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Interview With Michael Covel: Masters in Business (Audio) · Masters in Business

• 0:03
  Speaker 1: This is Masters in Business with Barry Ridholts on Bloomberg Radio.
• 0:08
  Speaker 1: Welcome to the podcast this week, I have a very
• 0:11
  Speaker 1: interesting person who I'm going to suspect that the average
• 0:15
  Speaker 1: listener is not familiar with. His name is Mike Covel.
• 0:18
  Speaker 1: I've I've known Mike for a long time. We share
• 0:22
  Speaker 1: a fascination with all things turtle, and we'll we'll discuss
• 0:26
  Speaker 1: that a little bit. UH. Mike is probably best known
• 0:29
  Speaker 1: for his book Trend Following it's sold a hundred thousand
• 0:32
  Speaker 1: plus copies. He goes around the world lecturing on this. UH.
• 0:37
  Speaker 1: He's met with some of the most successful futures traders
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  Speaker 1: in the world, everybody from Larry Height to Build Done
• 0:45
  Speaker 1: to John Henry to go go through the list. It's amazing. UH.
• 0:49
  Speaker 1: If you're interested in commodities trading specifically, or the concept
• 0:55
  Speaker 1: of trend trading dress generally, this is really h an
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  Speaker 1: interesting conversation. What I found most fascinating, UH, Mike and
• 1:05
  Speaker 1: I have both been completely enamored by Richard Dennis's total experiment.
• 1:10
  Speaker 1: And for those of you who may not be familiar
• 1:12
  Speaker 1: with this, UH, in Jack Schwager's Market Wizards, a classic
• 1:17
  Speaker 1: book on the art of trading and investing. H Richard
• 1:21
  Speaker 1: Dennis's is brilliant commodities trader made eighty million dollars one
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  Speaker 1: year in the eighties, back when eighty million dollars was
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  Speaker 1: real money, and had a debate with his partner as
• 1:32
  Speaker 1: to whether or not great traders are born or made.
• 1:37
  Speaker 1: And Dennis's argument was that the way they grew turtles
• 1:41
  Speaker 1: in the turtle farms and in the Far East is
• 1:44
  Speaker 1: how he could train h traders. And so they took
• 1:47
  Speaker 1: out an end and a number of newspapers, brought in
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  Speaker 1: a bunch of uh newbies and people with no experience
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  Speaker 1: or background in this, and ultimately taught them to trade.
• 2:00
  Speaker 1: And and the turtle traders have put together a fairly
• 2:03
  Speaker 1: spectacular track record following Dennis's instructions. And so the conclusion,
• 2:09
  Speaker 1: by the way, the punch line to all this is
• 2:11
  Speaker 1: they developed this debate after seeing the classic Wall Street
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  Speaker 1: movie Trading Places. And so the conclusion is, yes, you
• 2:19
  Speaker 1: can train traders to follow a few specific rules, to
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  Speaker 1: develop discipline, to manage their losses, and create fantastic traders.
• 2:29
  Speaker 1: And and this is really a really interesting conversation. I
• 2:33
  Speaker 1: think you'll find it absolutely fascinating. Without any further ado
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  Speaker 1: my conversation with Michael Covel. This is Masters in Business
• 2:44
  Speaker 1: with Barry Ridholts on Bloomberg Radio. My special guest today
• 2:49
  Speaker 1: is Trader author and fellow podcaster Michael Covel. You probably
• 2:54
  Speaker 1: know him as the author of the best selling trend Following.
• 2:59
  Speaker 1: He's all so the author of Complete Total Trader, as
• 3:02
  Speaker 1: well as three other books. Born in Quantico, Virginia, grew
• 3:06
  Speaker 1: up in the US, currently residing in Saigon. Michael, Welcome
• 3:11
  Speaker 1: to Bloomberg. I want to jump into your background a
• 3:14
  Speaker 1: little bit because you wrote, you know, in finance, a
• 3:18
  Speaker 1: decent selling book is ten thousand, twenty thousand, you know,
• 3:21
  Speaker 1: unless you're Michael Lewis, you're not selling half a million copies.
• 3:27
  Speaker 1: But trend Following, which is really a very specific trading
• 3:32
  Speaker 1: um book that's old, hundreds of thousands of copies, didn't it.
• 3:36
  Speaker 1: I know it's sold over a hundred thousand for sure.
• 3:39
  Speaker 1: So yeah, that's a pretty cool thing. I feel very
• 3:41
  Speaker 1: fortunate to have this fantastic strategy to write about in
• 3:45
  Speaker 1: this cast of characters that just have changed my life
• 3:48
  Speaker 1: for sure. So let's talk about how you found your
• 3:51
  Speaker 1: way into this. You grew up your dad was in
• 3:55
  Speaker 1: the Navy. You grew up in Quantico. Your father was
• 3:57
  Speaker 1: a dentist. How do you go from being colon an
• 4:00
  Speaker 1: army brat but essentially a Navy brat to finding your
• 4:03
  Speaker 1: way into the world to final He was only in
• 4:05
  Speaker 1: the Navy for a little while and they started private practice.
• 4:08
  Speaker 1: I grew up in Vienna, Virginia, right outside Quantico, about
• 4:11
  Speaker 1: an hour and a half away. Uh, political science major.
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  Speaker 1: I mean that's not exactly a prelude to writing trend
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  Speaker 1: following right. Not the only political science major in the
• 4:22
  Speaker 1: world of finance. I have plenty of others. So, you know,
• 4:24
  Speaker 1: one thing let to another. I ended up in grad school,
• 4:27
  Speaker 1: taking a last semester in my early to mid twenties
• 4:30
  Speaker 1: in London, London School Economics or something unrelated. It was unrelated,
• 4:35
  Speaker 1: but I was there and I knew, Okay, I'm going
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  Speaker 1: back to the States. I want to figure out a
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  Speaker 1: way to get rich. The classic I'm gonna get rich.
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  Speaker 1: And when I went back, I gone to grad school
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  Speaker 1: at Florida State, and the only alumni that I could
• 4:48
  Speaker 1: find that had graduated from Florida State literally was the
• 4:50
  Speaker 1: recently retired CEO of Solomon Brothers. Jim Massey, and he
• 4:56
  Speaker 1: was he had just made like five six million bucks
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  Speaker 1: and you know, n two that was a good amount
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  Speaker 1: of money, you know, And so I bugged him. I
• 5:03
  Speaker 1: took the train up to Greenwich. He was right there
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  Speaker 1: in those those two buildings alongside the tracks, right at
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  Speaker 1: the train station, right. So he took me out to lunch.
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  Speaker 1: And I didn't know anything, but I had, I had
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  Speaker 1: found my way. This is my very first guy I'm
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  Speaker 1: gonna talk to on Wall Street. Takes me to a
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  Speaker 1: little French diner. We start chatting. I start chatting. He's
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  Speaker 1: not saying a word. I'm just like, oh my god,
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  Speaker 1: this guy's gonna make or break me. He's not saying
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  Speaker 1: a word. So finally I said to him, I said, well,
• 5:30
  Speaker 1: he's munching on his salad. I said, hey, did I
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  Speaker 1: say anything today where you thought I was full of blank?
• 5:37
  Speaker 1: And he said yes, really, he said, you told me
• 5:40
  Speaker 1: today that you wanted to be the best. You don't
• 5:42
  Speaker 1: want to be the best, you just want to win.
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  Speaker 1: And let's go back to my office and let's talk.
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  Speaker 1: That was my doctrination to Wall Street. Really that's a
• 5:49
  Speaker 1: fascinating conversation. So how did that lead you to trend
• 5:54
  Speaker 1: following how did you get the exact same time I
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  Speaker 1: was having that conversation, I was in Borders Books job
• 6:00
  Speaker 1: in Tyson's Corner, Virginia about one month later, and this
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  Speaker 1: is nineteen and I see a magazine and the magazine
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  Speaker 1: was Wall Street's top one hundred paid for the year
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  Speaker 1: nineteen ninety three, number thirty five, number thirty seven somewhere,
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  Speaker 1: and there was a guy named Jerry Parker and he
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  Speaker 1: had just made thirty five million dollars in one year,
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  Speaker 1: and he was a turtle. And that fascinated me because
• 6:23
  Speaker 1: I was like, Oh, there's something going on here. This
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  Speaker 1: guy is not an economist. He doesn't know every piece
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  Speaker 1: of fundamental information in the world. I might be able
• 6:32
  Speaker 1: to do this. Now. The entire next segment of our
• 6:35
  Speaker 1: conversation is going to involve the turtles, So hold off
• 6:40
  Speaker 1: discussing that specifically because I really want to dive into that.
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  Speaker 1: But from seeing this list of of top paid Wall
• 6:47
  Speaker 1: Street people, how did you find your way from that
• 6:51
  Speaker 1: into active trading? Well, I kept going on for about
• 6:54
  Speaker 1: another year, and I kept bumping into other people. I
• 6:56
  Speaker 1: was literally coming to conferences and just seeing who I
• 6:59
  Speaker 1: can meet, who could I knock on the door. I
• 7:00
  Speaker 1: went to see Bill Dunn and Stewart floorda a long
• 7:03
  Speaker 1: time trader forty year track records. I found John Henry
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  Speaker 1: in an event and approached him. I still remember his advice.
• 7:10
  Speaker 1: This would have been five. John Henry, very famous trader,
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  Speaker 1: ultimately ends up owner of the Boston Red Sox. He's
• 7:19
  Speaker 1: done pretty well, yeah, done pretty well. Brought them to
• 7:21
  Speaker 1: a World Series for the first time, a championship, done
• 7:24
  Speaker 1: three the first time. And I don't know how many
• 7:27
  Speaker 1: decades I think, and um, just just one of the
• 7:33
  Speaker 1: greatest track records in the history of finance. So what
• 7:37
  Speaker 1: sort of advice did he give to you? His advice
• 7:40
  Speaker 1: was short and sweet, because I said, I was looking
• 7:43
  Speaker 1: at him, like right after he was on the other
• 7:45
  Speaker 1: side of the Barings bank trade within months of that,
• 7:48
  Speaker 1: and he said he looked at me and he said,
• 7:49
  Speaker 1: you know, it never gets easy losing money for people.
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  Speaker 1: Quite fascinating. He didn't want to talk much more than
• 7:56
  Speaker 1: that pretty shy guy if anyone's ever met him, not
• 7:58
  Speaker 1: a very big guy, but he was. That was all
• 8:00
  Speaker 1: he wanted to tell me. And he looked beat up,
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  Speaker 1: even though he had probably just made a half billion
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  Speaker 1: dollars in the preceding ninety days. He looked beat up.
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  Speaker 1: But that's heavy lifting. That's a lot of work. It's exhausting,
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  Speaker 1: its training. It's especially the bills are stacked up on
• 8:14
  Speaker 1: the ground and you have to pick them up. It's heavy, right,
• 8:17
  Speaker 1: that pallets, what's the palaties? What is it like? Ten
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  Speaker 1: million dollars is a pallet of paliative cash. So uh so,
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  Speaker 1: now it's John Henry. So after all of this, I
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  Speaker 1: decided to put up a website and I ended up
• 8:31
  Speaker 1: and I'm not gonna go into it. Yes, I know
• 8:32
  Speaker 1: you want to come back to it. But putting up
• 8:34
  Speaker 1: a website, my first blog in was really what got
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  Speaker 1: me started. That's amazing. And what was the name of
• 8:40
  Speaker 1: the website way back when? Because back then the big
• 8:44
  Speaker 1: picture was a Yahoo geo cities site. I always had
• 8:47
  Speaker 1: a legitimate domain barrier. I was always looking forward a
• 8:51
  Speaker 1: little bit. It was Turtle Trader dot com. You're listening
• 8:53
  Speaker 1: to Masters and Business on Bloomberg Radio. My special guest
• 8:57
  Speaker 1: today is author and trader Mike Covil. One of the
• 9:01
  Speaker 1: books he wrote is The Complete Turtle Trader. Those of
• 9:05
  Speaker 1: you who may have begun your career in finance by
• 9:08
  Speaker 1: reading Jack Schwager's Market Wizards. Should be familiar with the
• 9:13
  Speaker 1: chapter about Richard Dennis and the turtles. And I found
• 9:18
  Speaker 1: that to be an absolutely fascinating part of that. And
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  Speaker 1: I want to discuss how you found your way to that.
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  Speaker 1: A little background. All the way back in Richard Dennis
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  Speaker 1: had made eighty million dollars for the year, and in
• 9:32
  Speaker 1: modern terms, that's almost two million dollars. That's back when
• 9:35
  Speaker 1: a million dollars was was real money. He was a
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  Speaker 1: legendary floor trader, a systems guru, and really an industry
• 9:44
  Speaker 1: leading money manager. And I'll let you tell the story
• 9:47
  Speaker 1: of how did the turtles come about? Fascinating story, and
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  Speaker 1: there's still to this day myth and legend and perhaps
• 9:56
  Speaker 1: some superstition. People debate things, but here's the bottom law.
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  Speaker 1: And rich Dennis had made his first million by the
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  Speaker 1: age of nineteen seventy six, is a floor trader. And again,
• 10:06
  Speaker 1: seventy six a million dollars, there's a lot of money.
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  Speaker 1: I think there was about he had made about two
• 10:10
  Speaker 1: hundred million total by like eighty two, and he was
• 10:14
  Speaker 1: about thirty seven years old. Uh, And what I'm about
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  Speaker 1: to say is absolutely true. Him and his partner Bill
• 10:19
  Speaker 1: at cart they went to see a movie and the
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  Speaker 1: movie was Trading Places with Dan Ackroyd and Eddie Murphy.
• 10:25
  Speaker 1: They went to see this movie. They walked out and
• 10:27
  Speaker 1: his partner Bill at Cahart said, hey, Rich, you we
• 10:31
  Speaker 1: can never do that. You're a savant. You're brilliant. They
• 10:34
  Speaker 1: took a guy off the street. How what a silly story.
