Michael Covel is the author of the internationally bestselling book Trend Following

Ignorance v. Stupidity

October 31, 2007

An article with gentle reminders sent in by a blog reader.

London Interview

I am in London for a film interview, so my posting has been spotty!

Ground Control to Major Tom!

October 29, 2007

I saw a "correction" at TheStreet.com today of Marek Fuchs' review of my book "The Complete TurtleTrader":

By TSC Staff
10/29/2007 10:18 AM EDT

An Oct. 27 Marek Fuchs column, Wolves in Turtles' Clothing, said that Michael Covel ran the test discussed in his book. In fact, Covel wrote about the test, but did not run it. TheStreet.com regrets the error. (Corrected Oct. 29)

The only thing that comes to mind for me when I see their "correction" are the lyrics to David Bowie's Space Oddity...these guys are either plain lost or they are intent on confusing issues on purpose.

A Review of Marek Fuch's Review

A well written review of Marek Fuch's review.

Brett Steenbarger Review of "The Complete TurtleTrader"

October 28, 2007

A review of my new book forwarded to me today by a reader in France:

Turtle Trading Lessons From Michael Covel by Brett Steenbarger

Few legends in trading have been as enduring as that of the Turtles. The Turtles were traders in the 1980s trained in a trend-following methodology by Richard Dennis and William Eckhardt. The traders came from a variety of backgrounds; most had no background whatsoever in financial markets. Dennis championed the cause of nurture: he believed that great traders could be made. Eckhardt took the other side of the bet, and the Turtle experiment was on.

The Complete TurtleTrader, Michael Covel's engaging and well-written account of the Turtles, covers not only the experiment, but a second generation of Turtles who were inspired by the Dennis/Eckhardt vision. One of the most interesting segments of the book covers Salem Abraham, who by chance met one of the original Turtles, took a 180 degree life turn, and began his own highly successful fund. It's a powerful illustration that, though markets have changed since the 1980s, the dynamics of success have not.

Covel's book reads more like a piece of financial journalism than I expected, and I mean that as a compliment. It is this well-rounded perspective that makes "The Complete Turtle Trader" complete and a definitive contribution to the trading literature. He has clearly researched his topic and sources his quotes. He also casts a critical eye on his subjects, investigating why some Turtles found long-term success and why others didn't. A very enlightening portion of the book concerns Richard Dennis himself, the ending of the Turtle experiment, and the master's departure from his own trading rules and principles.

For those wanting access to the Turtle philosophy and rules, they're laid out clearly and unflinchingly. This is not a methodology for the faint-hearted, which is one reason so many Turtles and would-be Turtles have not stuck with it. Large drawdowns inevitably accompany the quest for large gains, and it's those large gains that ultimately provide trend following with its edge. Investors who place their money in funds simply don't want to see 20% of their money evaporate in a quarter. This inevitably leads money managers to refine (and ultimately eviscerate) the Turtle methodology.

Many of Covel's themes will ring true to readers of this blog, including the role of deliberative practice in the acquisition of trading expertise and the importance of emotional resilience and entrepreneurial spirit in sustaining a trading career. My impression, reading the book, is that Covel is under no illusions: the methodology, which provides the statistical edge in trading, is necessary but not sufficient for success. After all, the Turtles started with the same methods; some made it, others didn't. Covel's segment discussing what separated a successful Turtle, Jerry Parker, from his less successful peers is perhaps the most insightful portion of the book.

Because Covel so clearly lays out these ingredients of success, his book is relevant not just to trend traders, but to anyone who aspires to greatness in the markets. The message is clear: to win, the odds must be in your favor, and you must have the fortitude to keep playing, remain consistent, and compound your edge. That's a formula for success in any field of endeavor, which may be why the Turtle story finds universal appeal.

And, by the way, for readers who want to dig a little more into Turtle trading before purchasing Michael's book, I recommend his website. There are quite a few resources there, including articles on money management and trend following.

Source: Brett Steenbarger's Site

Marek Fuchs: When You Are This Arrogant Why Bother to Read Covel's Book!

I believe NY Times and TheStreet.com reporter Marek Fuchs wrote a review of my new book without even reading it. I should note that in our email exchange below it was fairly predictable that Fuchs would go down the path of "Mike doesn't have thick enough skin" as a defense for me questioning his competence. When you catch a reporter, a NY Times reporter, in the middle of sloppy reporting, its not surprising that when you press hard (which I did), he would come out arrogantly swinging back. Our email conversation:

Covel: Are you familiar with the factual errors in your review of my book?

