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Ep. 200: Tom Basso Interview #3 with Michael Covel on Trend Following Radio

Tom Basso

Tom Basso

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Today on the podcast, I speak with Tom Basso, the trader most famously known as “Mr. Serenity” in Jask Schwagger’s book New Market Wizards. Basso was a stock trader and president of Trendstat Capital Management, but is now retired.

In this interview, Basso and I discuss location independence, using mental exercises to optimize yourself, and Basso’s daily routine as a trader. We talk about Basso’s 39-year track record as a trader and discuss his strategies.

We get into the psychology behind trend following trading, how to identify difference between a regular drawdown and something going seriously wrong, and why the willingness to lose small amounts of money can have massive benefits in the long run. Basso also talks about why trend following does so well during black swan events.

This is Basso’s third time on my podcast. I hope you enjoy!

In this episode of Trend Following Radio:

  • How to use mental exercises to improve yourself as a trader
  • Why the tolerance for losing small amounts of money can make you almost invincible
  • Tom’s daily trading routine: how to ensure you don’t spend the whole day making trading decisions
  • Why understanding strategic planning is key to being a successful trader
  • Trading for clients vs. trading for yourself, and the regulations that go along with that
  • Understanding the difference between a normal draw down vs. something really going wrong
  • Separating facts from opinions, and why it’s important in trend following trading

Mentions & Resources:

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6 comments on “Ep. 200: Tom Basso Interview #3 with Michael Covel on Trend Following Radio
  1. Patrick says:

    Well done Mike. Another great interview with Basso. Loved his cool response re: whether a draw down is just the usual or the system is broken. Cool as.

  2. Robert Lynn says:

    It’s very frustrating that I can not download the Podcast directly from the website. Great interview with Tom Basso Mike.

  3. DGDye says:

    I absolutely agree with Tom’s reflection on how he would do things differently today. The financial industry is the most regulated industry in the world. As a result, all the “sheep” out there have zero chance of having their money managed by the best in the business because lawmakers have deemed such investments as risky based on generalizations and flawed analysis. Their “protection” of the masses has guarantees that these sheep will be herded into the mutual fund/big bank pens to get their usual sub-par returns with oversized fees.

    I originally dreamed of starting a hedge fund, but soon came to realize that — as Tom says — most of my time would be spent on non-trading activities. Consequently I trade only my own money. With the ability to focus and constantly improve, I have been fortunate enough to have results that beat anything I have seen, published or private.

    I have no desire to manage other people’s money. I went into trading for freedom — Why would I give that up to answer to a bunch of suited, moronic institutionals who don’t understand simple concepts like volatility, real returns, and the essentials of risk management?


  4. DGDye says:

    BTW, Michael,

    I should mention that my returns became exceptional only AFTER I read Trendfollowing. Until then I was doing the usual research, following analysts, etc. TF taught me about the world of algorithmic trading and I haven’t looked back since.


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