Another explanation as to why real time news is useless:

Mike Bloomberg became the richest man in New York by selling traders just fifteen seconds head start on the data they needed. Fifteen seconds costs thousands of dollars a month per trader. But in most cases, what we get online is not actually in real-time and it’s not news, either.

Getting ever closer to the first moment is expensive in other ways. It might cost you in boredom, because watching an entire event just to see the good parts takes time, particularly if there’s no guarantee that there will even be good parts.

It might cost you in filtering, because the less you’re willing to wait, the more likely it is that you’ll see news that’s incorrect, out of context or not nearly as valuable as it appears.

When journalists, analysts and pundits are all racing to bring you the ‘news’ first, you get less actual news and more reflexive noise. Go watch an hour of cable news from a year ago… what were they yelling about that we actually care about today?

And, it turns out, the five minute head start you got from watching that news live has no real value to make up for all the costs that go with it.

On the other hand, if you can figure out how to bring actual, interesting, useful breaking ‘news’ to those that will pay for it, you can provide quite a profitable and beloved service.

In the last ten years we’ve redefined breaking news from “happened yesterday” to “happened less than fifteen seconds ago.” The next order of magnitude will be prohibitively expensive and (most of the time) not particularly useful. Better, I think, to hustle in the other direction and figure out how to benefit from well-understood truth instead of fast and fresh rumor.

Shout to Seth Godin for words of wisdom not intended to buttress trend following, but damn well do.

Consider wisdom from author Seth Godin:

Wouldn’t it be great to be gifted? In fact…It turns out that choices lead to habits. Habits become talents. Talents are labeled gifts. You’re not born this way, you get this way.

Start. Find an edge somewhere (anywhere) and start.

Seth Godin writes:

A generation ago, a clever idea could run and run. We talked about Space Food Sticks and Tang and Gilligan’s Island and the Batmobile for years, even though there certainly wasn’t a lot of depth. Hit movies and books stayed on the bestseller lists for months or even years (!)

Today, an internet video or an investment philosophy or a political moment might last for weeks or even a few days. It’s not unusual for a movie or a book or even a TV series to come and go before most people notice it. Neophilia has fundamentally changed the culture.

The result is that there’s an increasing desire, almost a panic, for something new. Yesterday was a million years ago, and tomorrow is already here. The rush for new continues to increase, and it is now surpassing our ability to satisfy it.

When that need can’t be filled (which is not surprising, if you think about it) then we’re inclined to declare that it’s the end, the end of new ideas, the end of progress, the end of everything that’s interesting. Spend a week or two watching TED videos and once you catch up, you might find yourself saying, “sure, but what’s new now?”

If you’re in the business of making a new thing, this churn may be an opportunity, because it’s easier now than ever to send a hit up the pop charts, whatever sort of pop you make. But it comes at a price, which is that it won’t last, and you’ll quickly have to go back and make another one.

The real opportunity, I think, is in trying to build longer arcs. Now that the cycle of new is eating itself in a race to ever-faster, there’s a bigger chance to make long term change by consistently focusing on what works (and what’s important), not what’s new and merely shiny.

What’s important, what’s always important, is useful change.

He did not write that piece to buttress the timeless nature and arc of trend following. He also did not write it as a way to rip investment junkies glued to news shows 24/7 afraid of missing something actionable. However, Godin’s piece achieves both goals. Want more? Start with my books.