Fuchs: I've written thousands of articles and have only made a handful of errors, but I am sorry I said you ran the experiment in my article (I didn't make the sloppy mistake in my video). In quickly trying to edit out of a passively constructed "an experiment was run..." I slipped and I'm sorry. If there are any other errors, please let me know.

Covel: I have had feedback from a ton of people about your review. Intellectually honest criticism is one thing, I welcome it. But for a NY Times reporter to not read my book, and attempt to review it (while making factual errors), is frankly sad. One of my blog readers summed your effort up:

Reading the review of your book by Mr. Fuchs reminded of me an expression that goes something along the lines of 'It is better to let the world think you are ignorant than to open your mouth and prove it'. Well, Mr. Fuchs may not have opened his mouth per se, but clearly his written word was more than sufficient to highlight his ignorance.

A follow-up from the same above reader:

When I sent my initial comment below I did not realize that Fuchs had posted the video review. Now that I have watched that review, I stand corrected of my original comment. Mr. Fuchs was in fact good enough to open his mouth to prove his ignorance. Criticism that is rooted in a difference of professional opinion or a failure to comprehend the subject matter (after making an effort to do so) is one thing. Criticism such as Fuchs' which results from apparently nothing but an attempt to smear a book and its author without taking to the time to read the book much less obtaining at least a minimal understanding of the subject matter (i.e., the Turtles) is simply lazy and irresponsible. Apparently Fuchs doesn't subscribe to the Jim Cramer mantra of 'doing your homework'.

I would love to see you read my book one day.

Fuchs: Michael--Please don't play that game. I read that book and can send you a bunch of letters too--including one from a former student of your's--agreeing with my assesment [sic]. (He liked your class very much, by the way.) Again, if you think I made a specific error (other than the attribution of the contest in the aritlce [sic] and not the video--and I'm sorry for that) please let me know.

Covel: A former student? Huh? I am not Richard Dennis, I did not teach the Turtles. What are you talking about? Additionally:

1. You imply that the Turtles, the traders in my book, are slow and steady. Clearly, they were not. They were high risk and high reward.
2. You say that the Turtle students were already successful. My book does not say this, nor is this an accurate description of events. The Turtle story is about taking people who were not wildly successful already and making them successful.
3. You mockingly read a passage (with a smiling kid on your lap for good measure) from my book about a tortoise and hare. Problem? That story is not in my book. The word 'hare' is not in my book.
4. You don't understand that the Turtle traders were not fundamental traders and mockingly refer to my book advocating the use of momentum strategies. No kidding! That is what the book is about. You say "No turtle I know is a momentum player." That statement demonstrates no grasp about what the Turtle experiment even was. Here are some comparison reviews, not to say you needed to praise my book (I could care less), but to show that you did not read the book (1), (2), (3), & (4). Maybe you glanced at some pages in my book, but you don't have the facts even remotely understood. You demonstrate that in your writing and video. As I said, sad reporting.

Fuchs: Michael: I'm glad you may have gotten some good reivews [sic]. Better reason, perhaps, to have a thicker skin on a bad one. Look: in my subjective opinion, I did not like the book and did not think it would help investors who read it--the lens through which I judge. I never said the Turtles were already sucessful [sic] on Wall Street, but that they had sucess [sic] in other areas. Since many on Wall Street--those I used to work with, those I write about--come from varied backgrounds, I think trumpeting the fact that these one time novices did well makes too much of this (or any other) method. Plenty--as I made clear--have come from other fields. That is important for readers to know. In terms of the introduction of the video, that was a wry take on the turtle reference--I trust viewers know that the children's tale of the turtle and the hare preceded this book. And, look, laying out a "sound" and "easy to follow" system for trading certainly implies a steadiness--especially when drawing a comparison with the braying on cable television. Problem was, too much of the advice, in the end, takes the form of platitudes. This is dangerous when the aim is fairly aggressive trading. That's what I read, that's what I said and that's why I don't think this is a good book for investors. Look--I've gotten plenty of letters, including from those who say they were seminar students of yours, that they were disappointed in the book. I've also gotten letters that they loved the book and I am the dumbest thing since the Edsel. I side with the first and I'll hazard a guess that you throw your hat in with the second.

Covel: I welcome bad reviews from people who have read the book. Intellectually honest debates are great. However, you still don't have a clue what the book is even about and continue to misrepresent basic facts in it. Your email is further confirmation of that fact. Perhaps you were just lazy that day? No matter, it was an extremely weak effort for a NY Times reporter.

