Feedback in from a client Jim Byers of Indianapolis:

•••

Michael, in the spirit of [your course and DVDs] now available, I’m going to pretend you are interviewing me as I am approaching the end of my rookie year.

Question: Tell me a little about yourself?

My father was a Tech Sergeant in the U.S. Air Force so I had a chance to live in many cities growing up and meet many people. I attended the University of Cincinnati and received a bachelors degree in MIS (Mgmt Information Systems, now known as Information Technology). I joined a Fortune 500 company out of college and have remained with this company for 26 years and have had the pleasure to serve in many roles during this time. I am married and a father of three kids. I enjoy playing golf, reading, like a glass of wine in the evening and eating all kinds of good foods.

Question: When did you start investing your own money?

Well, in the summer of 2006, I was looking at my 401k statement from 1999-2006 and was shocked to see my account still hadn’t recovered. I was frustrated and decided to start a journey to figure out how to invest. I have read 100+ books since 2006 trying to determine an approach. Frankly, I was surprised at how many books have been written and at the same time how many really don’t offer any specifics as to how to achieve results.

Question: How did you find ‘Trend Following’?

I was browsing a book in Borders about how to calculate a company’s value and the notion of moving averages and stochastics was introduced to determine when to buy and sell. I was hooked. The idea of using a trend made sense to me and offered protection for downside moves. Once I noticed this idea of trends, a whole new set of book titles jumped out at me in Borders. And the first title that caught my eye was ‘Trend Following‘ by this guy named Michael Covel. This book blew me away — it showed mathematical evidence that trend following works and evidence was provided for numerous traders identified by name. I was still highly skeptical of everyone writing and talking about investing, but this book, much more than any other, gave me a sense of hope that I could replicate this approach.

Question: Then what?

Well, I read the TurtleTrader book and this got me more excited about the possibility that I could implement such a system. I also read one more book which emphasized the advantage a small investor can have going against the whales of Wall Street. These two stories convinced me I was on the right track. So, I setup two scenarios: 1) Pulled 50% of my money out of a Merrill-Lynch managed Stocks/Bonds account and started to invest small positions on my own. 2) Kept 50% with Merrill The stock market started to go crazy and broke a moving average so I got out with 50% of my money. The other 50% I left with Merrill because they assured me bonds go up when stocks go down and vice-versa. Well, after losing 30% in the financial crisis market crash, I pulled out my remaining money and went out on my own. But, I still had not settled on a system. In the summer of 2009, I decided to purchase [your] course and CDs.

Question: Then what?

Well, I was still pretty clueless. I read the course … and was stunned by the completeness of the system and how so much good information could be packed in… I listened to the [cds] again and again. And I asked you a number of questions such as who do I use for good pricing data. I looked at some on-line software demos and bought a package. However, after using this for a short while, I didn’t like the software and decided to write my own application. So I spent several weekends writing and testing my app (in between kids events and household chores).

Question: So, you now have an application — what next?

I then had to decide what markets to trade. I didn’t understand the futures market at all and was intimidated by the leverage, so opted for stocks and started to build a list of companies to watch for signals.

Question: Now that you are setup, what does a typical trading day look like?

I failed to emphasize this earlier, but, I have a busy full-time job so I needed a system which does not require lots of time staring at a computer screen. I needed to be able to setup my next day strategy in the evening and be free to perform my job during the day. So, when I get home at night, I immediately go to my computer and in a couple of minutes have the CSIdata.com site loaded and initiate the download data program, which takes about 15 minutes, and during this time I go upstairs to kiss my wife and kids, change into comfortable clothes and start relaxing. Later, after the price data is downloaded, I run my program to look for buy/sell and add positions signals. I also update my equity numbers and from this, determine position sizing for the next day. After my application completes running, I print the signals, determine the next days actions and place the next days trades and stops in my on-line brokerage account. And I am done. If I have extra time, I like to read various articles about the economy and markets to look for possible markets to include in my list of companies to apply the turtle trading system.

Question: What do you currently trade?

My company 401k provides basic indexes (S&P500, international fund, stable income, small cap.) and has self-directed brokerage account that includes about 300 ETFs). So, for my 401k, I focus on ETFs. I was able to pull 50% of my money from this 401k and place in an IRA account so I have many more options including the ability to buy individual stocks and inverse ETFs (go short). I also saved money in a personal account and have setup a margin account so I can go short.

Question: Have you gone short yet?

Yes, and I must say, I was so scared even though the … system establishes a loss limit. The media has done such a good job brainwashing me. But, I made money on that bet and now feel comfortable with the system and the idea of shorting.

Question: What do you think is the most important part of your success to date?

First, the turtle trading system you present in the course is so complete. Money management, the daily mathematical calculation of volatility, overall risk units — all of this fits together into a complete system! Second, PRACTICE, PRACTICE, PRACTICE. Putting my own money on the line and being responsible for profits and losses is not easy. You say in one of the CDs that after a person gets the math of the system under control, then 100% is psychological. This is spot on from my experience. Third, I had to re-program my brain — purge my thinking of all the CNBC, buy-and-hold, stay-the-course, invest for the long-term brainwashing offered everyday in commercials, print ads, billboards, etc. I listened to your CDs over and over and over again, so many times on my way to work to re-program my thoughts and follow the … system.

Question: What surprised you about the system?

Position Sizing. Before moving to [a trend following] system I was buying much smaller number of shares of stock I viewed risk as the total amount I spent on shares. With TT, I buy many more shares with the focus being on how much I could lose due to market volatility. This approach totally makes sense but even today I’m still getting mentally comfortable with this approach. To date, my position sizes put 1% of my total equity at risk.

Question: Was the system difficult to learn?

No, not at all. The system is easy to understand yet elegantly comprehensive leaving nothing to chance. I’m comforted by the mathematical and repeatable approach. And, because of this mathematical approach, it can be tested. This isn’t about candle-stick patterns, head and shoulder patterns, tea cups, etc. this is mathematical, repeatable and testable.

Question: What is difficult to execute?

Letting profits run. I expect to lose, after all, this is the stock market. But, with winning, I need the profits to run to their max. I am getting much better at this but this has taken practice and growing confidence in the system. Even though I had a great year, I definitely missed out on profits I would have gained if I just would have stuck with the system.

Question: If you could change anything about the course what would you do?

Futures — I would provide a table presenting ‘minimum fluctuation’ or ticks for a variety of markets and help in explaining this more. Personally, I haven’t found the CME courses all that great. So, I have read a few books and am gleaning what I need to understand these markets. Correlation — I would like to see some screen shots and examples on how to calculate this in Excel.

Question: What is your goal?

Financial freedom! I enjoy my job, but I would enjoy my job even more if I knew that I did not have to work.

•••

Thanks for the feedback Jim.