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  Speaker 1: We can never do that, And Rich said, Uh, I'm
• 10:40
  Speaker 1: not special. We can teach people to do what I
• 10:44
  Speaker 1: do another words, come up with rules and come up
• 10:46
  Speaker 1: with guidelines to quantify and systematize what I kind of
• 10:51
  Speaker 1: learned intuitively. They put ads in barns in Wall Street Journal,
• 10:55
  Speaker 1: They hired trainees. They got like two thousand applications. They
• 10:58
  Speaker 1: gave a screening test to a true false questions asking
• 11:01
  Speaker 1: what your favorite movie was, these types of things, and
• 11:04
  Speaker 1: they selected about twenty people over two years. They gave
• 11:08
  Speaker 1: them approximately two weeks training, staked them with varying amounts
• 11:12
  Speaker 1: of cable from a couple hundred thousand to a couple
• 11:14
  Speaker 1: of million. They basically turned them loose for three and
• 11:17
  Speaker 1: a half years. At the end of that three and
• 11:19
  Speaker 1: a half year period, that group of approximately twenty had
• 11:23
  Speaker 1: made a hundred million dollars profit. I actually went to
• 11:26
  Speaker 1: the n f A, the National Futures Association, and I
• 11:29
  Speaker 1: pulled all of the original documents. When they left the
• 11:32
  Speaker 1: program to go registers money managers, they literally it was
• 11:36
  Speaker 1: like waiter kitchen help. I mean some I mean some
• 11:40
  Speaker 1: of them are very brilliant. Nonetheless, they've gone to great
• 11:42
  Speaker 1: schools and stuff. But it was a completely rag tag
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  Speaker 1: Desperit random, completely right now, it's awesome and so, in
• 11:49
  Speaker 1: other words, the battle between nature and nurture, Dennis essentially
• 11:54
  Speaker 1: proved you can create a great trader. You can build
• 11:58
  Speaker 1: a great trader. It's not just something that you're either
• 12:01
  Speaker 1: born with and have or don't. I never questioned it
• 12:04
  Speaker 1: again myself. I think a lot of people still hear
• 12:06
  Speaker 1: that story and question it. I saw that story and
• 12:08
  Speaker 1: I was like, I saw the backgrounds, and I said,
• 12:10
  Speaker 1: that's it. Even if I never want to do trading,
• 12:12
  Speaker 1: I have to accept this as truth. It's it's an
• 12:15
  Speaker 1: amazing tale that the movie Trading Places inspired a real
• 12:20
  Speaker 1: life version of let's figure out if we can actually
• 12:24
  Speaker 1: create a person and turn them into a trader. So
• 12:27
  Speaker 1: so let's talk a little bit about the subsequent careers
• 12:30
  Speaker 1: of the turtles. What did they do afterwards? How did
• 12:33
  Speaker 1: they all work out? You know, one of them became well,
• 12:37
  Speaker 1: all of them started money management firms, most all of them,
• 12:40
  Speaker 1: and most all of them did extremely well. I mean,
• 12:42
  Speaker 1: making millions of dollars, you know, the typical success mark.
• 12:45
  Speaker 1: Everybody sees. One of them, in particular, Jerry Parker managed
• 12:49
  Speaker 1: over several billion for probably twenty plus years and just
• 12:53
  Speaker 1: made himself an incredible fortune. One of the most plane spoken,
• 12:58
  Speaker 1: plane talking guys. And he was here right now, he'd
• 13:00
  Speaker 1: be saying, Hey, it's all my success is all because
• 13:04
  Speaker 1: of Rich Dennis. Rich Dennis was kind enough to say,
• 13:07
  Speaker 1: here's how I made a fortune. Here are my rules,
• 13:09
  Speaker 1: go do it. So here's a quick question. Under normal circumstances,
• 13:15
  Speaker 1: when someone identifies an inefficiency and an inability for the
• 13:20
  Speaker 1: market to recognize an issue, eventually that gets arbitraged away.
• 13:26
  Speaker 1: Why haven't these rules been arbitraged away or copied by
• 13:30
  Speaker 1: enough people that they no longer have uh an effect?
• 13:34
  Speaker 1: And Well, the way I would answer that is the
• 13:35
  Speaker 1: turtles were just trend following traders, and so they weren't
• 13:39
  Speaker 1: the only trend following traders. Rich Dennis had Piers peers
• 13:42
  Speaker 1: like Bill Donne and Ed Sakota and Keith Campbell and
• 13:45
  Speaker 1: David Harding and Larry I and all of these guys
• 13:48
  Speaker 1: on affiliated with Rich Dennis. We're running trend following firms.
• 13:52
  Speaker 1: So if you just look at the history of this,
• 13:54
  Speaker 1: you say, well, why does trend following keep working? Why
• 13:56
  Speaker 1: is it not broken down? Well? When is human nature
• 13:58
  Speaker 1: going to change? That's the key to all of this
• 14:01
  Speaker 1: is that people are unchanging and even though we may
• 14:05
  Speaker 1: have high frequency trading, we may have new entrants into
• 14:09
  Speaker 1: the marketplace, at at the very bottom of it, it's
• 14:12
  Speaker 1: it's human nature that drives these things. Yeah, I mean,
• 14:15
  Speaker 1: we're just we want to get rich fast, and you know,
• 14:17
  Speaker 1: we start losing money, we just think it's gonna come back,
• 14:20
  Speaker 1: and then we lose all of our money. So let's
• 14:22
  Speaker 1: talk a little bit about trend following. Next next segment,
• 14:25
  Speaker 1: we'll talk a lot more about human nature and some
• 14:28
  Speaker 1: of the behavioral issues. But what was it about um
• 14:33
  Speaker 1: trend following that made it so successful? And and let's
• 14:37
  Speaker 1: give this a little context. These aren't people buying stocks
• 14:40
  Speaker 1: and bonds, They're buying futures. They're training pretty much anything
• 14:44
  Speaker 1: from commodities, two currencies to what have you. And they're
• 14:48
  Speaker 1: doing it with a lot of leverage. So how does
• 14:50
  Speaker 1: that translate into the trends? As your friend? And that's
• 14:53
  Speaker 1: how these folks made their money. I don't think instrument
• 14:56
  Speaker 1: is critical, it's important. I mean, futures are the best
• 15:00
  Speaker 1: st instrument you got, the leverage you get like liquidity,
• 15:02
  Speaker 1: that's the best place to be. But you want diversification.
• 15:05
  Speaker 1: You know, if you wake up in its early two
• 15:08
  Speaker 1: thousand fourteen and every economist down there is saying, hey,
• 15:11
  Speaker 1: you know, we don't see anything happening for oil, and
• 15:14
  Speaker 1: you know there's no prediction of a drop in oil.
• 15:18
  Speaker 1: But if you're a trend following trader, you don't have
• 15:21
  Speaker 1: a a mindset or a prediction of where any particular
• 15:24
  Speaker 1: market's going to go. So when it starts to move,
• 15:26
  Speaker 1: you're just following along. You're following the crowd, your indicator,
• 15:30
  Speaker 1: your your reason for moving is the price action. That's it.
• 15:35
  Speaker 1: So if you think about trend following, think about with
• 15:38
  Speaker 1: like five kinds of ways to think about trend find
• 15:40
  Speaker 1: five rules. First, what's the portfolio you're going to trade?
• 15:44
  Speaker 1: Trade everything? So generally trend following traders historically have chosen
• 15:48
  Speaker 1: diversified portfolios and your goal, your oil, the equity indices,
• 15:51
  Speaker 1: the interest rates, the currencies, the big liquid movers. Number
• 15:56
  Speaker 1: number two, when are you going to get in? What's
• 15:58
  Speaker 1: gonna force you to get into a position? Number three?
• 16:02
  Speaker 1: How much you're gonna bet? You can't bet unlimited. You
• 16:06
  Speaker 1: know you're gonna bet half percent, one percent, ten percent.
• 16:09
  Speaker 1: I can't tell you. Many times I've given a presentation,
• 16:11
  Speaker 1: I'll ask an audience, to be an audience of a
• 16:12
  Speaker 1: thousand people, how much would you bet on each trade?
• 16:15
  Speaker 1: People actually say tempercent. Look, come on, you know what's
• 16:18
  Speaker 1: gonna happen at temper cent? The last four and five?
• 16:21
  Speaker 1: When do you exit this trade with a winner? When
• 16:24
  Speaker 1: do you exit this trade with the loser? What does
• 16:26
  Speaker 1: this all look like when it's crunched through the system.
• 16:28
  Speaker 1: You're basically a venture capitalist. You're basically a film financer.
• 16:32
  Speaker 1: Jason Blum he finances films, right, How does he do it?
• 16:35
  Speaker 1: He bets on a bunch of things that cost very
• 16:38
  Speaker 1: little money, and he'll get one big paranormal behavior or
• 16:41
  Speaker 1: whatever it's called, and that's the one that makes him.
• 16:43
  Speaker 1: That's the one that makes the fortune and pays for
• 16:45
  Speaker 1: the losers. For the other ones, none of this stuff
• 16:48
  Speaker 1: can be predicted. I'm very ridults. You're listening to Masters
• 16:51
  Speaker 1: in Business on Bloomberg Radio. My guest today is Michael Covel.
• 16:55
  Speaker 1: He is a trader and author, probably best known for
• 16:58
  Speaker 1: trend following and The Complete Total Trader. He also has
• 17:03
  Speaker 1: an extensive podcast, over four hundred episodes. And I've really
• 17:09
  Speaker 1: enjoyed both listening to other people's podcast and putting together
• 17:13
  Speaker 1: my own little podcast. How did you find your way into? Uh? Podcasting?
• 17:18
  Speaker 1: We get to beat in school? Huh? We never get
• 17:20
  Speaker 1: out of school now, right? Absolutely, it's it's an on
• 17:24
  Speaker 1: from my perspective. I get to bring in some really
• 17:27
  Speaker 1: really smart people and say teach me. It calms me down?
• 17:31
  Speaker 1: Yeah did when you listen to really smart people over
• 17:34
  Speaker 1: and over it again, I really I find myself calmer.
• 17:37
  Speaker 1: I started it in January of two thousand twelve. I
• 17:40
  Speaker 1: my last book came out before that, about six months
• 17:43
  Speaker 1: before that, And I don't know, I had done short
• 17:45
  Speaker 1: brief podcast several years before, like five minute little speech segments,
• 17:51
  Speaker 1: and I just decided, well, okay, I want to do
• 17:53
  Speaker 1: a podcast. It was completely on a lark. It was
• 17:55
  Speaker 1: just let's do it. And this was before what iTunes
• 17:58
  Speaker 1: looks like today, so that was it was just really
• 18:01
  Speaker 1: and one thing led to another. Remember Jack Schweger, who
• 18:04
  Speaker 1: wrote the book The Market Wizards that you mentioned. When
• 18:07
  Speaker 1: he came on, that was when I saw my first
• 18:09
  Speaker 1: pop because it had been two or three months of okay,
• 18:12
  Speaker 1: listens are going up, and then when Jack came on
• 18:14
  Speaker 1: and he was promoting a new book, Uh, that was
• 18:17
  Speaker 1: like boom, and it's exciting what that stuff happens. Right,
• 18:20
  Speaker 1: Schweger is legendary. I mean, how many people do you
• 18:24
  Speaker 1: think the first book they read when they started in
• 18:26
  Speaker 1: finance was Market Wizards. So I had quick, funny digression.
• 18:30
  Speaker 1: I had Schwegger on the show, and when I invited him,
• 18:33
  Speaker 1: he said, oh for the guy who gave me that review. Absolutely, Jack,
• 18:39
  Speaker 1: what are you talking about? I want you on the show,
• 18:41
  Speaker 1: but I have no idea what you're talking about. He's like,
• 18:43
  Speaker 1: you wrote a review of Market Wizards on Amazon a
• 18:47
  Speaker 1: decade ago and it's the top. You know, it's the
• 18:49
  Speaker 1: it's the most influential review. It's that So I had
• 18:52
  Speaker 1: to go on Amazon. I'm like, oh my god, he's right,
• 18:54
  Speaker 1: I forgot about it? Was it? So we had really
• 18:56
  Speaker 1: interesting conversation. I think he's a fascinating, fascinating guy. What
• 19:01
  Speaker 1: was it that made you gravitate to long form podcasting?
• 19:04
  Speaker 1: If it was it, was it just that, hey, I
• 19:07
  Speaker 1: have some time to kill or what motivated that. I
• 19:12
  Speaker 1: was working on a new book and I knew it
• 19:14
  Speaker 1: was gonna be coming out immediately, and I just I
• 19:18
  Speaker 1: don't know. It was just it was just something where
• 19:20
  Speaker 1: it was in my in my soul. I want to
• 19:22
  Speaker 1: do this, I want to talk to people. Look, I
• 19:23
  Speaker 1: had done a film. I had made a film. I
• 19:25
  Speaker 1: traveled the world for several years. I had had a
• 19:28
  Speaker 1: chance to sit down and do long form interviews already.
• 19:31
  Speaker 1: And the film was Broke, an American uh story, so
• 19:35
  Speaker 1: to speak, something like that. Right there was like you
• 19:39
  Speaker 1: were in there, you were in there doing something. It
• 19:41
  Speaker 1: was called it was broke, Broke, Broke the new American jury,
• 19:44
  Speaker 1: new American right, My My my premise being is it
• 19:47
  Speaker 1: broke is the new American jury. People want to be
• 19:50
  Speaker 1: broke because their actions are so irrational that that makes
• 19:53
  Speaker 1: some interesting sense. So so let's we're gonna talk more
• 19:56
  Speaker 1: about broke in in a ladder segment. Let's let's keep
• 19:59
  Speaker 1: coming back to the to the podcast. So any of
• 20:02
  Speaker 1: your guests really surprised you with things they said, Yeah,
• 20:06
  Speaker 1: and I should. There's a timeline of like guests that
• 20:10
  Speaker 1: broke the podcast. First was Jack Schwegger, and then my
• 20:13
  Speaker 1: first guest to my first non trading guest was Dan Airily,
• 20:18
  Speaker 1: and then once I got Dan Eireley, I had a
• 20:21
  Speaker 1: guy on who had been in my film named Vernon
• 20:23
  Speaker 1: Smith who won the most won the Nobel Prize, and
• 20:26
  Speaker 1: Brian brilliant guy George Mason now somewhere in Chapman in California.
• 20:31
  Speaker 1: But once I had those guys on, I went for
• 20:34
  Speaker 1: the home run. The home run guest, the one guy
• 20:37
  Speaker 1: that I knew if I could get, was gonna really
• 20:40
  Speaker 1: help my podcast, and that was Daniel Kneman, who won
• 20:43
  Speaker 1: the Nobel Prize shared it with Vernon Smith, and so
• 20:46
  Speaker 1: I had asked him six months prior in no response,
• 20:50
  Speaker 1: then I sent him an email knowing that he had
• 20:53
  Speaker 1: won the prize the same year as Vernon Smith. They
• 20:54
  Speaker 1: shared it and I sent a link to Vernon Smith
• 20:57
  Speaker 1: and he rubbed me back and he said, I listen
• 20:58
  Speaker 1: to that podcast with Vernon Smith, it's very good, and
• 21:01
  Speaker 1: I'm sure I'll come on your show. And the thing
• 21:03
  Speaker 1: that he said that was so amazing to me. It's
• 21:06
  Speaker 1: not related to making money or investing. But he was
• 21:10
  Speaker 1: in Nazi occupied Paris and there was a curfew and
• 21:15
  Speaker 1: he was not supposed to be out, and he was
• 21:17
  Speaker 1: six seven eight years old and alone walking the streets
• 21:24
  Speaker 1: and a Nazi soldier spots him, and the Nazi soldier says,
• 21:28
  Speaker 1: come here, come here now. Sure Conment is thinking at
• 21:32
  Speaker 1: that time, I'm done. I'm done. The Nazi soldier sits
• 21:35
  Speaker 1: him down on his knee, pulls out his wallet and
• 21:38
  Speaker 1: opens up his wallet and shows him a picture of
• 21:40
  Speaker 1: his son. They both spoke different languages and they shared
• 21:43
  Speaker 1: that experience and condom and said that was what That
• 21:47
  Speaker 1: was what triggered me into psychology. That that fascinating moment.