Another blogger posting about this review.

I Punch Jim Cramer, He Punches Back; An Odd 'Review' at TheStreet.com from Marek Fuchs

October 27, 2007

Jim Cramer received a gentle punch from me in the preface of my new book. And clearly, he must not be happy. One of his reporters, who is also a NY Times reporter as well, has written a review of my new book that appears to have been completed without even reading it. Why do I say that? In his review he says that "I" did the Turtle experiment. Brilliant attention to detail!

Here is the review from TheStreet.com's Marek Fuchs (PDF).

The first paragraph of his review is an embarrassing admission that he NEVER read the book. However, it gets better. Fuchs also posted a VIDEO review of "The Complete TurtleTrader".

My thoughts? In Fuchs two reviews there are some "odd" discrepancies and or outright falsehoods that make me wonder what about the intended purpose of his "review":

1. Marek Fuchs implies that the Turtles, the traders in my book, are slow and steady. Clearly, they were not. They were high risk and high reward.
2. Marek Fuchs says that "Covel ran a contest of sorts". Fuchs is nowhere near accurate there.
3. Marek Fuchs says that the Turtles were already successful. My book does not say this, nor is this an accurate description of events. The Turtle story is great because it essentially took people who were not wildly successful already and made them successful. Again, clearly Fuchs is just reading my cover jacket at best.
4. Marek Fuchs mockingly reads a passage (with a smiling kid on his lap for good measure) from my book about a tortoise and hare. Problem? That story is not in my book. The word hare is not in my book.
5. Marek Fuchs doesn't understand that the Turtles were NOT fundamental traders and mockingly refers to my book advocating the use of momentum strategies. No kidding! THAT is what the book is about.

I must be making progress if Jim Cramer sends in the help to write an inept hit piece! As one of my readers wrote me:

Reading the review of your book by Mr. Fuchs reminded of me an expression that goes something along the lines of “….It is better to let the world think you are ignorant than to open your mouth and prove it…”. Well, Mr. Fuchs may not have opened his mouth per se, but clearly his written word was more than sufficient to highlight his ignorance. Congratulations on the new book. I will be ordering it from Amazon.com soon. Regards, Mike

A follow-up from the same above reader:

When I sent my initial comment below I did not realize that Fuchs had posted the video review. Now that I have watched that review, I stand corrected of my original comment. Mr. Fuchs was in fact good enough to open his mouth to prove his ignorance. Criticism that is rooted in a difference of professional opinion or a failure to comprehend the subject matter (after making an effort to do so) is one thing. Criticism such as Fuchs' which results from apparently nothing but an attempt to smear a book and its author without taking to the time to read the book much less obtaining at least a minimal understanding of the subject matter (i.e., the Turtles) is simply lazy and irresponsible. Apparently Fuchs doesn't subscribe to the Jim Cramer mantra of 'doing your homework'.

My email exchange with Fuchs.

The Turtle Memo to "Cut Back"

One of the interesting aspects of the Turtle program was the research completed by four Turtles during the program. They figured out that the rules given to them were too "hot". Here (PDF) is the memo telling them to cut back.

1980s Parallels?

October 26, 2007

An interesting piece by Barry Ritholtz.

Market Technicians Newsletter Review

October 24, 2007

I received permission to post a recent Market Technicians Newsletter review of my new book. Here it is (PDF) by Ajay Jani.

Catching

For the Wall Street film I am producing we just finished a Moneyball-connected shoot at Cal Ripken's minor league park. An old friend of mine, who pitched professionally for 10 years, threw some of his "stuff" at me for the better part of the morning. 'Kevin' can still get it going 85+ mph on his fastball (from his playing days high of touching 97 mph), and my catching hand (I have not caught for over 15 years) is feeling it. That said, I took none in the groin, so I am happy!

