Michael Covel: News & Info.

The German language version of Trend Following will be out within weeks. Here is the cover design. As a side note, not sure why foreign publishers seem to all change original cover designs, but they do.

Some thought provoking research (PDF 1, PDF 2) regarding stress and childbirth. These articles came up in conversation during a meeting I had with one of the Turtles last week. This Turtle has shun the spotlight, but has a very interesting background and most interesting career.

I am looking for an experienced web developer/designer. If you are capable of producing the work at my sites currently, and then some, drop me a line.

“Hello Michael, I wanted to send a quick note of congratulations, and thank you, for your book Trend Following. I am a regional manager for Charles Schwab who travels around the state of Texas and Latin America helping our clients help themselves. A topic of almost every workshop is reading material - for which your book has provided great value. I grabbed your book from a colleague at CyberTrader where I worked for several years as Business Development Manager, read it, and recommend it as often as I am asked for recommended reading material. Thanks again, XXX”

There are elements of this CME Guide to Becoming a Fund Manager (PDF) that every participant in the market should read whether you trade money for clients or not. It has ‘money management’ and ’stop’ advice useful for everyone who trades.

I never pondered the notion that one day trend followers would trade “snow”:

“CHICAGO, Feb 9 (Reuters) - The Chicago Mercantile Exchange said on Thursday it will list futures and options on snowfall in Boston and New York City. The new snowfall contracts will be based on a CME snowfall index and are designed to help cities manage the risks associated with snow accumulation, the largest U.S. futures exchange said. “The impact of weather can influence regional and local markets, playing a critical role in the overall economy,” said Rick Redding, CME’s managing director of products and services. The contracts will launch on Feb. 26, and will trade on a monthly basis from October through April.”

Michael Mauboussin of Legg Mason offers this recent research on bet sizing (PDF). An excerpt:

“Edge is key. Recall the foundation of Kelly’s model rests on having a view that is different, and more correct, than that of the market. Having an edge requires understanding the market’s perspective. As Poundstone writes, ‘The stock ticker is like a tote board. It gives the public odds. A trader who wants to beat the market must have an edge, a more accurate view of what bets on stocks are really worth.’”

Jason Russell, who contributed some great quotes to my book Trend Following, manages a fund (PDF) at Salida Capital. Jason is a trend following trader.

I caught an article today in a respected publication that featured stocks “under $10″. Here is a screenshot of the poll taken in the article:

Now, if you ever ponder where “losers” come from in the great zero-sum game…one category of “losers” could very well come from the camp looking to buy something “cheap”.

Feedback from a manager of a $2B dollar equity portfolio:

“Hi Michael: I love receiving your emails and insightful comments. I manage a $2 billion equity portfolio. One of my primary strategies is trend following. I have been roundly criticized by my fellow portfolio managers and analysts who believe that a DCF (discounted cash flow) model is the answer to successful investing. Sometimes it’s very tough explaining that the reason I own a stock is because it’s going up. That’s too simple for these University of Chicago trained MBAs and CFAs. But some of them are slowly coming around to trend following because they see the results. Over the past 3 years I have outperformed my benchmark by about 800 basis points, while the other portfolio managers are consistently failing to beat their benchmarks. After managing money for over 12 years, I am absolutely convinced that trend following works. I am so glad I found your book. Thank you.”
[Name Withheld], CFA Portfolio Manager
Ohio Teachers Retirement System

Of course, the praise is a nice boost to ego, but to me the great insight from this type of feedback is that it presents a view of trend following from someone you might not first expect it from.