• 21:51
  Speaker 1: I want to study people for the rest of my life.
• 21:54
  Speaker 1: Konomen just realizes, Wow, what we think we know about people,
• 21:59
  Speaker 1: it is all wrong. Those quick judgments. There's the Nazi soldier,
• 22:03
  Speaker 1: He's gonna kill me. I'm a I'm a Jew in
• 22:04
  Speaker 1: Paris on the streets. I'm gonna be killed. Didn't happen
• 22:08
  Speaker 1: and that caused him to reassess, take a step back,
• 22:11
  Speaker 1: and say, how can I how can I look at
• 22:13
  Speaker 1: psychology for the rest of my life? He really knew
• 22:15
  Speaker 1: what that instant. That's amazing, old fascinating. I'm Barry rich Helps.
• 22:21
  Speaker 1: You're listening to Masters in Business on Bloomberg Radio. My
• 22:24
  Speaker 1: guest today is trader and author Michael Covell, best known
• 22:29
  Speaker 1: for the trend following series of books. We were talking
• 22:33
  Speaker 1: before the break about Daniel Kheman's epiphany as a child
• 22:38
  Speaker 1: on the war torn streets of Nazi occupied Paris. Let's
• 22:43
  Speaker 1: let's let's talk a little bit about human behavior in psychology.
• 22:46
  Speaker 1: What what did you learn from Coneman about how psychology
• 22:50
  Speaker 1: effects investing? Loss of version? Nobody wants to take a loss.
• 22:57
  Speaker 1: I just had. I happened to have lunched with one
• 22:58
  Speaker 1: of the guys that was profiled. And Jack Schwegger's book
• 23:01
  Speaker 1: Larry Hyde and Larry is famous for just saying, you know,
• 23:04
  Speaker 1: risk management, how much can you afford to lose? That's it.
• 23:08
  Speaker 1: All the academics can have all the complicated stuff and
• 23:13
  Speaker 1: all the white papers, how much can you afford to lose?
• 23:15
  Speaker 1: That's your risk management, and that's loss a version tied
• 23:18
  Speaker 1: in with conom and that's just I think many of
• 23:21
  Speaker 1: the traders actually had figured out long before. It's not
• 23:24
  Speaker 1: taking anything away from common but clearly many traders had
• 23:27
  Speaker 1: figured this out. I mean, David Ricardo back in the
• 23:30
  Speaker 1: sevent undred sure they had figured out lost reversion many many,
• 23:34
  Speaker 1: arguably centuries before they give out the Nobel prizes for it.
• 23:37
  Speaker 1: I started on a trading desk and one of the
• 23:39
  Speaker 1: first things they teach you is it's okay to be wrong,
• 23:42
  Speaker 1: it's not okay to stay wrong. And that's essentially a
• 23:46
  Speaker 1: form of of you know, risk management. You can't hope
• 23:50
  Speaker 1: and wish and pray for a trade to suddenly go
• 23:52
  Speaker 1: your way. If it's going against you, cut your losses
• 23:56
  Speaker 1: and move on to the next one. You gotta have
• 23:57
  Speaker 1: chips to play right, that's right, and if you get
• 23:59
  Speaker 1: wiped out, you're done. You you move along. So, uh,
• 24:03
  Speaker 1: System one and system too from comment is essentially what
• 24:06
  Speaker 1: are what is your immediate response? That's that's the systemic
• 24:11
  Speaker 1: way your brain has managed to keep you alive on
• 24:14
  Speaker 1: the savannah. Not really well suited for for trading in
• 24:18
  Speaker 1: the capital markets. Is that terrible? Right? I mean, especially
• 24:20
  Speaker 1: if you look, I say terrible that people could say, hey,
• 24:24
  Speaker 1: that's Mike Covel's opinion. Terrible. If you look at the
• 24:27
  Speaker 1: track records of the traders that have got you know,
• 24:32
  Speaker 1: durations going back decades, what do they do? It's systematized,
• 24:37
  Speaker 1: They have rules these This is not a day to
• 24:40
  Speaker 1: day guessing game. There is not not gut instinct. They're
• 24:45
  Speaker 1: running businesses. You gotta run. This is like a business, right,
• 24:48
  Speaker 1: I got a gut instinct, my my stomach says, by
• 24:50
  Speaker 1: this and sell that not a good way to run
• 24:53
  Speaker 1: managed money. You know. Isn't there a story about George
• 24:55
  Speaker 1: Soris in his back? Yes? Absolutely, you really do you
• 24:58
  Speaker 1: really believe it? I believe that on a subconscious level,
• 25:03
  Speaker 1: his back is warning him about something that he may
• 25:06
  Speaker 1: not have. But do you think do you think the
• 25:08
  Speaker 1: buying sells signals and the risk management is attached to
• 25:11
  Speaker 1: his back? No, of course not. You're not running billions
• 25:14
  Speaker 1: of dollars and whether or not your sacrililiac is bothering
• 25:17
  Speaker 1: you that. But I think the average person probably hears
• 25:19
  Speaker 1: that story and they still think, oh, you know, it's
• 25:21
  Speaker 1: seat of the pants, it's instinct, it's gout, and it
• 25:24
  Speaker 1: really doesn't work. That way. So so let's let's delve
• 25:27
  Speaker 1: a little more deeper into behavioral eras that are are
• 25:32
  Speaker 1: fairly typical. What is the most common behavioral error that
• 25:37
  Speaker 1: sinks traders? We mentioned loss aversion, but I tell you
• 25:41
  Speaker 1: framing is one to just how does one define framing?
• 25:45
  Speaker 1: How does one they look? You can look at too.
• 25:46
  Speaker 1: You can look at a number in two different ways.
• 25:48
  Speaker 1: You know you can being right fifteen percent of being
• 25:52
  Speaker 1: you know wrong? I mean, there's let me let me
• 25:54
  Speaker 1: stop you right there. So doctors are trains in a
• 25:57
  Speaker 1: really interesting aspect of that. So if you tell a
• 26:01
  Speaker 1: patient I have bad news and I have good news.
• 26:03
  Speaker 1: The bad news is you have this fatal disease. The
• 26:05
  Speaker 1: good news is there's a surgery with a pretty good
• 26:08
  Speaker 1: track record of of of survival. You take two groups.
• 26:12
  Speaker 1: To group one you say you have a seventy five
• 26:15
  Speaker 1: chance of survival if we do this procedure. And group
• 26:18
  Speaker 1: to you say there's a twenty five percent chance that
• 26:20
  Speaker 1: you won't survive if we do this procedure. What do
• 26:23
  Speaker 1: you think the reaction is amongst don't want to do it?
• 26:27
  Speaker 1: That's right, and yet it's the same statistics. So that
• 26:30
  Speaker 1: applies to trading as well. How how does framing affect
• 26:34
  Speaker 1: what traders behave? How do they behave? Are they behave
• 26:39
  Speaker 1: in all the wrong ways? They behave in the ways
• 26:40
  Speaker 1: they don't help them. I mean, look, this is about measurement.
• 26:44
  Speaker 1: You have to measure how much money you have at
• 26:46
  Speaker 1: all times that you can't do that meaning money is
• 26:50
  Speaker 1: your inventory. I'm gonna quote your way to keep score.
• 26:53
  Speaker 1: So you know money, capital is what you have. It's
• 26:56
  Speaker 1: what you're gonna have to turn over. It's your inventory.
• 26:59
  Speaker 1: If you're running a a gap and you have a
• 27:02
  Speaker 1: certain number of shirts and pants in the back, you
• 27:04
  Speaker 1: want that inventory turning over constantly when you're running a
• 27:07
  Speaker 1: trading operation for yourself. Is that the way to think
• 27:12
  Speaker 1: about capital is its inventory that you have to manage absolutely,
• 27:15
  Speaker 1: because look, we know what money can be used for.
• 27:19
  Speaker 1: We're both in New York City. The streets are littered
• 27:21
  Speaker 1: with gold, there's all kinds of toys we can buy,
• 27:23
  Speaker 1: there's all kinds of fun, fun things to do, as
• 27:27
  Speaker 1: well as basic survival, security, health, etcetera. Um, that's just
• 27:34
  Speaker 1: where we start. There's a great trader out of London.
• 27:36
  Speaker 1: We'll probably end up talking about him. David Harding of
• 27:39
  Speaker 1: Winton Capital, and I saw him make the comment recently
• 27:41
  Speaker 1: it's once you reach that point where money is not
• 27:46
  Speaker 1: an object, your trading improves. So, in other words, the
• 27:50
  Speaker 1: psychology of I gotta hit a bogey this month, I
• 27:53
  Speaker 1: gotta make some payments. Once that pressure goes away, once
• 27:57
  Speaker 1: that's psyche impact is lifted, they actually get better. Then
• 28:01
  Speaker 1: you're just playing the board game risk, you're playing chess,
• 28:03
  Speaker 1: you're playing whatever skill game. You're applying the rules. When
• 28:07
  Speaker 1: do you think back when you're a kid, didn you
• 28:08
  Speaker 1: play Risk as a kid? Like when you're a kid,
• 28:10
  Speaker 1: you play the game the right way. You don't play
• 28:13
  Speaker 1: it based on whether or not I can go to
• 28:14
  Speaker 1: the Apple Store by the newest iPhone today. It's a
• 28:18
  Speaker 1: that's fascinating. So what other little psychological insights did you
• 28:23
  Speaker 1: garner from interviewing some of these famous Mobil Prize winning
• 28:28
  Speaker 1: I love gird Gig and Rendzer like that. Oh, it's
• 28:32
  Speaker 1: he's awesome though. Risk Savvy one of his most recent books.
• 28:36
  Speaker 1: One of the things that he talks about. It's not
• 28:37
  Speaker 1: necessarily trading, but it gets you in the probabilities mind frame.
• 28:41
  Speaker 1: P s A tests like you know here, I'm I'm
• 28:44
  Speaker 1: forty seven. You know, you're you're probably about the same
• 28:46
  Speaker 1: age as right, you know, so everyone wants men to
• 28:49
  Speaker 1: go do these tests, all right? Do these tests? These
• 28:53
  Speaker 1: tests kill us. These are not good things. We're all
• 28:56
  Speaker 1: going to have prostate problems at some point in time
• 28:59
  Speaker 1: of our life. But the vast majority of us don't
• 29:02
  Speaker 1: need the after effects of a p S A test
• 29:06
  Speaker 1: and continents and all kinds. You know, your wetting your genes,
• 29:08
  Speaker 1: who knows what's going on. We don't want that kind
• 29:10
  Speaker 1: of stuff. So Gird points out that you have to
• 29:13
  Speaker 1: look more closely at the numbers and don't just let
• 29:15
  Speaker 1: the fear drive you. So we've seen a number of
• 29:18
  Speaker 1: studies about mammograms and false positives and doctors not really
• 29:22
  Speaker 1: understanding how how likely it is that a positive result
• 29:28
  Speaker 1: is actually a false positive and not into an industry
• 29:32
  Speaker 1: of cancer. Is that what Geared is referring to. Look,
• 29:36
  Speaker 1: the vast majority of us, if we live okay, et cetera,
• 29:40
  Speaker 1: we're gonna be fine. There's something's going to take us
• 29:43
  Speaker 1: all out at some point in time. But too much testing,
• 29:46
  Speaker 1: too much of this stuff is absolutely harming us. So
• 29:50
  Speaker 1: let me ask you about a couple of your podcasts
• 29:52
  Speaker 1: that I have tied up but haven't listened to. Uh.
• 29:56
  Speaker 1: Brent Steambarger, who is somebody I've read for a year
• 30:00
  Speaker 1: is and really enjoyed his work. Brett, I think is
• 30:03
  Speaker 1: the is synonymous with practical, pragmatic. Right. He just breaks down,
• 30:09
  Speaker 1: so you know, if you imagine walking into his office,
• 30:12
  Speaker 1: as he was a practicing psychiatrist, walk in and he's
• 30:15
  Speaker 1: gonna take whatever drama you might have and break it
• 30:19
  Speaker 1: down to its component parts and get you to think
• 30:22
  Speaker 1: about each of the component parts. Once you do that,
• 30:25
  Speaker 1: it's not so scary. I mean, that's that's the brilliance
• 30:28
  Speaker 1: of what somebody like Brett does and how he ended
• 30:31
  Speaker 1: up doing a lot of work with some fairly well
• 30:34
  Speaker 1: known fund managers and hedges and stuff. How different is
• 30:37
  Speaker 1: that from just the broad based Here's here are the
• 30:41
  Speaker 1: cognitive arrows that humans make all the time. I think
• 30:44
  Speaker 1: it helps people to have a coach. Doesn't make a
• 30:48
  Speaker 1: difference how much money you have, how much success you have.
• 30:51
  Speaker 1: If somebody can walk in and analyze you unemotionally and
• 30:55
  Speaker 1: say here, I've broken it down, I've observed you, here's
• 30:59
  Speaker 1: what you need to think about. That helps I'm sure
• 31:01
  Speaker 1: that's one of the secrets to Brett success. So we've
• 31:04
  Speaker 1: talked about risk aversion, we've talked about framing. What other
• 31:08
  Speaker 1: cognitive errors or or behavioral problems impact traders more so
• 31:13
  Speaker 1: than they do other people. One of the biggest ones,
• 31:16
  Speaker 1: I guess would be hurting. You know, a crowd effect, Ryan,
• 31:19
  Speaker 1: and a crowded trade is always a dangerous place to be.
• 31:22
  Speaker 1: But look, if you've got a strategy to follow the crowd,
• 31:25
  Speaker 1: and that can be a good thing too so, but look,
• 31:27
  Speaker 1: too many traders don't have a sound strategy when it
• 31:32
  Speaker 1: comes to something like hurting. They will see the crowd move,
• 31:35
  Speaker 1: they'll get on board, but they don't have a full plan,
• 31:38
  Speaker 1: thought out. Trend following, for example, takes into account this
• 31:41
  Speaker 1: hurting and says, you know what, if everyone's moving that direction,
• 31:44
  Speaker 1: we want to be on board. Why not? Why not
• 31:47
  Speaker 1: let's be on board. Look, take take a restaurant. For example.
• 31:50
  Speaker 1: You walk into a new city like New York City.
• 31:51
  Speaker 1: If I walk down the street, I haven't been to
• 31:53
  Speaker 1: the city for four years. If I walk down the street,
• 31:55
  Speaker 1: I walk four blocks, I passed ten restaurants. Nine of
• 31:58
  Speaker 1: those restaurants are empty. One of those restaurants is packed.
• 32:02
  Speaker 1: Where am I eating? Of course, you're gonna follow the crowd.
