letter personality type because I am willing to bet it is INTJ? Of course, I understand if you do not wish to reveal personal details about yourself.

Regards,
[Name]

INTP

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Posted in Feedback, Psychology, Trend Following

Amazing Forecasting with Dozens of Technical Indicators

Feedback:

Hi Mike, I just had to send you this link, from a commentary on BarChart.com: http://www.barchart.com/headlines/story/1903370/grains-futures-wheat-corn-soybeans-trend-indicators. I was nothing short of amazed to read this. The guy is trying to put a case that wheat is in an uptrend, or the start of. Talk about picking bottoms! He plasters the chart with useless indicators and suggests it’s time to buy wheat. I wonder how many people take this sort of commentary and make trading decisions based on this type of analysis. Looking at the wheat chart it’s clearly been moving down for some months and now moving sideways. Any trend trader would be firmly short or out, but to suggest this is a buying opportunity? I’m sure you see this sort of stuff regularly, but this one struck me as so awful I thought I would pass it on.

Regards,
[Name]

One amazing reading of the tea leaves.

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Posted in Feedback, Trend Following

Ep. 274: Guy Kawasaki Interview with Michael Covel on Trend Following Radio

Synopsis: 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.

Guy Kawasaki

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

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Posted in Interviews, Multimedia, Podcasts, Trading 101

Ben Hunt Raises the Big Issue: A Cracking Narrative

A recent piece from Ben Hunt (see my podcast for his episode):

In every important respect, the Fed and the ECB and their brethren are no longer central banks at all. They are Ministries of Markets, no different from a Ministry of Industry or – even more eerily similar – the Ministry of Culture you would find in most European governments.

I spent the past week in Switzerland, meeting with old friends and making some new ones, and just like my recent travels in the US there was one overwhelming sentiment. No one doubts the omnipotence of central banks. No one doubts that market outcomes are fully determined by central bank policy. No one doubts that central banks are large and in charge. No one doubts that central banks can and will inflate financial asset prices. And everyone hates it.

Among those investors and allocators with the freedom to flee public markets, the interest in private market opportunities has never been greater. Among those investors and allocators trapped by mandate diktat in the Alice in Wonderland world of public markets, the resigned desperation has never been worse. It’s a quiet desperation in Zurich – a Teutonic stare at the floor and a wrinkling of the mouth – more obvious in Geneva with a Gallic shrug and a full-faced grimace. But’s it’s all the same emotional response to the Bizarro markets in this, the Golden Age of the Central Banker.

At this point the Narrative hegemony is complete. There’s no longer even a cursory bow to the idea that fundamentals matter. Earnings seasons come and go in the financial press with hardly a murmur. Over the past six months I can count on the fingers of one hand the financial press headlines that recapped the market day by saying that stocks went up or down “because” of company fundamentals. Six months ago I was writing in insurgent fashion about the “New Goldilocks Economy” constructed not on actual fundamental data but on how that data was interpreted through the lens of central bank policy. Today it’s a so-what-else-is-new article in the WSJ. A year ago I would meet with the occasional true believer in the power of central bank Narratives and the poverty of fundamental analysis in an environment of profound political uncertainty, but it was always against a dominant backdrop of “synchronized global growth” or “stock-picking is going to work again, just you wait and see”. Now everyone is a convert to the Narrative of Central Bank Omnipotence. Wherever I go, anywhere in the world, I am preaching to the choir when I deliver my sermon.

So I’m calling a top. Not a top in markets, because I honestly have no idea what’s going to happen next. But I’m calling a top in the Narrative of Central Bank Omnipotence because it has, in fact, reached its asymptotic limit of influence and belief.

It’s a top because the cracks are starting to show and widen. A Narrative architecture can sustain amazing structures, much like the flying buttress allows Gothic cathedrals to soar, but ultimately it can only bear so much weight. Draghi’s language last Thursday was sloppy. His pitch was uncharacteristically poor as he sang his lullaby to the Red King. I think he’s bitten off waaaay more than even he can chew, a point I’ll review at length next week. As for the US, the Central Bank Omnipotence Narrative is actually counterproductive for equity market price levels at this point. Because we are such well-trained monkeys, we act by reflex today to buy-buy-buy whenever a headline of Central Bank activism surfaces, but the training starts to work the other way when the tightening starts in earnest and the Fed reserves hang out there unresolved, like the mother of all lead balloons draped around the long end of the curve. Remember what an inverted yield curve looks like? Ain’t a pretty sight. But draining the reserves could look even worse. Damned if you do. Damned if you don’t. And the equity market caught in the middle.

It’s a top because – like a Ministry of Industry or a Ministry of Culture – a Ministry of Markets and its dirigiste control of the human animal’s social behavior ultimately fails. Maybe not a failure in the sense of apocalypse and ruin (although sometimes), but a failure in the sense that The Next Big Thing never comes out of a Ministry. They have their successes, sure, some grand program or triumphant announcement, but they’re only successes because we are TOLD they are successes. Since when has a Ministry of Culture sparked great art? Since when has a Ministry of Industry sparked great commercial advancement? Ministries are well-meaning. Ministries are the darlings of the professional intelligentsia that controls the organs of the State and Media. Ministries are wonderfully effective instruments of social control. But neither art nor commerce nor investment comes well from on high. It just doesn’t stick. The most powerful ideas in human history always come from below, not from above, and markets (and elections and revolutions) are the transmission mechanism of the idea engine. Watch out above!

An inflection point in the market Narrative doesn’t alter market price levels directly. It alters the informational structure of markets (for a refresher course on what I mean, see “Through the Looking Glass”). It alters the market’s response pattern to future signals and events. That’s why I think it’s silly to predict end of year S&P 500 levels or engage in any such crystal ball gazing, because I have no idea what will happen next. But whatever pops out of the woods next (and somehow I doubt the global economy is walking down a primrose path), I think that using an Epsilon Theory perspective based on information theory and strategic behavior can help me react quickly and appropriately, which is what I mean by Adaptive Investing.

I don’t know what the catalyst for The Next Big Thing will be, although I have my suspicions. Maybe it’s a realignment election in Italy or the US. Maybe it’s China saying whatever the Mandarin equivalent of no mas might be. Maybe it’s a liquidity seizure in the repo market or some other unanticipated structural market failure. But whatever it is, we’re no longer at a point where additional State intervention can claim additional Narrative firepower. It’s like buying a stock that has no short interest and where all the sell-side analysts are rabidly positive. No thanks! Just as a short seller today is the marginal buyer of your stock tomorrow, so is the skeptic today the convert tomorrow. There are no more skeptics. To update Milton Friedman’s famous quote, we are all Bernankians now. Or rather, we all have to profess our Bernankian faith through our market behaviors even as we privately yearn for the Old Gods of greed and fear and the Old Languages of value and growth. And that’s the inflection point. From here on out I’m a seller of the Central Bank Narrative of Omnipotence and Control, and I’ll be writing about what that means for portfolio construction and risk management here at Epsilon Theory.

All the best,
Ben Hunt, Ph.D.
Chief Risk Officer

Nice. He is not a pure trend follower, but makes a great case for it.

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Posted in Economics

“I’m Shocked!”

If you are going to leave feedback, leave feedback with substance. Here is a great example from an email that came across my desk recently:

I’m shocked you would have Dennis Gartman a part of what you’re doing.

My response: “Ok.”

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Posted in Feedback, Trend Following
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