Blackstar Funds Go Video & Comments on Turtle Book

October 22, 2007

Blackstar funds has long been at the forefront in researching trend trading stocks. The other day I heard from Cole Wilcox of Blackstar Funds about my new book "The Complete TurtleTrader":

Mike, "The Complete TurtleTrader" is a vastly superior follow-up to your first book. It's well written and filled with useful insight and entertainment. This book delivers on the key concepts and philosophy that drive long term trading success. Congrats...Cheers, Cole

Also, check out Blackstar's new interview on Wallstrip.com:

Singapore Straits Times Bestsellers List for Sunday October 22, 2007

I know it's a small sample size subject to change, but still its better than not being listed! My new book was on the Singapore Straits Times Bestsellers List (Nonfiction) for Sunday October 22:

1. (1) English As It Is Broken by The Straits Times
2. (2) The Secret by Rhonda Byrne
3. (3) Marley And Me by John Grogan
4. (5) The Age Of Turbulence by Alan Greenspan
5. (-) The Complete TurtleTrader by Michael W. Covel
6. (-) I Can Make You Rich by Paul McKenna
7. (4) Mother Teresa: Come Be My Light by Mother Teresa
8. (6) In My Time by Mr Miyagi
9. (7) The Innocent Man by John Grisham
10. (-) Handbook For Stock Investors by Goh Kheng Chuan

Another Turtle Review

October 21, 2007

Now that my book is out I am hearing from original Turtles about it. Another wrote me today:

"Nice book. Thanks. Sad ending. Although it's still far from over."

I have not named some of the Turtles that have been emailing me as their emails were personal notes. Additionally, now that my book is out two Turtles who were not interviewed have expressed interest in talking to me, Of course I will take that opportunity, but their feedback might have to wait for a future expanded edition!

Chuck Jaffe Interview Re: The Complete TurtleTrader

October 19, 2007

Just finished radio interview with Chuck Jaffe of Market Watch. While he said he had read another book on the Turtles, he did offer that my book was at the head of the pack.

Complete TurtleTrader Review in Market Technicians Association Newsletter

October 18, 2007

The following review appears in the Oct 2007 Market Technicians Association Newsletter. It is by Ajay Jani. You can find full review here. A screen shot:

Radio Tour for 'The Complete TurtleTrader'

In promoting 'The Complete TurtleTrader' I have probably done 20+ radio interviews across the country in the last 24 hours. Very interesting to hear the reactions. Most people have never heard of the story.

Flo and Eddie Enter the Picture: The Turtle Inspiration?

Right when I think I know something, I am not so sure. Legend? Dennis/Singapore/Turtle breeding farm. Now, one of the players square in the middle of the whole Turtle world, someone who did not talk until after my book was out, says the Turtles came from Rich Dennis' fondness for the music of the Turtles. Is this a minor point? Yeah, but a fun one! However, given the behind the scenes drama in bringing this story to life, not so sure all of the Turtles (the traders) are singing the lyrics to the Turtles (the rock group) best song, "Happy Together":

Imagine me and you, I do
I think about you day and night, it's only right
To think about the girl you love and hold her tight
So happy together

So happy together
How is the weather
So happy together
We're happy together
So happy together
Happy together
So happy together
So happy together (ba-ba-ba-ba ba-ba-ba-ba)

Pied Piper Feedback

October 17, 2007

Below is fedback from an "Old Pro" trader who has written me great stuff before:

Hi Michael,

Keep up the good work!

Recent Run of Interviews

October 16, 2007

In the last 36 hrs I have conducted on camera interviews with Congressman Richard Baker, Congressman Chris Van Hollen and Bill Miller of Legg Mason.

Turtle Feedback about My New Book

Feedback from one Turtle on my new book:

Thanks, but you do not need to send me a copy. I've already bought the book and read most of it. Liked it. Congratulations on a job well done.

To the point! Another Turtle called me to say the book was spot on.

Michael Martin Review of "The Complete TurtleTrader"

October 15, 2007

A review from trader Michael Martin of my new book. Martin manages a fund in excess of $100 million.

Stephen Aust: A Critic Goes Off the Cliff

A review on Amazon of my new book by Stephen B. Aust is titled "It Made My Brain Hurt":

I really, really, really wanted to like this book. I pre-ordered it, but wish that I had just sat in a bookstore to spend the 60 minutes that it took to read it. Then I could have invested (the money that it cost me to purchase it) in the markets instead. The book contains the "legend" and a little on the "results," but not much substance on the "lessons," so what is the point? This book was a real disappointment.
I keep reading how poorly the "turtle traders" are doing in the current markets...massive losses.

The facts of what is in my book don't mesh with Aust's view.

This Is Never Good

October 13, 2007

Bailouts? Crap. Read.

Your Trading Edge Magazine Review

A review from Australia's Your Trading Edge Magazine:

The legend of Richard Dennis' bet with his friend and business partner William Eckhardt that trading could be taught to anyone is known to almost everyone involved in trading and investing. The trend following break out system taught to this mixed group of students forms the basis of the majority of trading styles, theories and methodologies around today. This group were referred to as the turtles after Dennis visited a turtle breeding farm in Singapore and allegedly made the comment to Eckhardt that he could 'breed traders just like they breed turtles.'