• 32:04
  Speaker 1: They're all there for a specific reason, So you're using
• 32:08
  Speaker 1: the crowd as a sign that someone else has done
• 32:11
  Speaker 1: their homework, someone else has done the fundamental research. They're
• 32:15
  Speaker 1: piling in for a specific reason, and you think it's
• 32:17
  Speaker 1: gonna take that that trend further and you want to
• 32:20
  Speaker 1: participate in. I'm gonna pile into and I'm gonna have
• 32:22
  Speaker 1: a stop losses. I pile in stop loss in that case,
• 32:25
  Speaker 1: I guess would be food poisoning. But if I get that,
• 32:27
  Speaker 1: I'm getting out. So, Mike, if people want to find
• 32:29
  Speaker 1: your stuff, how can they track you down? I pretty
• 32:33
  Speaker 1: much own the word trend following, so you can find
• 32:35
  Speaker 1: me podcast, Twitter, or websites, tread following dot com. Good
• 32:40
  Speaker 1: good too, Good to know? UH. Be sure and stick
• 32:43
  Speaker 1: around and listen to our podcast extras where we keep
• 32:45
  Speaker 1: the tape rolling and allow the conversation UH to continue
• 32:48
  Speaker 1: on Be sure and check out all of our previous
• 32:52
  Speaker 1: seventy or so podcasts. You can find them on SoundCloud,
• 32:56
  Speaker 1: Bloomberg dot com, and of course on Apple iTunes. Check
• 33:00
  Speaker 1: out my daily column on Bloomberg View dot com or
• 33:03
  Speaker 1: follow me on Twitter at rid Halts. I'm Barry rit Halts.
• 33:07
  Speaker 1: You're listening to Masters in Business on Bloomberg Radio. Welcome
• 33:12
  Speaker 1: to the podcast. This is Barry Ridholts, and you've been
• 33:14
  Speaker 1: listening to Masters in Business on Bloomberg Radio. My special
• 33:18
  Speaker 1: guest today and they're always a special guest is Michael Covel,
• 33:22
  Speaker 1: somebody I've known for g a decade? Is it a decade?
• 33:26
  Speaker 1: Almost a decade for sure, pretty close to it. So
• 33:30
  Speaker 1: it's funny. We were talking about during the break about
• 33:34
  Speaker 1: about podcasts, and I do some of the same things
• 33:39
  Speaker 1: every time when it's the podcast time, I throw my
• 33:42
  Speaker 1: hands in the air. I get to like relax. It's
• 33:44
  Speaker 1: a deep breath because I'm not hearing in my ear
• 33:48
  Speaker 1: halfway one minute, thirty seconds. There are no time constraints.
• 33:52
  Speaker 1: It's always a challenge there too, right, You've got to
• 33:55
  Speaker 1: I'm doing it on the phone, you're doing it live,
• 33:57
  Speaker 1: but you still have to bring something out of somebody,
• 34:00
  Speaker 1: which for some people you just have to say, how's
• 34:03
  Speaker 1: it going, and there's an hour and a half and
• 34:06
  Speaker 1: for other people you asked these questions and you get
• 34:09
  Speaker 1: answers like not really, what am I gonna do with that.
• 34:13
  Speaker 1: That's like a giant meat ball that lands. Okay, well
• 34:16
  Speaker 1: that's all the time we have. It's that sort of stuff.
• 34:19
  Speaker 1: So the funny thing you and I were talking about
• 34:22
  Speaker 1: doing the podcast earlier and how this came about. When
• 34:26
  Speaker 1: I first started doing this, the first twenty I recorded,
• 34:30
  Speaker 1: but they weren't broadcast, so we had no idea were
• 34:33
  Speaker 1: these any good or people gonna listen to these? It
• 34:36
  Speaker 1: was I was behind somebody else who were. There was
• 34:40
  Speaker 1: a run of things that had to go out before
• 34:42
  Speaker 1: these started broadcasting on the radio and going up on
• 34:45
  Speaker 1: the site, so we really were kind of groping in
• 34:49
  Speaker 1: the in the dark, figuring out what works, and then
• 34:52
  Speaker 1: to make matters worse. I have no professional radio training.
• 34:56
  Speaker 1: I have no expertise. You neither, so with me, I
• 35:00
  Speaker 1: have to follow this format of Bloomberg Radio or any
• 35:04
  Speaker 1: radio for that matter, where you do the intro and
• 35:07
  Speaker 1: you set up the guest, and then on the longer
• 35:09
  Speaker 1: segments halfway through you have to reintroduce the guests. You
• 35:13
  Speaker 1: may have been wondering why you heard repeatedly and our
• 35:15
  Speaker 1: guest today because I have to reintroduce the guest, and
• 35:18
  Speaker 1: then you have to do the outro at the end
• 35:19
  Speaker 1: of the segment coming up, we can, and for the
• 35:22
  Speaker 1: life of me, I could not get those outros right
• 35:26
  Speaker 1: because it's really very, very counterintuitive. So when I first started,
• 35:31
  Speaker 1: it was always when we come back. No, no, it's
• 35:34
  Speaker 1: not when we come back. We're not going anywhere. We're here. Now.
• 35:37
  Speaker 1: Think about someone sitting in your car, in their car
• 35:39
  Speaker 1: listening to the radio. They're not going anywhere. Coming up
• 35:42
  Speaker 1: after that, No, it's not after the break it was.
• 35:44
  Speaker 1: So it took me a long time, and after about
• 35:48
  Speaker 1: fifty episodes, it's practically a year. So I would come
• 35:51
  Speaker 1: back do the podcast on a Monday, and I'd come
• 35:54
  Speaker 1: back on a Tuesday and do the intros and outros.
• 35:56
  Speaker 1: It was take me an hour to do all that stuff,
• 35:59
  Speaker 1: to do the intro and the ending, and now it's
• 36:02
  Speaker 1: a tape in my head. I don't know if you've experienced,
• 36:05
  Speaker 1: you've done four Love him or hate him, Howard Stern
• 36:10
  Speaker 1: teaches the profession of broadcasting. He's he is unbelievable. I've
• 36:15
  Speaker 1: thrown up some of his podcasts. I shouldn't call that.
• 36:18
  Speaker 1: Some of his interviews on the blog, things that Louis
• 36:22
  Speaker 1: c K and Madonna and James Taylor, and these are
• 36:26
  Speaker 1: like masterful, masterful into his Seinfeld interview of either two
• 36:31
  Speaker 1: thousand thirteen or two thou and fourteen on the Howard
• 36:33
  Speaker 1: Sterns Show, easily found on YouTube or whatever, is one
• 36:36
  Speaker 1: of the best pieces of listening. It's amazing. And I
• 36:40
  Speaker 1: went through a period listen. I used to listen to
• 36:42
  Speaker 1: Howard in my twenties and thirties, and you know, it
• 36:46
  Speaker 1: was it was sophomoric and hilarious and and great. And
• 36:50
  Speaker 1: then at a certain point it's like, I don't have
• 36:52
  Speaker 1: time for this. And then once he went to exam,
• 36:55
  Speaker 1: once he went to satellite radio, and really became more
• 36:58
  Speaker 1: interesting in many ways, more sophisticated anyway, a little less tough,
• 37:03
  Speaker 1: more like a little more you know, a little bit
• 37:05
  Speaker 1: of gravitas. He is a master in the field of broadcasting,
• 37:10
  Speaker 1: and people don't really think of him that way, but
• 37:12
  Speaker 1: they should, you know, people out there listening. Okay, so
• 37:15
  Speaker 1: you and I are two amateurs essentially doing this right.
• 37:18
  Speaker 1: So I'm hoping to achieve amateur status one day. But
• 37:21
  Speaker 1: you still, if you're gonna be, if you're gonna have
• 37:24
  Speaker 1: enough cohn is to bring on Nobel Prize winners to
• 37:27
  Speaker 1: your show. You've had more, You've had four, I've only
• 37:29
  Speaker 1: had three. Wow, I atready start looking for right on
• 37:33
  Speaker 1: your tail, although on a per capita basis, on ahead
• 37:37
  Speaker 1: of you. But it's that's true, but it's when if
• 37:40
  Speaker 1: you're gonna have those types of minds on, there is
• 37:44
  Speaker 1: a certain you have to be confident, you have to
• 37:47
  Speaker 1: be well researched, and you have to make those people
• 37:51
  Speaker 1: stimulated in such a way that they're not bored. The
• 37:54
  Speaker 1: worst thing is to hear a board guest on your show.
• 37:58
  Speaker 1: That's absolutely right. And and the way I found that
• 38:01
  Speaker 1: that works is we do a deep dive. My head
• 38:04
  Speaker 1: of research who you just signed the trend following book
• 38:07
  Speaker 1: Till Mike Mike Batnick. He and I sit down usually
• 38:10
  Speaker 1: a few days before the podcast, and the question is
• 38:13
  Speaker 1: what do we want each segment to be about? And
• 38:15
  Speaker 1: then what sort of and I he looks the world
• 38:18
  Speaker 1: very differently than I do, and he and I both
• 38:22
  Speaker 1: come up with very different questions, and a lot of
• 38:25
  Speaker 1: the questions that he comes up with, I'm like, you know,
• 38:27
  Speaker 1: I never would have thought of asking that. And between
• 38:29
  Speaker 1: the two of us, you know, when you're sitting down
• 38:32
  Speaker 1: with a guy like Leon Kooperman of Omega Advisors, who's
• 38:35
  Speaker 1: got a reputation being a tough guy and a difficult boss,
• 38:38
  Speaker 1: and he's in work at six am and he leaves
• 38:40
  Speaker 1: at midnight. And guy's a billionaire and he still keeps
• 38:43
  Speaker 1: those sort of hours. You better bring the serious questions.
• 38:47
  Speaker 1: You can't just lollighag through that. And uh, that's a
• 38:51
  Speaker 1: really really significant thing if you could get a guy
• 38:54
  Speaker 1: like him to say, hey, this, these are really impressive.
• 38:57
  Speaker 1: These are really good questions. You've gone places. And my
• 39:02
  Speaker 1: argument probe podcast has been, look, we don't the logo,
• 39:07
  Speaker 1: the model of the show is no stockpicks, no forecasts.
• 39:10
  Speaker 1: So right away, I'm different than those are my rules,
• 39:13
  Speaker 1: no podcast, all right, I never would have never had
• 39:17
  Speaker 1: date on the right side of of the of the
• 39:19
  Speaker 1: five books in I've never had anything amounting close to
• 39:22
  Speaker 1: a pick that's forecast. So that makes you different from
• 39:28
  Speaker 1: all these other all these other media, and on top
• 39:32
  Speaker 1: of everything else, it makes you different than the conversation.
• 39:37
  Speaker 1: The focus, the boredom factor goes away for a guest
• 39:42
  Speaker 1: who doesn't have to worry about, well, why do I
• 39:45
  Speaker 1: have to do a stockpick? And it is it gonna
• 39:47
  Speaker 1: be a good one? Is it gonna be a bad one?
• 39:48
  Speaker 1: A I'm gonna have to hear crap from my brother
• 39:50
  Speaker 1: in law. Two thanksgivings from now about this, Like those
• 39:53
  Speaker 1: are the sort of silly things that that takes place.
• 39:56
  Speaker 1: So your four hundred podcasts in memory, old guest, one
• 40:02
  Speaker 1: that really comes to that come to the mind. Robert
• 40:04
  Speaker 1: Ahman believe eighty five year old Israeli. He is he
• 40:10
  Speaker 1: won the Nobel Prize in game theory. Now you already
• 40:14
  Speaker 1: know if you you're out there in the audience, you're saying,
• 40:16
  Speaker 1: my gosh, I can't imagine interviewing an eight five year
• 40:18
  Speaker 1: old Nobel Prize winner in game theory, because the man
• 40:21
  Speaker 1: knows more math than we could ever attempt to know.
• 40:24
  Speaker 1: So I go into this episode and he's kind of
• 40:27
  Speaker 1: dragging this is over the phone. We get to talking
• 40:29
  Speaker 1: about Switzerland and we're talking a little bit about gun control,
• 40:34
  Speaker 1: and it might have sounded political, but we started he said, well,
• 40:37
  Speaker 1: why why are there fighter jets flying over He goes
• 40:41
  Speaker 1: to vacation in Switzerland in the summer. Why they're fighter
• 40:44
  Speaker 1: jets flying over Switzerland. Now, this is one of the
• 40:46
  Speaker 1: guys with Thomas Shelling, who basically laid out that mutually
• 40:50
  Speaker 1: assured destruction routine with the Soviets. So they were figuring
• 40:53
  Speaker 1: out the math that you have to have bombers in
• 40:55
  Speaker 1: the air and seven with nukes, so could you could
• 41:00
  Speaker 1: never have get caught unaware a surprise attack forty years
• 41:05
  Speaker 1: we had bombers in the air both sides, forty years
• 41:07
  Speaker 1: with loaded with nukes. But he brings up the point
• 41:09
  Speaker 1: of Switzerland, and it's the idea that you have to
• 41:12
  Speaker 1: have a credible threat. So, while I don't attempt to
• 41:15
  Speaker 1: get political, it was interesting here is a man who
• 41:18
  Speaker 1: was talking essentially about the idea of arming yourself to
• 41:23
  Speaker 1: protect yourself. Now, if you look at it strictly from
• 41:25
  Speaker 1: a political standpoint in America, that opens up Pandora's box.
• 41:28
  Speaker 1: You have both sides, everyone's arguing. But it's a challenge
• 41:31
  Speaker 1: when you're talking to a man who you know is
• 41:33
  Speaker 1: grounded and that much math. What is what is the
• 41:37
  Speaker 1: idea of armament? To that man? He's thinking you nobody's
• 41:42
  Speaker 1: it's it's the beautiful mind movie going on while you're
• 41:44
  Speaker 1: interviewing him, right, And he's not talking about whether you
• 41:47
  Speaker 1: can carry automatic weapons or or the or hidden carry
• 41:51
  Speaker 1: rules he's talking about how do you prevent nuclear armaged
• 41:55
  Speaker 1: through a series of decisions that forces everybody to simultaneously
• 41:59
  Speaker 1: arm up and avoid destroying each other, which is a fascinating,
• 42:03
  Speaker 1: fascinating thought. Douglas Emlyn animal weapons, animal weapons. I don't
• 42:11
  Speaker 1: recall that. Yeah, it came out recently. Basically, he wrote
• 42:14
  Speaker 1: about the idea that the animals that have the the elongated,
• 42:18
  Speaker 1: the larger. They spend so much energy trying to get
• 42:25
  Speaker 1: these things, and they don't survive. They usually die out.
• 42:29
  Speaker 1: The saber tooth cat or whatever, the saber tooth cata
• 42:31
  Speaker 1: barely run. It's sat in the tree and fell on
• 42:33
  Speaker 1: top of elephants and bit into it. I mean, so
• 42:36
  Speaker 1: it's you know, and he started this through the study
• 42:38
  Speaker 1: of dung beetles. Jack Horner on my podcast, who was
• 42:42
  Speaker 1: the paleontologist, must have got to get him off. He's ever.