Synopsis: Michael Covel talks about his upcoming trip to Asia (with a special song intro for Korea). His plans include a speech in Tokyo, time spent in Singapore, Bali, Panang, KL Thailand, with various speaking events throughout. Covel’s Asian odyssey is sure to be documented in the podcast. Covel also thanks the listeners for the success of the podcast. People feel stuck, and Covel talks about Stephen Cope’s “The Great Work of Your Life: The Guide to the Journey of Your True Calling“. Most Americans don’t want to be on the endless treadmill, and maybe trend following is a way to get the freedom that you need in order to find your calling. Next, Covel discusses a quote from Bob Prechter, of Elliott Wave fame. Covel doesn’t think that predictive techniques work, but Prechter had a fantastic piece of writing that Covel shares that analyzes some of the Fed actions in the past compared to what they’re doing now. Covel contemplates what this might mean, and how it shows the Fed might be in a panic. But what does this mean to a trend following trader? Very simply, it’s just another reason to employ a trend following strategy. If the Fed has dampened speculation in the past by raising interest rates to pop a bubble, and today you’ve got markets right back at the all-time highs but rates are still at 0%–what might this mean? If this scenario is accurate, what strategy do you employ? You can either trust the system, or you can put in place a strategy that only places trust in price action. Look at what Prechter says to inspire you to become a trend following trader. So how do you adjust? Covel goes on to discuss how to get “unstuck” quoting author Seth Godin: “Starting without seeing the end is difficult, so we often wait until we see the end.” Next, a quote from Atul Gawande that talks about knowing your fallibility, and the importance of practice and nurture (in trend following). Covel also discusses an upcoming massive searchable .PDF file that he’s putting together featuring 15 years of research containing background documents, systems, and other research materials. Covel’s special offer new DVD: www.trendfollowing.com/win.

What follows are three different views I found relevant to trend following success. First, Bob Prechter offers:

“You can go all the way back to 1929, and [the Fed] was doing what its job is supposed to be, which is to put dampers on exuberance and only make money easier when the markets are down and the economy is contracting. Following that plan, the Fed raised the discount rate in 1929 to 6%. Here at the 1937 high, it raised margin requirements and bank reserves. In the 1968 bull market, when the public was excited about stocks, the Fed raised margin requirements and raised the discount rate to 6%. In 2000, right at that high, the Fed again raised its discount rate to 6%. In 2006, when the housing market was topping, and a year before stocks topped, it raised it to 6¼%. What is it doing now? The market is right back in the rarified areas that it was when the Fed dampened speculation, but now the Fed is doing the opposite. Not only has the Fed not raised the discount rate to 6%, or even to 1%, but it is keeping the Fed funds rate at zero, and it is promising a 0% Fed-funds rate through 2015, three whole years. This 180-degree turn tells me that the Fed is in a panic.”

Real simple: want to trust that system to take care of you? Of course not. Trend following is wise for anyone who sees the moral hazard at play and still has a pulse. How can you go about breaking away from the current Federal Reserve daddy/mutual fund/CNBC/”fundamentals till you drop” Matrix? Seth Godin offers:

“The best way to get unstuck? Don’t wait for the right answer and the golden path to present themselves. This is precisely why you’re stuck. Starting without seeing the end is difficult, so we often wait until we see the end, scanning relentlessly for the right way, the best way and the perfect way. The way to get unstuck is to start down the wrong path, right now. Step by step, page by page, interaction by interaction. As you start moving, you can’t help but improve, can’t help but incrementally find yourself getting back toward your north star. You might not end up with perfect, but it’s significantly more valuable than being stuck.”

One way to approach being unstuck? Copy the best’s understanding of fallibility. Atul Gawande offers:

“What I found over time, trying to follow and emulate people that were focused on achieving something more than competence, is that they weren’t smarter than anybody else, they weren’t geniuses. Instead they seemed to be people that could come to grips with their inherent fallibility–fallibility in the systems that they work in, and with what it took to overcome that fallibility.”

“Bingo!” The Turtle story as but one example fits the bill.

Author Seth Godin writes:

Who you hang out with determines what you dream about and what you collide with. And the collisions and the dreams lead to your changes. And the changes are what you become. Change the outcome by changing your circle.

THAT is how you learn trend following. Are you ready to change your associations?

Seth Godin nails it:

Snark and fear: The single most appropriate question to someone who attacks, dismisses or trolls: “What are you afraid of?” It’s incredibly easy to tear someone down, easier still to criticize an idea. The more vehement the opposition, though, the deeper the fear.