The book is a fascinating insight into the turtle program and 'system', the developers of the training program (Dennis and Eckhardt), and a number of the original turtle students, both then and now. It is a great read for anyone enamoured by the turtle 'myth' and for all those with an interest in trading in general as it tells the 'real stories' rather than just the glossy good bits - a thoroughly good read.

Paul Tudor Jones

A fun article on Paul Tudor Jones. I have this video documentary on him. It is a great film.

TurtleTrader Table of Contents

The Complete TurtleTrader Table of Contents:

Preface
Acknowledgments
1 Nurture versus Nature
2 Prince of the Pit
3 The Turtles
4 The Philosophy
5 The Rules
6 In the Womb
7 Who Got What to Trade
8 Game Over
9 Out on Their Own
10 Dennis Comes Back to the Game
11 Seizing Opportunity
12 Failure Is a Choice
13 Second-Generation Turtles
14 Model Greatness
Appendix I: Where Are They Now?
Appendix II: Related Websites
Appendix III: Turtle Performance Data
Appendix IV: Turtle Performance While Trading for Richard Dennis
Endnotes
Index
About the Author

Georgetown University Shoot

October 12, 2007

For the film I am producing we did a shoot today at Georgetown University. It was a great opportunity to sit down with nearly 20 students and their professor to learn about what investment strategies are being taught in school.

Bulk Buys of "The Complete TurtleTrader"

October 11, 2007

For those who have asked about bulk buys of my book "The Complete TurtleTrader", check out here. They list my first book "Trend Following" too.

Monty Hall Problem

October 10, 2007

I am not saying this example will make you a better investor, but it will get your probabilistic juices flowing.

'The Complete TurtleTrader' Book Feedback

A question from Hong Kong about my new book:

Dear Michael, I bought your book and noticed that Russell Sands was not included among the Turtles. I was wondering if there was a reason for this? I ask because I have always wondered about the relationship between Russell and Richard Dennis. I loved your book. While trend following is not my cup of tea, the insights you brought on the Turtle mindset was invaluable. Thanks for a great job. All the best, Ray

Before I could answer that Russell Sands is indeed in my book, Ray followed up:

Sorry on re-reading this I realize I was unclear. What I wanted to know was why Russell's track record was not among those you published?

Sands was only with Dennis for a year, and I don't have that one year record. In terms of the next 20 yrs he doesn't have a continuous record. For the book, after the Turtle program ended, I aimed to publish those Turtles with a continuous track record. For trading during the Turtle program I published the records that could be found. There was some interesting discrepancies there.

My New Book Available Today: The Complete TurtleTrader

October 09, 2007

At Amazon and bookstores.

The Monkeys Have It Figured Out

October 08, 2007

Chimps choose more rationally than humans. Not sure what that means exactly!

Cautionary Tale of Victor Niederhoffer

October 07, 2007

From the New Yorker comes a familiar story.

This Is No Way to Learn

Depressing state of affairs to say the least.

What's the most important psychology experiment that's never been done...?

October 06, 2007

This article lists many answers to the question: What's the most important psychology experiment that's never been done...? One I like: Why is learning slow?

Want A Dollar?

Wallstrip tackles our worthless dollar.

Innocents Abroad

From Slate: Why European banks were the big losers in the U.S. subprime meltdown.

Hedging Your Hedge-Fund Bet

October 05, 2007

An article sent in by a reader:

Hedging Your Hedge-Fund Bet
By JONATHAN REISS

JONATHAN REISS, former head trader in international bonds for Sanford C. Bernstein & Co., is founder of Analytical Synthesis, a research firm focused on financial innovations in the public interest. He says he is both a safer-than-average driver and a better-than-average investor.

Miami Real Estate: Documentary Marches On

October 04, 2007

You can't do a documentary on markets and investor behavior without taking a first hand look at one of the most volatile real estate markets in the world: Miami. Can't say enough good things about Miami, but clearly there are winners and losers there, just like every other market. Why do some win and some lose there in real estate? That's my question.

Was Harry Potter Inevitable?

October 01, 2007

Michael J. Mauboussin of Legg Mason posits an answer (PDF) to the question of "Was Harry Potter Inevitable?" as he investigates "Cumulative Advantage, Counterfactuals, and the Halo Effect".