• 42:46
  Speaker 1: He's fantastic. He's fantastic. There's a handful of he's building
• 42:49
  Speaker 1: a chick asaurus. I read about that. He's gonna basically
• 42:53
  Speaker 1: do his own Jurassic figured out how to make the
• 42:55
  Speaker 1: tail turn on the wings will go from wings to
• 42:59
  Speaker 1: claus and they've turned. They figured out how to turn
• 43:01
  Speaker 1: on teeth in the beak. Can you not wait for
• 43:05
  Speaker 1: you will even arm up for this if you have
• 43:06
  Speaker 1: to go get your latte at Starbucks right and you've
• 43:09
  Speaker 1: got to walk down the street in New York City
• 43:11
  Speaker 1: because somebody has re engineered raptors to run wild. This
• 43:15
  Speaker 1: is not exactly related to investing, but these guys fascinate me.
• 43:18
  Speaker 1: So there's a handful of astrophysicists I'm trying to get
• 43:21
  Speaker 1: on the program as well, because that area of how
• 43:26
  Speaker 1: rapidly that's been changing over the past five years is
• 43:29
  Speaker 1: quite fascinating. And what what I find intriguing about that, Look,
• 43:33
  Speaker 1: everything is epistemology. To me, everything is the study of knowledge,
• 43:37
  Speaker 1: the theory of how we learn and more importantly, and
• 43:40
  Speaker 1: this is a part that everybody in finance needs to
• 43:42
  Speaker 1: pay attention to. How we make mistakes and how we
• 43:45
  Speaker 1: subsequently learn from those eras mistakes. To quote um Thomas
• 43:51
  Speaker 1: Ede of Edison, failure is just bringing me that much
• 43:55
  Speaker 1: closer to success. And that sort of philosophy is really
• 43:58
  Speaker 1: quite amazing. And I see consistently among some of the
• 44:02
  Speaker 1: most successful people I've had on the show. You know,
• 44:05
  Speaker 1: we're talking about traders, some of the newer trend following
• 44:09
  Speaker 1: traders today, physics backgrounds huge, John Felip Buchow CFM out
• 44:13
  Speaker 1: of Paris. You and Kirk can Tap out of London.
• 44:17
  Speaker 1: David Harding went and out of London. These guys all
• 44:19
  Speaker 1: have physics backgrounds. Now their systems ultimately might be fairly simple.
• 44:24
  Speaker 1: There's a great book out right now called Simple Rules
• 44:27
  Speaker 1: by Kathleen Eisenheart. So you want to have simple rules,
• 44:30
  Speaker 1: but the thinking behind it extreme complexity. And you know,
• 44:34
  Speaker 1: when you look at the ability of physics to land
• 44:36
  Speaker 1: a craft on a moving comment right where we know
• 44:41
  Speaker 1: very specifically, here's what the math is behind it, here's
• 44:44
  Speaker 1: what the result of each subsequent action, and all these
• 44:48
  Speaker 1: complicated and interrelated dynamics. It's not a big surprise that
• 44:52
  Speaker 1: people who have an expertise in that find success in
• 44:55
  Speaker 1: the world of finance because there are many Certainly there
• 44:58
  Speaker 1: are many ways it's different, but they are many, many parallels,
• 45:01
  Speaker 1: and I think people forget that you take physics and
• 45:04
  Speaker 1: throwing a little human psychology and that's a recipe for
• 45:07
  Speaker 1: making When did you hit on trend following for the
• 45:09
  Speaker 1: first time? You were emailing me, gosh, we're probably emailing
• 45:11
  Speaker 1: together a decade so I began my career as a trader.
• 45:16
  Speaker 1: I quickly figured out that there was a tremendous noticed
• 45:19
  Speaker 1: I was comfortable with a flip. There the tremendous amount
• 45:22
  Speaker 1: of randomness, and how people you know the trader. First
• 45:25
  Speaker 1: of all, they don't give you any training. They take
• 45:27
  Speaker 1: you to the deep end of the pool and push
• 45:28
  Speaker 1: you in and whoever doesn't drown? All right, you guys
• 45:30
  Speaker 1: get a desk and yours will stake you with with
• 45:33
  Speaker 1: some capital. And essentially, this guy to my right is
• 45:37
  Speaker 1: killing it this month, and the guy on my left
• 45:38
  Speaker 1: is stinking it up, and next month it flips. And
• 45:41
  Speaker 1: I became more fascinated by why different traders were making
• 45:44
  Speaker 1: or losing money than what was going on in my screen.
• 45:47
  Speaker 1: And eventually figured and I had some great months and
• 45:50
  Speaker 1: some terrible months, but eventually figured out that the study
• 45:54
  Speaker 1: of why investors are either more or less successful than
• 45:57
  Speaker 1: others really took over my my daily focus. And that's
• 46:03
  Speaker 1: how I ended up moving into first research and then
• 46:07
  Speaker 1: strategy and then ultimately asset management. But the progression that
• 46:11
  Speaker 1: that progression comes specifically from why is this guy and
• 46:16
  Speaker 1: that guy who will appear to be doing the same thing,
• 46:21
  Speaker 1: reaching such different levels of attainment and success and inconsistent
• 46:26
  Speaker 1: to boot. Why is it reversing from this month of
• 46:29
  Speaker 1: that month? And I learned a lot just by watching people,
• 46:33
  Speaker 1: Like I didn't necessarily know what to do, but I
• 46:36
  Speaker 1: quickly figured out what not to do by watching people.
• 46:39
  Speaker 1: And I found myself studying other traders more than I
• 46:42
  Speaker 1: was wanting to stick my face in the screen. And
• 46:44
  Speaker 1: I love trading too much. And I that, by the way,
• 46:47
  Speaker 1: looking for that vein, that was like a sign, all right,
• 46:50
  Speaker 1: it's time to to to enter twelve step program. It was.
• 46:55
  Speaker 1: It was painful to move from trading to research, but
• 46:58
  Speaker 1: I had just a time, just enough self awareness to
• 47:01
  Speaker 1: know that I enjoyed it too much that I would
• 47:04
  Speaker 1: ever be Do you think I was a junkie? It
• 47:06
  Speaker 1: was like it was like the thrill as opposed to
• 47:10
  Speaker 1: the cold school discipline rules of the most success. I
• 47:14
  Speaker 1: remember going into Bill Dunn's office. Bill Donne is one
• 47:16
  Speaker 1: of the few investors that has a continuous track record
• 47:20
  Speaker 1: going on over forty years. I think it's somewhere between
• 47:24
  Speaker 1: sixteen and nineteen percent after fees. I mean, come on,
• 47:28
  Speaker 1: that's that's a that's a story and of itself. I
• 47:30
  Speaker 1: remember going to his office for the first time. I
• 47:32
  Speaker 1: believe it was nine, and I walked in. It was
• 47:34
  Speaker 1: in Stuart, Florida, you know, right down there near Palm Beach.
• 47:37
  Speaker 1: And I walked in and there was no one in
• 47:40
  Speaker 1: the waiting room, there was no secretary. There was several
• 47:43
  Speaker 1: magazines that were I looked at them. They were several
• 47:46
  Speaker 1: years old. There was no one in the office looking
• 47:49
  Speaker 1: at a screen, and they were running billions of dollars.
• 47:52
  Speaker 1: It felt like a c P A office. That experience also,
• 47:55
  Speaker 1: because here you are, you're talking about all the excitement,
• 47:57
  Speaker 1: You're talking about veins and all that kind of stuff.
• 47:59
  Speaker 1: My first experiences were the exact opposite. I was looking
• 48:02
  Speaker 1: at these guys that were treating trading like a law off.
• 48:04
  Speaker 1: It's like a c P A firm, And so I
• 48:06
  Speaker 1: never had the experience that you're talking about. Well, but
• 48:09
  Speaker 1: it was really clear very quickly that if there, if
• 48:12
  Speaker 1: you're doing this for the thrill, if you're doing this
• 48:14
  Speaker 1: for the buzz, you're doing it for all the wrong reasons,
• 48:17
  Speaker 1: and you need to be cold and bluntless and disciplines
• 48:22
  Speaker 1: and be able to just treat it like a dentist.
• 48:25
  Speaker 1: Off is not treated like you're going to Vegas and
• 48:28
  Speaker 1: it's a party, because it shouldn't be look look good.
• 48:32
  Speaker 1: Good investing should be boring, and I think really successful
• 48:35
  Speaker 1: trading should be I don't want to say mechanical, but certainly,
• 48:40
  Speaker 1: can you say mechanics. I would say the vast majority
• 48:43
  Speaker 1: look trend following is my world. I would say the
• 48:45
  Speaker 1: vast majority of trend following traders are mechanical. Mechanical, mechanical.
• 48:49
  Speaker 1: In fact, I'm fairly certain you. And Kirk told me
• 48:53
  Speaker 1: on the show that he has an algorithm pick the
• 48:55
  Speaker 1: picks lunch for the day. That's a little insane, picks
• 48:59
  Speaker 1: love for the fairly certain you, And if I'm wrong,
• 49:03
  Speaker 1: that's amazing. See now, I could never have an algorithm
• 49:05
  Speaker 1: that picks lunch for the day because I have too
• 49:09
  Speaker 1: many lunch choices in and about New York, and I
• 49:11
  Speaker 1: would rather the very swartz part. So let's talk a
• 49:16
  Speaker 1: little bit about that. If that's an issue that I've
• 49:19
  Speaker 1: never had a hard time with. I know a lot
• 49:21
  Speaker 1: of people are paradise you like you like your choice.
• 49:24
  Speaker 1: I'm an I'm an aberration. You can make a decision, Yeah,
• 49:27
  Speaker 1: I'm well, first of all. So here's where the algorithm
• 49:30
  Speaker 1: comes in. I have some my own internalized rules that
• 49:35
  Speaker 1: you give me a list of eighty things. I don't
• 49:38
  Speaker 1: care what it is. It could be eighty different hot sources,
• 49:40
  Speaker 1: a thousand different restaurants. There is a series of steps
• 49:44
  Speaker 1: you can take, process of elimination. Okay, get rid of these,
• 49:46
  Speaker 1: get rid of those, get rid of these. I want
• 49:48
  Speaker 1: something with a little of this. And right away that
• 49:50
  Speaker 1: list of ten thousand is now four, and you have
• 49:53
  Speaker 1: to choose from four. So there are ways to deal
• 49:56
  Speaker 1: with that, that that paradox of choice. But I think
• 50:00
  Speaker 1: most people can't don't have a systemic approach to that
• 50:04
  Speaker 1: sort of thing. And and a lot of this comes
• 50:06
  Speaker 1: from just experience where you're confronted with that. You either
• 50:11
  Speaker 1: succumb to that paralysis or develop some methodology of dealing
• 50:16
  Speaker 1: with it. But I we've had this debate. My favorite
• 50:19
  Speaker 1: example of this is the advantages of a benevolent dictatorship
• 50:23
  Speaker 1: over a democracy. Mostly in summer beach house shares, and
• 50:28
  Speaker 1: you learn that you never ask a room full of
• 50:30
  Speaker 1: people what they want for dinner or what the movie
• 50:34
  Speaker 1: they want to see, because if you do that, you
• 50:36
  Speaker 1: set off a twenty minute debate and you ultimately end
• 50:38
  Speaker 1: up paralyzed. The paradox of choice. The benevolent dictatorship says, hey,
• 50:45
  Speaker 1: I'm going for slice of pizza. Anyone want to join me?
• 50:49
  Speaker 1: And you make a decision and the crowd comes. If
• 50:52
  Speaker 1: someone else says no, I'd prefer a hamburger, you have
• 50:56
  Speaker 1: to make a split second decision do we start this
• 50:59
  Speaker 1: mic ration or um because if you say that sounds good,
• 51:04
  Speaker 1: let's do that. I just had pizza yesterday. Now someone
• 51:07
  Speaker 1: else wants a hot dog and it's a whole bunch
• 51:09
  Speaker 1: of craziness. So that take that benevolent dictator and expand
• 51:14
  Speaker 1: it geo politically. I currently live and spend the vast
• 51:17
  Speaker 1: majority of my time in Southeast Asia, specifically Saigon, Vietnam. Okay,
• 51:21
  Speaker 1: benevolent dictator. You might not think that's how you would
• 51:24
  Speaker 1: describe a communist country. I think you could put that
• 51:27
  Speaker 1: term Singapore benevolent dictator, Vietnam benevolent dictator, China benevolent dictator. Look,
• 51:33
  Speaker 1: those guys want the power in those countries, but they
• 51:37
  Speaker 1: let the people get rich, they let the people keep improving,
• 51:40
  Speaker 1: and they make the big decisions. New York City as
• 51:43
  Speaker 1: I walk around for the first time in four years.
• 51:45
  Speaker 1: This city can never be rebuilt in two thousand and fifteen. Never,
• 51:48
  Speaker 1: people would never allow it to happen. There'd be too
• 51:50
  Speaker 1: many hands in the cookie jar, there's too many environmental
• 51:53
  Speaker 1: This environmental that the benevolent dictator solves those issues. It
• 51:56
  Speaker 1: just takes, for your point even to another step further.
• 51:59
  Speaker 1: We're gonna build this it in. If you don't like
• 52:00
  Speaker 1: it too bad, and if there's a lot of smog
• 52:02
  Speaker 1: and no one could breathe, we'll worry about that later.
• 52:04
  Speaker 1: That seems to be approach, which brings me to the question.
• 52:07
  Speaker 1: There was probably some smog here though, in the back
• 52:08
  Speaker 1: in the day at one point in time, while you
• 52:10
  Speaker 1: have the e p A pass rules and response to
• 52:12
  Speaker 1: under President Nixon, in response to people really being concerned
• 52:16
  Speaker 1: about health and what have you. But I want to
• 52:18
  Speaker 1: ask you, what makes a kid from Virginia's decide I'm
• 52:22
  Speaker 1: gonna pick up and go to Asia. How did that
• 52:25
  Speaker 1: come about? Well, I was living most of my life
• 52:29
  Speaker 1: in Vienna, Virginia, uh two thousand eight, working on this film.
• 52:33
  Speaker 1: When you were kind enough to appear in my film,
• 52:36
  Speaker 1: I I knew I moved to San Diego, and I
• 52:39
  Speaker 1: was living in San Diego. I started this podcast, and
• 52:42
  Speaker 1: actually starting the podcast got me to Asia because I
• 52:46
  Speaker 1: started doing yoga in two thousand and twelve and a
• 52:50
  Speaker 1: guy listening to my podcasts said, Hey, I really like yoga.
• 52:54
  Speaker 1: My friend of mine. A friend of mine runs the
• 52:55
  Speaker 1: c l s A office and U c ls A
• 52:58
  Speaker 1: Hong Kong brokerage firm runs the c l A c
• 53:01
  Speaker 1: l s A office in Tokyo. When you come speak,
• 53:04
  Speaker 1: I had done a gig for them before I said sure.
• 53:06
  Speaker 1: They called me up. They said, let's let's have you over.
• 53:09
  Speaker 1: At that moment, I he said, well, let's book the
• 53:12
  Speaker 1: ticket for you. And I said, well, so where are
• 53:14
  Speaker 1: you flying from? And I said, well, I'm gonna already
• 53:16
  Speaker 1: be in Asia. I wasn't already going to be in Asia.
