Michael Covel’s Official Site

The Wisdom of Crowds by James Surowiecki.

“The question that I don’t yet know the answer to, and I suppose what the partners of Long Term Capital, I can suppose what their answer would be, but I don’t yet know the balance between whether this was a random event or whether this was negligence on theirs and their creditors’ parts. If a random bolt of lightning hits you when you’re standing in the middle of the field, that feels like a random event. But if your business is to stand in random fields during lightning storms, then you should anticipate, perhaps a little more robustly, the risks you’re taking on.”
Trillion Dollar Bet (PBS Special)

David Druz, a long-time trend follower, offered this endorsement of Trend Following:

“Trend Following: Definitely required reading for the aspiring trader.”

David S. Druz
Tactical Investment Management
Trend Follower for 25 years, Haleiwa, HI

David S. Druz was formally educated in engineering, with an emphasis in computer science, and in medicine. While pursuing his education, Dr. Druz became fascinated with markets and market theory and began managing his own futures account in 1975. He developed the Tactical Trading System over the next five years. While in college he worked part time in the research department of a Futures Commission Merchant. Thereafter he pursued a dual career in futures investments and medicine from 1975 until 1991 when he retired from medicine to devote his time fully to Tactical Investment Management Corporation which he founded in 1980. Dr. Druz is considered to be an authority on trading systems and is often consulted in regard to their construction, testing, and implementation

Van Tharp, originally profiled in The Market Wizards, offered this endorsement of Trend Following:

“I think the book did a superb job of covering the philosophy and thinking behind Trend Following (basically why it works). You might call it the Market Wizards of Trend Following.”
Van K. Tharp, Ph.D.

In the unique arena of professional trading coaches and consultants, Van K. Tharp stands out as an international leader in the industry. Helping others become the best trader or investor that they can be has been Tharp’s mission since 1982. Dr. Tharp offers very unique learning strategies, and his techniques for producing great traders are some of the most effective in the field. Over the years Tharp has helped people overcome problems in areas of system development and trading psychology, as well as in success related issues such as self-sabotage. He is the founder and president of the International Institute of Trading Mastery, Inc., dedicated to offering high quality products and services for traders and investors.

Tharp uses a combination of skills and education to fine-tune his strategies to coach, consult and teach traders and investors. He received his Ph.D. in psychology from the University of Oklahoma Health Science Center in 1975. He is a certified as a Master Practitioner of NeuroLinguistic 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.

Dr. Tharp is the author two acclaimed books published by McGraw Hill; Trade Your Way to Financial Freedom, and Financial Freedom Through Electronic Day Trading.

In addition, Tharp is the only trading coach featured in Jack Schwager’s best selling book, The Market Wizards: Interviews with Great Traders. Tharp has published numerous articles in various industry publications and has been featured in publications such as Forbes, Barron’s Market Week, Technical Analysis of Stocks and Commodities, Investors Business Daily and Futures and Options World, just to name a few.

Charlie Wright of Fall River Capital paints a true picture of risk management:

“I often tell the story of the great fish restaurant that opened up just down the street from my office. It opened with great fanfare and was ranked in the top five restaurants in the city. The food was outstanding. But it only took a little more than a year and this great restaurant was out of business. Why? Because the key to running a good restaurant is not the food–it is cash management and risk control. It is making sure your business is run efficiently, keeping your costs (risk) in control, and managing your staff effectively. If you believe that the taste of the food is what makes a great restaurant, think of how great the food is at your favorite fast food restaurant. But, someday, watch how well that restaurant is run. Just as in the restaurant business, the key to profits in trading is not in the prediction or the indicator, but how well the trading strategy is designed and executed. The ability to achieve risk control and cash management will make the difference between a successful trader and an unsuccessful trader. If you ever have the opportunity to watch a successful trader, you will see that they don’t worry about where the market is going or about predicting when the next big move will take place. They aren’t looking to tweak their indicator. They are worried about their risk on each trade. Is the trade being executed correctly? How much of their total account is at risk? Are the stops in the right place? And so on.”
Charlie Wright
Chairman of Fall River Capital, LLC

Charlie reminds us all that great decison-making is needed for running a trading firm or running a restaurant.

1. Big thinkers are on fire.
2. Big thinkers never lose in their imaginations.
3. Big thinkers bet the farm.
4. Big thinkers marinate in thought.
5. Big thinkers think better together.
6. Big thinkers don’t take no for an answer.
7. Big thinkers turn reality into fantasy.
8. Big thinkers live their lives with purpose.
9. Big thinkers think with their hearts.

Presidential Market 2004

Tom Basso was originally profiled in The New Market Wizards by Jack Schwager. He recently offered the following endorsement of Trend Following:

“I think that this book documents a great deal of what has made Trend Following Managers a successful part of the money management landscape (how they manage risk and investment psychology). It serves as a strong educational justification on why investors should consider using Trend Following Managers as a part of an overall portfolio strategy.”
Tom Basso
Retired CEO, Trendstat Capital Management, Inc., Scottsdale, AZ

There will always be promises of magical formulas or secrets to wealth. The latest to come across my desk is the camarilla equation. Read these two links:

http://www.camarillaequation.com/interview.html
http://www.camarillaequation.com/

You will never hear a trend follower speak like this. If you ever hear a trend follower state that his process is “convoluted”…walk away.

“…if a formerly good entrepreneur should suddenly make a bad mistake, he will suffer losses proportionately; if a formerly poor entrepreneur makes a good forecast, he will make proportionate gains. The market is no respecter of past laurels, however large. Capital does not ‘beget’ profit. Only wise entrepreneurial decisions do that.”
Murray N. Rothbard