True that. A good example from my world.

A great note on fundamentals (even if not intended) from marketing consultant Seth Godin:

Is more always better? Sometimes, only better is better.

He was not directly talking about the insatiable desire on the part of many investors to have more and more data, but that’s how I took it. More and more data doesn’t provide anything except more.

Better (or profits) is something else entirely.

Do you want more or better?

A sage writes:

Being judged is uncomfortable. Snap judgments, prejudices, misinformation… all of these, combined with not enough time (how could there be) to truly know you, means that you will inevitably be misjudged, underestimated (or overestimated) and unfairly rejected. The alternative, of course, is much safer. To be ignored.

Safe is not my way. Ignored? By some, but not others.

Recent Reading that Dovetails Perfectly with Trend Following:

The Little Guide to Contentedness
Where’s the Heat?

Just Cool:

Pencil vs Camera by Ben Heine

Just Turtles:

Scientists Lift Lid on Turtle Evolution

Seth Godin writes:

Where’s the heat? Is that your goal? To find the next hot thing? Do you want to buy it, sell it, use it, eat it? In every industry where there’s fashion (which is every industry), people spend an enormous amount of time looking for heat. It defines the cutting edge, determines what’s in or out, what’s hot or not. Two things worth considering:

a. the hot thing isn’t always the thing that’s aligned with your goals. Sure, sometimes the most profitable item is also the hot item of the moment, but for many companies, market share or profitability or utility has not a lot to do with being on the cutting edge of fashion. And as a user, the hot item of the moment isn’t necessarily the thing that will create value or even identify you as truly hip.

b. The cycle of hot keeps getting shorter.

You can chase this, but it’s not free, and it might not get you where you want to go.

In my 15 years working with students hot is the guillotine. It’s the hangman’s noose. The death knell ringing.

Do you want a hot, fast, quick, fake, slick, imaginary, phony and fleeting investing education? You will not find it here.

Seth Godin writes:

Media volatility makes more people and more ideas famous for ever shorter periods of time. What the fine art market shows us, though, is that real value isn’t created by this volatile fame. Consistently showing up on the radar of the right audience is more highly prized than reaching the masses, once then done. This works for every career, even if you’ve never touched a brush.

My work, my creativity, my thought–is driven around reaching the right people–not necessarily the masses.

Think about what drives the masses.

Kim Kardashian has 14,000,000 million Twitter followers–primarily due to her original porno.

I don’t have those numbers and I’m not so sure that a porno would afford more Twitter followers. Don’t get me wrong, I have to play the game at some level, and do to some degree (i.e. 100,000+ books sold and millions of web visitors over 15+ years), but quality work that reaches the right people is what really drives me. Quality counts still.

Opps. The original headline question: “Covel, Why Are You Not on CNBC All of the Time?”

David Harding answers that with his CNBC appearance.

From Seth Godin:

“The formula doesn’t work. It never has. And yet we act as if it does. We act as if there are only two steps to school: Get kids to behave Fill them with facts and technique Apparently, if you take enough of each, enough behavior and enough technique, then suddenly, as if springing from verdant soil, passion arrives. I’m not seeing it. I think that passion often arrives from success. Do something well, get feedback on it, and perhaps you’d like to do it again. Solve an interesting problem and you might get hooked. But if it takes ten years for you to do math well, that’s too long to wait for passion.”

You want to be a trend follower? There is a secret.

Note: Read Godin’s new book–free.

Seize the moment. It is time for massive economic challenge, political and generational change–whether you want it or not.

What will you do? Trust the old ways. Hold on. Pray.

Those are not solutions.

Seth Godin adds:

That’s a question you hear a lot. “Was it worth it?” Not certain what either “it” refers to, but generally we’re saying, “was the destination worth the journey? Was the effort worth the reward?” The thing about effort is that effort is its own reward if you allow it to be. So the answer can always be “yes” if you let it.

Seize the moment.

The short version:

Note: Shout to Jim Byers for the find.