• 53:20
  Speaker 1: I just said this at that moment. He then said
• 53:22
  Speaker 1: to me, Hey, would you like to speak for us
• 53:25
  Speaker 1: in Beijing, Shanghai, Guangzhou, shan Jen, Kuala Lumpur, Singapore in
• 53:33
  Speaker 1: Hong Kong. I said, and we'll pay you the same
• 53:35
  Speaker 1: for each each day over four months. And I said, oh,
• 53:39
  Speaker 1: thank you, twist marm. Yes, we've got a deal. A
• 53:42
  Speaker 1: paid trip seeing all of the best of Asia. Yes,
• 53:46
  Speaker 1: so that had to be a fascinating Yeah. By four
• 53:48
  Speaker 1: first four months of two thousand thirteen, and my last stop,
• 53:52
  Speaker 1: I was doing this around the world fair and first
• 53:55
  Speaker 1: class on United or something, and I my last stop
• 53:59
  Speaker 1: was Bali. And I was in Bali and I was like, Okay,
• 54:01
  Speaker 1: I'm not going back to San Diego. I'm gonna live
• 54:03
  Speaker 1: in Asia. But I can't stand Bali after two weeks,
• 54:06
  Speaker 1: and I said to myself, where did I have the
• 54:09
  Speaker 1: most fun over the last four months? And it was Saigon, Vietnam,
• 54:15
  Speaker 1: now known as Ho Chi Min's City. And so communists,
• 54:19
  Speaker 1: wasn't that what originally known as Hochi originally not originally
• 54:22
  Speaker 1: known as Saigon renamed Hochi Min City after we left
• 54:26
  Speaker 1: in seventy five? And so you you've been there for
• 54:29
  Speaker 1: two years now, is that right? Two thousand, half of thirteen,
• 54:33
  Speaker 1: all of fourteen or fifteen on three years? How do
• 54:37
  Speaker 1: you find it? How do you find the people they
• 54:38
  Speaker 1: are given our little adventure there in the sixties and seventies,
• 54:42
  Speaker 1: How is an American abroad treated in Saigon slash Ho
• 54:46
  Speaker 1: Chi Min City? Fantastic? I've never i have never had
• 54:53
  Speaker 1: anybody bring up the war with me, really, not one,
• 54:57
  Speaker 1: not one. And just for numbers, people can wrap their
• 55:00
  Speaker 1: arms around this. Most of us in America, no, since
• 55:04
  Speaker 1: I my family lives about fifteen miles outside Washington, d C.
• 55:07
  Speaker 1: Most of us know that about sixty Americans died during
• 55:11
  Speaker 1: the Vietnamese War. Less but yeah, that's that's the number.
• 55:14
  Speaker 1: Uh some and the Vietnamese. The Vietnamese number is somewhere
• 55:17
  Speaker 1: between three point five and five million. It's an amazing
• 55:21
  Speaker 1: So you get over there and you're like, whoa. It
• 55:23
  Speaker 1: really forces you. And of course then you have the
• 55:25
  Speaker 1: whole come to Jesus, like why were we even here?
• 55:30
  Speaker 1: Because look, we thought that, you know, there's this Domino theory,
• 55:34
  Speaker 1: and apparently nobody in the State Department bothered to understand
• 55:38
  Speaker 1: that the Vietnamese hate the Chinese. The Vietnamese didn't really
• 55:41
  Speaker 1: like the Russians, and they just wanted their own damn
• 55:43
  Speaker 1: country after being dominated for a thousand years by the Chinese,
• 55:47
  Speaker 1: the French, and the Americans. And so somehow another we
• 55:49
  Speaker 1: decided that was gonna be the Domino theory. And it
• 55:51
  Speaker 1: was a huge mistake. You know, it's fascinating for people
• 55:55
  Speaker 1: who aren't familiar with Asia. The different cultural groups of
• 55:59
  Speaker 1: different countries and their long history. It's no different than Europe.
• 56:04
  Speaker 1: We just look at them in a different perspective. Japan, Korea, China, Vietnam.
• 56:09
  Speaker 1: There's a long history of life, the Philippines of different
• 56:13
  Speaker 1: parts of that world, disliking and engaging in warfare. Everybody
• 56:17
  Speaker 1: seems to have have had a fight with the Japanese
• 56:19
  Speaker 1: at one point in time. Uh. In Asia, it's really
• 56:23
  Speaker 1: quite fascinating, but it's not all that different from what
• 56:26
  Speaker 1: took place in Europe or what took place, you know,
• 56:29
  Speaker 1: on on this half of the world. So, so you
• 56:31
  Speaker 1: end up in Saigon, cost of living has got to
• 56:34
  Speaker 1: be next to nothing there. It's not bad. I'm I
• 56:37
  Speaker 1: I stay at a pretty cool place. It's uh, it's
• 56:40
  Speaker 1: not bad. It's not New York City, for sure. It's
• 56:42
  Speaker 1: not Tokyo. I was just in Tokyo. Love Tokyo. But
• 56:46
  Speaker 1: you know, it's not even the cost of living. It's
• 56:47
  Speaker 1: there's a there's a cowboy feel. It's the it's the
• 56:52
  Speaker 1: wild West of capitalists, West of capitalism. I mean, it's
• 56:55
  Speaker 1: just everything's under construction that the Japanese are building their
• 56:57
  Speaker 1: first metro there. I just you know, there's a million motorbikes.
• 57:01
  Speaker 1: I mean, right now, I have I could. I'm looking
• 57:03
  Speaker 1: out of this Bloomberg facility, and I can imagine if
• 57:06
  Speaker 1: I was to walk out here in Saigon, there could
• 57:08
  Speaker 1: be two of motorbikes going in different directions. And as
• 57:12
  Speaker 1: an American, I would have absolutely no problem walking straight
• 57:15
  Speaker 1: out into the middle of it and not even blinking,
• 57:17
  Speaker 1: because I know how they think and how how do
• 57:21
  Speaker 1: they think? It's very zen and it's Buddhists trying to
• 57:25
  Speaker 1: kill you. There's trying to get somewhere, you know, So hey,
• 57:28
  Speaker 1: I want to wait, wait, Vietnam is Buddhist. They didn't
• 57:32
  Speaker 1: realize that. Yeah, that's quite fascinating. So you're about to
• 57:35
  Speaker 1: say I was about to say, you know, on this
• 57:36
  Speaker 1: this little excursion, I told you about this four month
• 57:39
  Speaker 1: tour that got me to Asia. One of the fascinating
• 57:42
  Speaker 1: things about that was it was four months of speaking
• 57:45
  Speaker 1: to the biggest funds in Asia. So when I was
• 57:48
  Speaker 1: in China, I was speaking to China Asset Management, which
• 57:51
  Speaker 1: is their largest sovereign wealth phone. When I was in Singapore,
• 57:54
  Speaker 1: g I see their sovereign wealth fund and just to
• 57:56
  Speaker 1: share some fun stories about how things go down in
• 57:58
  Speaker 1: different parts of the world. So I'm presenting a trend
• 58:01
  Speaker 1: following presentation to a group of people at China Asset Management.
• 58:05
  Speaker 1: This is the largest fund in the country, so there's
• 58:07
  Speaker 1: twenty five You have to assume the smartest people in
• 58:10
  Speaker 1: the country at one point four billion. You know, they've
• 58:13
  Speaker 1: gone through who knows how many tests to get to
• 58:15
  Speaker 1: that room. And I give this presentation. There's a translator.
• 58:20
  Speaker 1: I talked for a sentence translated. At the end of it,
• 58:23
  Speaker 1: I say, Hey, any questions. The lead guy very first question,
• 58:26
  Speaker 1: perfect English, room, perfect English, Perfect English. And then they
• 58:31
  Speaker 1: immediately got so excited because they were like, oh my gosh.
• 58:34
  Speaker 1: So this trader we all know about in China who
• 58:36
  Speaker 1: has made billions of dollars, and what he does is
• 58:38
  Speaker 1: he buys right before the market goes limit up. And
• 58:41
  Speaker 1: so they all China, of all the countries that I've
• 58:44
  Speaker 1: been to, instinctively understands momentum and trend. It's in their
• 58:49
  Speaker 1: blood because they do go back trust the fundamentals. They
• 58:53
  Speaker 1: don't trust the fundamentals. They've learned not to believe. They
• 58:56
  Speaker 1: don't believe anything in the fundamentals. The only thing they
• 58:58
  Speaker 1: believe is the momentum. That's funny because you think the Japanese,
• 59:01
  Speaker 1: we've had candlestick charting for centuries. You would think they
• 59:05
  Speaker 1: would be the ones that would be more likely to
• 59:07
  Speaker 1: uh to, to buy into that sort of stuff. I
• 59:11
  Speaker 1: find it's just the opposite. I find every time I'm
• 59:13
  Speaker 1: in Tokyo. Everyone's super nice, but their interest level is
• 59:16
  Speaker 1: kind of like a you know, it's like a pulse,
• 59:18
  Speaker 1: that's this flatline. Huh. The Chinese, the Chinese when it
• 59:22
  Speaker 1: comes to you know, bitcoin betting, it's I mean, look,
• 59:25
  Speaker 1: I was in an event in Beijing in June. Uh.
• 59:28
  Speaker 1: Most of the men will work and then the women
• 59:31
  Speaker 1: will go to financial conferences. So it's six women ages
• 59:34
  Speaker 1: forty to seventy. The excitement level to sit there and
• 59:38
  Speaker 1: talk about technical trend following off the charts? Well, isn't
• 59:42
  Speaker 1: it true that over a thousand it was crazy? That?
• 59:45
  Speaker 1: Isn't it true that the I forgot the Chinese word
• 59:49
  Speaker 1: for housewives? Are who are have been opening all these
• 59:52
  Speaker 1: brokerage accounts in China and leveraging up and day trading.
• 59:57
  Speaker 1: And that's why even after a four percent drop in
• 1:00:01
  Speaker 1: the Shanghai Index year to date, or at least this
• 1:00:04
  Speaker 1: is true as of August or September, was still like
• 1:00:07
  Speaker 1: marginally positive that they have had such a spectacular run
• 1:00:12
  Speaker 1: for the past few years. That whack is really just
• 1:00:15
  Speaker 1: seems to be a minor setback to UH to the
• 1:00:19
  Speaker 1: day traders in China. I'll share I'll share another one
• 1:00:21
  Speaker 1: with you, so that during that period I spoke with
• 1:00:24
  Speaker 1: the Sovereign Wealth Fund in Singapore and so here I
• 1:00:27
  Speaker 1: am at this very nice offices it's called G I
• 1:00:30
  Speaker 1: C and three people there are three key people and
• 1:00:33
  Speaker 1: give a presentation on trend following. And the first guy
• 1:00:35
  Speaker 1: immediately says, ah, we can't do any of this. This
• 1:00:38
  Speaker 1: week were value guys, were fundamental guys. We can't do
• 1:00:42
  Speaker 1: any of this. This is just not us. And over
• 1:00:45
  Speaker 1: there on the other side was one of the three
• 1:00:46
  Speaker 1: main guys contemplating, and then he bursts out and he says, oh, man,
• 1:00:51
  Speaker 1: we can't keep doing this stuff. It's not working. We
• 1:00:53
  Speaker 1: just read the condom in book. None of this is
• 1:00:55
  Speaker 1: We've got to do some other stuff. So it's interesting
• 1:00:58
  Speaker 1: to see, even at the highest re chees UH about
• 1:01:01
  Speaker 1: you know, one of the wealthiest countries in the world,
• 1:01:04
  Speaker 1: the desire to hold on and the desire to or
• 1:01:10
  Speaker 1: the need to break away and do something different. That's amazing.
• 1:01:14
  Speaker 1: You would think that these are just people in different slots,
• 1:01:18
  Speaker 1: and it doesn't matter whether it's a Chinese sovereign wealth
• 1:01:20
  Speaker 1: fund or a day trading housewife in China. It's still
• 1:01:24
  Speaker 1: a human being making decisions, and whether it's successful or
• 1:01:26
  Speaker 1: not is what motivates them to Let's try something else,
• 1:01:29
  Speaker 1: maybe that'll work. Every place is different, every every speaking
• 1:01:32
  Speaker 1: in Hong Kong. Uh, nobody in Hong Kong is interested
• 1:01:35
  Speaker 1: in the subject of trend following. It's just ex pat
• 1:01:39
  Speaker 1: white guys that know everything both they don't want to
• 1:01:42
  Speaker 1: know anything else. It's funny. So but I find so
• 1:01:45
  Speaker 1: why is that? Are they successful enough on their own
• 1:01:48
  Speaker 1: that they don't feel the need to keep growing or
• 1:01:51
  Speaker 1: is it just arrogance? All right? Well that that's not
• 1:01:55
  Speaker 1: a big shakra. And and are these former Brits what
• 1:01:58
  Speaker 1: sort of what sort of background are these people? So
• 1:02:00
  Speaker 1: a little opera class British and hubrists. Chinese aren't like that.
• 1:02:05
  Speaker 1: The Chinese just want to win, right, you know? And
• 1:02:08
  Speaker 1: look and the other thing is too, is it? I
• 1:02:10
  Speaker 1: find every time that I've been in mainland China. The
• 1:02:12
  Speaker 1: reception and the warmth is off the charts really, So
• 1:02:16
  Speaker 1: you know, we have this, we have the media and
• 1:02:18
  Speaker 1: the States talking about a war and this and that,
• 1:02:20
  Speaker 1: and every time I go there, they treat me like royalty.
• 1:02:23
  Speaker 1: They're so nice. They want to engage, they want to talk.
• 1:02:27
  Speaker 1: You know, they're not happy about the Japanese. They're free
• 1:02:29
  Speaker 1: to tell you that. Nobody, nobody in Asia seems to
• 1:02:32
  Speaker 1: be happy about the Japanese. No, the Vietnamese love the Japanese. Really,
• 1:02:35
  Speaker 1: why is that? I think, Well, the Japanese been huge
• 1:02:41
  Speaker 1: investors in Vietnam, so the Singaporeans and the and the
• 1:02:43
  Speaker 1: Japanese invest huge in Vietnam. I wonder why that is
• 1:02:47
  Speaker 1: just an opportunity. Or ninety million people, forty five million
• 1:02:52
  Speaker 1: of them are under the age of thirty. That means
• 1:02:54
  Speaker 1: forty five million people were born after the war. So
• 1:02:57
  Speaker 1: they don't care. They're all young people that just want
• 1:02:59
  Speaker 1: to get ahead. It's you know, look, it doesn't make
• 1:03:02
  Speaker 1: a difference where we're at. But the real issue when
• 1:03:05
  Speaker 1: I travel the world and seeing Asian it passed along
• 1:03:07
  Speaker 1: some insights. Demographics. Look at the demographics Japan. The demographist' terrible. Yeah,
• 1:03:12
  Speaker 1: everyone's old everyone in Vietnam, and Vietnam is like going
• 1:03:15
  Speaker 1: to a party. And what's going on with China? Now
• 1:03:18
  Speaker 1: that they've overturned the the one child or family rule,
• 1:03:22
  Speaker 1: are they going to run into the same issue where
• 1:03:24
  Speaker 1: they don't have enough young people and they're gonna have
• 1:03:25
  Speaker 1: a bunch of aging single people. And I think that's
• 1:03:27
  Speaker 1: why they did it. Yeah, one would expect. So what
• 1:03:31
  Speaker 1: what what's your read of of the demographics in China?
