Synopsis: Michael Covel discusses a sketch he recently saw on gapingvoid.com depicting an office with a poster on the wall that says: “Fanatical: Kiss every hope of leading a normal life goodbye”. Covel relates and wishes that he could impart this message upon people. If you listen to the words that Covel says, perhaps the enthusiasm that he brings can also bring you to see your life as fanatical. You’ve got to be fanatical, whether you’re going to be an entrepreneur, or a trend following trader. You have to be focused, you have to be passionate, and you have to understand. You have to *want it*, otherwise you simply won’t get there. Covel goes on to discuss a white paper by SEB Asset Management in Sweden. There’s always ups and downs in trend following strategy. A strategy that makes a promise to make you money every month is a fraud. There will be periods of time while you follow a trend following strategy where you have drawdowns. It’s just the way it works. But if you live to play another day, you can come up on top in the end. However, if you believe that the world has changed forever in such a way that there are no more business cycles, no severe banking crises, real estate crises, government bond crises, and corporate crises; that there will never be any large movements in the currency markets, no longer any social or military crises, and no major recovery from these crises–then trend following investments is unnecessary. Do you really expect there to be no future change? If we accept unpredictability, trend following is the best strategy to follow. Covel goes on to talk about the Fed, and whether we want the Dow to be elevated at the expense of our interest income. Covel continues on with the idea of information overload. How do you make decisions with it all? You can’t. It’s not a day trading rat-race. The most successful people in the world take a step back and look at the big picture. Simple makes money, simple finds freedom, and simple can be inspiring. The complexity is useless. Knowing every single data point does nothing for you in the long run. It’s just a game of trivial pursuit. Also: Covel announces product specials for the month of December–a great long term trend following system. Free DVD: www.trendfollowing.com/win.
Episode 44 Live Now
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