• 1:03:34
  Speaker 1: Or is it just so big and so vast and
• 1:03:36
  Speaker 1: so varied you can't draw any single conclusion exactly. It's
• 1:03:40
  Speaker 1: it's it's a it's a it's a really big ship.
• 1:03:43
  Speaker 1: What about Korea? Pass something along about interesting about China? Though?
• 1:03:46
  Speaker 1: When I presented there in Beijing of this year, I
• 1:03:48
  Speaker 1: guess it was over in front of about a thousand people,
• 1:03:51
  Speaker 1: and the translation was really rough. The translation was not good.
• 1:03:55
  Speaker 1: How do you know? Well, the crowd started getting restless.
• 1:03:58
  Speaker 1: I'm in front of a thousand people. Okay, I mean,
• 1:04:01
  Speaker 1: do you speak Man's No, I don't speak anything. So
• 1:04:03
  Speaker 1: the translation I speak for thirty seconds, there is a translation.
• 1:04:07
  Speaker 1: The audience starts getting restless. All of a sudden, they
• 1:04:10
  Speaker 1: start talking. People talking at once, right, so I can't
• 1:04:15
  Speaker 1: hear myself, so we we had to stop the It
• 1:04:18
  Speaker 1: was basically a mutiny the audiences. The audience decided that
• 1:04:23
  Speaker 1: the translators were so bad. They then commandeer and found
• 1:04:26
  Speaker 1: people in the audience from Malaysia spoke English, English and
• 1:04:29
  Speaker 1: Mandarin who had read my books. Brought the guy up
• 1:04:32
  Speaker 1: out of the audience and he translated for the rest
• 1:04:33
  Speaker 1: of the event. It made me realize about China, that
• 1:04:36
  Speaker 1: the that the the leaders of China have to give
• 1:04:41
  Speaker 1: that crowd what they want or they have some real
• 1:04:44
  Speaker 1: trouble facing that way. And I think they're doing a
• 1:04:46
  Speaker 1: pretty good job of that. I mean, anyone's been a Shanghai,
• 1:04:49
  Speaker 1: you know. I mean, Hong Kong continues to do well,
• 1:04:51
  Speaker 1: but Shanghai is the real jewel. So and I mean,
• 1:04:53
  Speaker 1: what is there. I don't know how many cities there
• 1:04:55
  Speaker 1: are in China with over a population one million, it's huge. So,
• 1:05:00
  Speaker 1: you know, the big challenge China faced where they had
• 1:05:02
  Speaker 1: all these billion seven coming up on two billion people
• 1:05:07
  Speaker 1: with half of the country is still living on the farm.
• 1:05:10
  Speaker 1: Have they successfully moved people into the cities or is
• 1:05:13
  Speaker 1: that still work in progress? I took the bullet train
• 1:05:16
  Speaker 1: from Shanghai to Beijing, which is about the same distance
• 1:05:18
  Speaker 1: from Washington, d C. To Orlando, and the entire way
• 1:05:23
  Speaker 1: was construction cranes and condos. Whether they've moved everyone into
• 1:05:26
  Speaker 1: those or not, I don't know. That's the direction it's going.
• 1:05:29
  Speaker 1: How long did that trip take that That would have
• 1:05:31
  Speaker 1: been the equivalent of eight hours here in the States,
• 1:05:34
  Speaker 1: about the same distance as the Exceller from New York
• 1:05:37
  Speaker 1: to d C. So three hours here or four hours. Yeah,
• 1:05:40
  Speaker 1: so they're going quick. They've actually got bullet trains. What
• 1:05:42
  Speaker 1: we have I'm not really sure. No, we have a
• 1:05:44
  Speaker 1: routing infrastructure and of government, the benevolent, the benevolent dictators
• 1:05:49
  Speaker 1: on infrastructure. Uh, you know, it helps to say to
• 1:05:52
  Speaker 1: say the least. It helps to say the absolute least.
• 1:05:56
  Speaker 1: Um Korea. That's the one place you haven't mentioned. Did
• 1:05:58
  Speaker 1: you make your way over the Soul? I have not
• 1:06:00
  Speaker 1: into Korea yet. I've not been to Korea, and I
• 1:06:02
  Speaker 1: have to make it. My first trip I want to
• 1:06:03
  Speaker 1: go in the new year is Miamar Burma. Yep. That's
• 1:06:08
  Speaker 1: the only thing I know about. Burma is down by
• 1:06:10
  Speaker 1: mc Sorley's that used to be a Burmese restaurant that
• 1:06:12
  Speaker 1: was quite fantastic twenty years ago. I don't I don't
• 1:06:15
  Speaker 1: know if it's still there. Uh. Speaking of food and
• 1:06:19
  Speaker 1: the paradox of choice, Singapore is supposed to be the
• 1:06:22
  Speaker 1: food capital of Asia. Tokyo, Tokyo more Michelin Star restaurants
• 1:06:27
  Speaker 1: in Tokyo that anywhere else in the world. Oh really, Yeah,
• 1:06:30
  Speaker 1: Singapore is supposed to basically be the crossroads of Asian.
• 1:06:33
  Speaker 1: You could get any type of Asian. I have some
• 1:06:36
  Speaker 1: fantastic Singaporean friends. I love them to death. If I've
• 1:06:40
  Speaker 1: given a choice of food, I'm gonna go right alongside
• 1:06:43
  Speaker 1: Bourdaine and we're gonna go to Tokyo. By the way,
• 1:06:46
  Speaker 1: he's someone who's on my list to uh to get
• 1:06:48
  Speaker 1: on the show. I've had Bobby Flay, who was fascinating
• 1:06:52
  Speaker 1: guy real New York and we left. We took the
• 1:06:53
  Speaker 1: subway downtown and as we're walking down the street, people like,
• 1:06:56
  Speaker 1: oh my god, it's Bobby Flay and he's like nods
• 1:06:59
  Speaker 1: and we get in the subway. Like talk about in
• 1:07:01
  Speaker 1: New Yorker Boor Dane is really a fascinating character. Um,
• 1:07:05
  Speaker 1: he would he would be really interesting you in the
• 1:07:07
  Speaker 1: choice on food, I should add I could go through
• 1:07:10
  Speaker 1: the rest of my life with somebody else choosing for me. Really, yeah,
• 1:07:15
  Speaker 1: that's amazing. Why not control? It's control thing it's to
• 1:07:21
  Speaker 1: think about. Think about living in a place like Vietnam
• 1:07:23
  Speaker 1: where you don't know most of the menu, you can't
• 1:07:26
  Speaker 1: read it. They have pictures on the menus. Can you
• 1:07:30
  Speaker 1: point this, this, and this a little and you don't
• 1:07:32
  Speaker 1: speak vietnames at all? You get by with English without
• 1:07:37
  Speaker 1: right a little bit, a little bit. You speak very
• 1:07:39
  Speaker 1: little bit, very little. If you had to not speak
• 1:07:43
  Speaker 1: try deep thang right, left, straight ahead. But but how
• 1:07:48
  Speaker 1: how fluent are you? If you couldn't use English? You'd
• 1:07:50
  Speaker 1: be in trouble there. You bring up a good point. Generally,
• 1:07:53
  Speaker 1: I see this in Tokyo. Now, to English is really permeating.
• 1:07:56
  Speaker 1: It's it's permating because look, it's the business language. And
• 1:07:59
  Speaker 1: I'm not being a cocky American or listen, it's arrogant.
• 1:08:02
  Speaker 1: It's not not us. The Brits are the one who
• 1:08:05
  Speaker 1: who made English the English England. The English are the
• 1:08:10
  Speaker 1: ones who made English the global language, not us ugly Americans.
• 1:08:15
  Speaker 1: You know, the old joke is two people separated by
• 1:08:17
  Speaker 1: a common language. Let me give one tip to your audience.
• 1:08:19
  Speaker 1: I don't think this tip has been given yet on
• 1:08:21
  Speaker 1: your show. If you want to take an interesting vacation,
• 1:08:26
  Speaker 1: just go to Saigon. Trust me, go to Saigon. Don't
• 1:08:31
  Speaker 1: go to Thailand, don't go to Singapore, don't go to Tokyo.
• 1:08:33
  Speaker 1: I mean, you can go to all those places, they're
• 1:08:34
  Speaker 1: all fine, but go to the place that's off the
• 1:08:37
  Speaker 1: beaten track. You will be shocked. My parents just came back.
• 1:08:41
  Speaker 1: I don't think my father is gonna stop talking about
• 1:08:43
  Speaker 1: Vietnam until the day died. Really, he's in love with it.
• 1:08:46
  Speaker 1: It's it's it's probably my favorite food in the world, Vietnamese.
• 1:08:51
  Speaker 1: It's what's amazing about New York, which has every fantastic
• 1:08:54
  Speaker 1: restaurant you can find. It's much harder to find a
• 1:08:58
  Speaker 1: good Vietnamese restaurant here. Then, say, if you go to
• 1:09:01
  Speaker 1: San Francisco or even Montreal, you can can't walk a
• 1:09:06
  Speaker 1: block without in Quebeca, Montreal without finding a bun Me shop.
• 1:09:09
  Speaker 1: And if you go to San Francisco, there's some fantastic Vietnamese,
• 1:09:13
  Speaker 1: few and far between on the East Coast, and and
• 1:09:16
  Speaker 1: I'm surprised given sushi and a million varieties of different
• 1:09:20
  Speaker 1: other Asian cuisines. From Korean. There's a huge Korean town
• 1:09:24
  Speaker 1: in in Down on thirty second Street in Broadway. That's
• 1:09:27
  Speaker 1: that's a fast NAT off the island. Barry, what the
• 1:09:30
  Speaker 1: off island of Manhattan. I'm I'm I'm in this general region,
• 1:09:34
  Speaker 1: but I travel around the country pretty regularly for work.
• 1:09:37
  Speaker 1: I would. I have not done Asia, and that's something
• 1:09:41
  Speaker 1: I really want to put some time in. Stop into
• 1:09:43
  Speaker 1: Tokyo in the twelve to fourteen hours, six more hours
• 1:09:46
  Speaker 1: to Southeast Asia. You can cover Bangkoks Singapore. I had city,
• 1:09:51
  Speaker 1: I had an event It's calling you supposed to speak
• 1:09:54
  Speaker 1: at a couple of years ago, and then some international
• 1:09:58
  Speaker 1: thing happened in the event gat Camp consult So um,
• 1:10:02
  Speaker 1: I need to get over there. It's certainly on my
• 1:10:05
  Speaker 1: shortlist of places to go. You brought something up a
• 1:10:07
  Speaker 1: side ago that I want to circle back to. You
• 1:10:09
  Speaker 1: were talking about we're talking about risk essentially. One of
• 1:10:13
  Speaker 1: the things I find really fascinating about the world that
• 1:10:15
  Speaker 1: I'm in is I shift out of Vietnamese food is
• 1:10:18
  Speaker 1: draw down. And when I had Ben Carlson of your
• 1:10:21
  Speaker 1: firm on my show, we talked about this We specifically
• 1:10:23
  Speaker 1: talked about Warren Buffett because in my world, the trend
• 1:10:26
  Speaker 1: following world, it's not unusual to have your capital go
• 1:10:29
  Speaker 1: down a significant amount. I mean, look, if you're if
• 1:10:31
  Speaker 1: you're trying to jump on a trend and you can't
• 1:10:33
  Speaker 1: predict the trends direction and you've got to take a
• 1:10:36
  Speaker 1: bite of the apple and you lose, those little losses
• 1:10:38
  Speaker 1: can add up, right. So Bended pointed something out in
• 1:10:42
  Speaker 1: his book about the number of down moves that Buffett
• 1:10:47
  Speaker 1: had taken in the last years. I think it was
• 1:10:50
  Speaker 1: five and two of those, we're minus fift Buffet in
• 1:10:55
  Speaker 1: the last twenty five years. That that right there, amazing
• 1:11:00
  Speaker 1: for people that don't understand trading, or even people that
• 1:11:03
  Speaker 1: do understand trading. The Warren Buffets allowing himself to take
• 1:11:07
  Speaker 1: five plus drawtowns a lot of wisdom in that statement
• 1:11:12
  Speaker 1: and that bit of evidence to break apart for sure.
• 1:11:15
  Speaker 1: So one of the columns I had done for the
• 1:11:16
  Speaker 1: Washington Post was it last summer was looking at Apple
• 1:11:21
  Speaker 1: and saying, people talk about Apple up seven thousand percent
• 1:11:26
  Speaker 1: over the past thirty years. And now he's laughed whenever
• 1:11:28
  Speaker 1: anyone says I wish I could I could have brought
• 1:11:31
  Speaker 1: Apple way back when my answer is why, what makes
• 1:11:34
  Speaker 1: you think you would have held it through the number
• 1:11:36
  Speaker 1: of forget thirty or fifty row bounds? How about the
• 1:11:40
  Speaker 1: downs they've had repeatedly throughout their history. You would not
• 1:11:44
  Speaker 1: have anybody who tells me if only I held Apple
• 1:11:48
  Speaker 1: over the past thirty unless you put in a draw
• 1:11:50
  Speaker 1: and forgot you had it, you would not have rode Apple.
• 1:11:54
  Speaker 1: Think think about the near death experience in the late nineties,
• 1:11:58
  Speaker 1: think about the seventy rash in the in the mid
• 1:12:01
  Speaker 1: two thousand's, think about the most recent drop. It's one
• 1:12:04
  Speaker 1: of those things that people just can't live through. I'm
• 1:12:08
  Speaker 1: trying to find you a pick right now that you
• 1:12:10
  Speaker 1: I know, given that you're an Apple guy, I'm a
• 1:12:14
  Speaker 1: Mac fanboy since my classic in nine. Really, so hold on,
• 1:12:19
  Speaker 1: it goes back to nine. Just keep keep talking. How
• 1:12:22
  Speaker 1: to find this picture for you? Or the heck? Is it?
• 1:12:26
  Speaker 1: You will? You will be just you? And Steve Jobs,
• 1:12:30
  Speaker 1: is that what you're gonna show me? Come on, man,
• 1:12:34
  Speaker 1: you and was very nice Saigon Airport. Oh really, he
• 1:12:40
  Speaker 1: looks genuinely happy to Usually you take a selfie with
• 1:12:43
  Speaker 1: a guy like that and they're they're rolling their eyes
• 1:12:45
  Speaker 1: at that. Come. I look, I'm like you, I have
• 1:12:47
  Speaker 1: to ask a lot of interesting people to come on
• 1:12:49
  Speaker 1: a podcast, so you've got to do the approach right
• 1:12:51
  Speaker 1: get So I'm yeah, I'm sitting there minding my own business.
• 1:12:53
  Speaker 1: This guy taps me on the shoulder. I'm sitting with
• 1:12:55
  Speaker 1: my parents. Guy taps him in the shoulder. I got
• 1:12:57
  Speaker 1: my cell phone plugged in behind me, says, hey, can
• 1:13:00
  Speaker 1: I share it? Can I plug my splitter in and
• 1:13:01
  Speaker 1: share your power? And in that quarter second, I looked
• 1:13:04
  Speaker 1: at his face and I said, sure, as long as
• 1:13:06
  Speaker 1: you give me a selfie and he said yes, Oh
• 1:13:09
  Speaker 1: that's great. So I know I only have you for
• 1:13:11
  Speaker 1: a certain amount of time, and I want to get
• 1:13:14
  Speaker 1: to some of my favorite questions. What's our hard stop
• 1:13:17
  Speaker 1: on the recording today? At alright, So so we are
• 1:13:24
  Speaker 1: down to our last half hour. I have my eight
• 1:13:26
  Speaker 1: favorite questions. I'll come back to them in about ten minutes.
• 1:13:29
  Speaker 1: I want to stick with some of the things we've
• 1:13:31
  Speaker 1: been talking about. We discussed Asia. I have to ask
• 1:13:35
  Speaker 1: you about Broke the New American Dream. What motivated you
• 1:13:40
  Speaker 1: a trading guy to make a movie about pre financial crisis?
• 1:13:47
  Speaker 1: About what was going on in the housing market and
• 1:13:50
  Speaker 1: the huge shifts in in American economic demographics. So a
• 1:13:55
  Speaker 1: budget was put together and there was going to be
• 1:13:58
  Speaker 1: a reality show on the Turtles. Huh. Then at the
• 1:14:05
  Speaker 1: process of doing my Turtle book, a lot of the
• 1:14:08
  Speaker 1: Turtles started throwing, uh, look, this was a secretive thing.
• 1:14:12
  Speaker 1: People didn't want this out. So I got a I
• 1:14:14
  Speaker 1: got a few legal a few legal notices here and there,
• 1:14:17
  Speaker 1: and not today, but back in the day there was
• 1:14:19
  Speaker 1: there was a concern, and so we shifted on a
• 1:14:23
  Speaker 1: dime and I had I had hired a director and
• 1:14:25
  Speaker 1: we were gonna do a retrospective on the dot com bubble.
• 1:14:27
  Speaker 1: And she said, Michael, I want to do a story
• 1:14:31
  Speaker 1: on a guy that started with nothing, went to a
• 1:14:34
  Speaker 1: billion and lost it all. And I said, well, that's great.
• 1:14:36
  Speaker 1: We don't have that person. And she said, well, I
• 1:14:39
  Speaker 1: know someone that that that happened to. And I said, oh,
• 1:14:42
  Speaker 1: really who. I looked up the guy's name and he
• 1:14:45
  Speaker 1: was an heir to the Nestley family fortune. And I said, well,
• 1:14:47
  Speaker 1: I can't use this guy. It's not gonna work. And
• 1:14:50
  Speaker 1: she said, Michael, don't worry about it. The audience will
• 1:14:52
  Speaker 1: believe anything we tell them to believe, and I said, okay,
• 1:14:54
  Speaker 1: you're fired. So long story short, long story short, um
• 1:14:58
  Speaker 1: I ended up becoming the director, and it was meant
• 1:15:01
  Speaker 1: to be a trend following picture. That's where there's so
• 1:15:03
  Speaker 1: many trend following traders in it. And as we were
• 1:15:06
  Speaker 1: filming it, we were stumbling into the crisis. So the crisis.
• 1:15:12
  Speaker 1: So it wasn't planned, and I wasn't really trying to
• 1:15:15
  Speaker 1: make any kind of a fundamental statement other than, look
• 1:15:18
  Speaker 1: what can happen when you lever up and you really
• 1:15:20
  Speaker 1: don't think about bubbles? So that was really the premise.
• 1:15:23
  Speaker 1: It wasn't I wasn't trying to make any grand statement
• 1:15:25
  Speaker 1: about you know, where things can go. Of course, in
• 1:15:28
  Speaker 1: the middle of it, I took some shots at things
• 1:15:30
  Speaker 1: like state lotteries, which are a boondoggle. But can I
• 1:15:33
  Speaker 1: tell you that's one of my many pet peeves in
• 1:15:36
  Speaker 1: in I forgot what piece I had written this in
• 1:15:39
  Speaker 1: not too long ago. Do you realize that across the country,
• 1:15:42
  Speaker 1: state lottos make more money then all of professional sports,
• 1:15:47
  Speaker 1: all of movies, all of music, all of books an
• 1:15:51
  Speaker 1: Apple app store combined. I think the stats and I'm
• 1:15:55
  Speaker 1: gonna try and go from memory five of the p
• 1:16:00
  Speaker 1: bull that play the lottery, I think it's their best
• 1:16:03
  Speaker 1: chance for making a half million dollars for retirement. That's insane.
• 1:16:07
  Speaker 1: It's sad because it's and it's mostly people who really
• 1:16:10
  Speaker 1: can't afford the most. And what's and what's sad about
• 1:16:12
  Speaker 1: it is like if we had to really make a
• 1:16:14
  Speaker 1: moral type statement, no one's gonna care, no one's gonna
• 1:16:16
  Speaker 1: do anything, the country is too big, whatever. But it
• 1:16:19
  Speaker 1: really is something where the government is truly abusing the
• 1:16:23
  Speaker 1: disadvantaged class for abusing the look Mark Twain called gambling
• 1:16:28
  Speaker 1: attack on the stupid, and this is your taxing the poorest,
• 1:16:32
  Speaker 1: least capable people of of paying this bill. It's it's awful.
• 1:16:36
  Speaker 1: So from that from gambling, how did you see the
• 1:16:40
  Speaker 1: parallels too? You know the stripper with six houses and
• 1:16:44
  Speaker 1: other people speculating, and that was just add a little color.
• 1:16:47
  Speaker 1: But and all the flip bears the poker though the
• 1:16:49
  Speaker 1: poker was the real thing. The poker was, you know,
• 1:16:52
  Speaker 1: getting the poker players in the film because that has
• 1:16:54
  Speaker 1: so many people talking about poker, whether it was the
• 1:16:56
  Speaker 1: trend following traders or at the time Bill Miller and
• 1:16:59
  Speaker 1: Michael Mobus down there like Mason. I know he's Mike,
• 1:17:02
  Speaker 1: Mike's moved Yeah, yeah so, but also a guest on
• 1:17:05
  Speaker 1: the show and he's been on your you know, just
• 1:17:08
  Speaker 1: a side tangent note. Did you read the last read
• 1:17:11
  Speaker 1: more than you know? The book after the Skill and
• 1:17:15
  Speaker 1: Um what is the name of it? I could punch
• 1:17:20
  Speaker 1: it up. It's it's a look at at skill and
• 1:17:23
  Speaker 1: luck in business, sports and investment. Yeah, you know, success equation. Listen.
• 1:17:28
  Speaker 1: You know what what's great about what Michael did? Michael
• 1:17:29
  Speaker 1: really made it I don't want to say fashionable, that
• 1:17:32
  Speaker 1: sounds trite, but he made it very acceptable to take
• 1:17:35
  Speaker 1: all these disparate disciplines and use them to make a
• 1:17:39
  Speaker 1: point in investing. He was doing that in the late nineties. Yeah,
• 1:17:42
  Speaker 1: his stuff is fascinating. Again, you could, by the way,
• 1:17:44
  Speaker 1: you could pull I don't know if it's still on
• 1:17:46
  Speaker 1: the leg Mason side, but it used to be all
• 1:17:49
  Speaker 1: of his quarterly missives, which are eight page works of
• 1:17:53
  Speaker 1: I have him from his before, like Mason when he
• 1:17:55
  Speaker 1: was at Credit Swiss before, because he came back to
• 1:17:58
  Speaker 1: Credit Swiss now, so I've got all of his old
• 1:18:00
  Speaker 1: ones from the nineties. There really are that that's a
• 1:18:02
  Speaker 1: book in and of itself, someone someone to tell him
• 1:18:05
  Speaker 1: to uh, to crank that out. So you put out
• 1:18:09
  Speaker 1: the the movie. What did you learn from the experience
• 1:18:12
  Speaker 1: of doing it and and what did you learn from
• 1:18:17
  Speaker 1: um the actual I learned, don't submit your film to
• 1:18:21
  Speaker 1: Sundance in September of oh eight because I was the
• 1:18:27
  Speaker 1: deadline September eight, mid mid September of eight was I
• 1:18:31
  Speaker 1: had to submit the film to Sundance, So you know,
• 1:18:33
  Speaker 1: of course, and I think that the thing that I
• 1:18:35
  Speaker 1: really learned is that you need to have time. So
• 1:18:39
  Speaker 1: if there's going to be a big event, you really
• 1:18:41
  Speaker 1: can't be first. You needn't have time for people to
• 1:18:43
  Speaker 1: settle on it. Even though I thought my message was
• 1:18:45
  Speaker 1: important for people to really think about the bubbles and
• 1:18:49
  Speaker 1: whatnot and how to how to prepare, it was too early.
• 1:18:52
  Speaker 1: And I think also I wasn't blaming anybody except the
• 1:18:56
  Speaker 1: end user. I was blaming us. I didn't blame you know,
• 1:18:59
  Speaker 1: all these boogeyman up here on Wall Street and you know, yeah,
• 1:19:05
  Speaker 1: I didn't blame Dick follow. I mean, look, the FED
• 1:19:07
  Speaker 1: is done what they've done. But ultimately we're the people.
• 1:19:10
  Speaker 1: We do it, you know, we've we vote for it.
• 1:19:11
  Speaker 1: We support it. I know there's there's guys behind the
• 1:19:15
  Speaker 1: curtain up here in OZ and stuff like that, but
• 1:19:18
  Speaker 1: you know, ultimately we all wanted to get rich. We
• 1:19:20
  Speaker 1: all had no problem getting a million dollar mortgage from
• 1:19:23
  Speaker 1: WAMO in two thousand and three with no no docks down.
• 1:19:27
  Speaker 1: So I'll never have told this story so many times
• 1:19:31
  Speaker 1: that the first house I owned, we bought and I
• 1:19:34
  Speaker 1: want to say two thousand and two thousand one, not
• 1:19:36
  Speaker 1: counting apartments in the city, first free standing house in suburbia,
• 1:19:41
  Speaker 1: and we had done a refine oh five. Absolutely true story.
• 1:19:46
  Speaker 1: And this was back in the day when the bank
• 1:19:49
  Speaker 1: would come to your house. Guy pulls into a driveway,
• 1:19:52
  Speaker 1: flings the door open to his car, leaves the engine running,
• 1:19:55
  Speaker 1: runs in with some papers, really apologetic. I'm really sorry.
• 1:19:59
  Speaker 1: I a closing on a new sale a few blocks
• 1:20:02
  Speaker 1: from here, signed sign initial initial his check for thirty
• 1:20:07
  Speaker 1: Now is that your cash outrefly? Thank you so much.
• 1:20:09
  Speaker 1: I gotta go and he he was in and out
• 1:20:12
  Speaker 1: in two minutes. And as he leaves the driveway, I
• 1:20:16
  Speaker 1: say to my wife, this this is a bad thing.
• 1:20:19
  Speaker 1: Some something like it started me looking at how insane
• 1:20:23
  Speaker 1: has housing become, and I had been looking at that
• 1:20:25
  Speaker 1: space for a while, but that experience was so surreal
• 1:20:30
  Speaker 1: compared to the most recent house we bought a year ago.
• 1:20:33
  Speaker 1: Was the polar opposite. All Right, we need a uh,
• 1:20:39
  Speaker 1: I need a pint of blood, we need some hair samples,
• 1:20:41
  Speaker 1: a little d n A. Alright, we'll be checking your
• 1:20:43
  Speaker 1: stool sample every month for a year, just to make
• 1:20:46
  Speaker 1: sure that you can can repay this. It was. It
• 1:20:48
  Speaker 1: was insane. It was good column fodder, but it was
• 1:20:54
  Speaker 1: absolutely insane this go round, the last one. We looked
• 1:20:58
  Speaker 1: at each other and just like, okay, let's read do
• 1:21:00
  Speaker 1: the kitchen. It was. It was that simple and and
• 1:21:02
  Speaker 1: that crazy. Um what did you learn? Not so much
• 1:21:07
  Speaker 1: about the subject matter of finance, but what did you
• 1:21:10
  Speaker 1: learn about the Um? Oh, we have plenty of time.
• 1:21:13
  Speaker 1: I'm afraid we're gonna run out of time for our questions.
• 1:21:15
  Speaker 1: What did you learn about the process of making a film?
• 1:21:18
  Speaker 1: Would you ever make a film again? Or a television show?
• 1:21:21
  Speaker 1: Are you interested in that in the least if I
• 1:21:25
  Speaker 1: don't have to finance any of it, right, well, that's
• 1:21:28
  Speaker 1: a given. Um. If I don't have to finance any
• 1:21:30
  Speaker 1: of it, and you know, I found in making a
• 1:21:33
  Speaker 1: film there's two types of staff. There's really the people
• 1:21:37
  Speaker 1: that will come along and work their butt off and
• 1:21:39
  Speaker 1: they really want to make creative magic, and then there's
• 1:21:42
  Speaker 1: the other people that just want to paycheck. So there's
• 1:21:44
  Speaker 1: a whole I think it's of the film world is
• 1:21:47
  Speaker 1: like just kind of you know, they know there's these
• 1:21:49
  Speaker 1: budgets and they're gonna get a paycheck, and they're really
• 1:21:51
  Speaker 1: like half isn't that true? And everything every endeavor there
• 1:21:53
  Speaker 1: are people who do it for the love of the job,
• 1:21:55
  Speaker 1: and there are people who work for the love of
• 1:21:57
  Speaker 1: the paycheck. It's fun. Art is fun. We're gonna We're
• 1:22:02
  Speaker 1: gonna of course, we're gonna die. We're all gonna die.
• 1:22:05
  Speaker 1: Make art. Whether it's a book, whether it's a podcast,
• 1:22:09
  Speaker 1: whether it's a trading system. I don't care. Make art.
• 1:22:11
  Speaker 1: You're gonna die. We're all gonna die. Make art. Mike Covil,
• 1:22:16
  Speaker 1: uh that that's your philosophy of life summed up in
• 1:22:18
  Speaker 1: in one's It's true. So we're all gonna die. Make art.
• 1:22:21
  Speaker 1: But I think a lot of people don't think they're
• 1:22:22
  Speaker 1: gonna die, so they don't do anything. Who doesn't think
• 1:22:24
  Speaker 1: they're gonna die. I'm really curious about you know, normally,
• 1:22:28
  Speaker 1: I'm I'm making these arguments as to why you have
• 1:22:31
  Speaker 1: to look at the data and why you need to
• 1:22:33
  Speaker 1: make sure you're fact based and logical and and don't
• 1:22:36
  Speaker 1: have some glaring blind spots blind um spots that you're
• 1:22:42
  Speaker 1: you're unaware of where you're making errors. But when someone's
• 1:22:45
  Speaker 1: fundamental premise of life is clearly false, how do you
• 1:22:51
  Speaker 1: respond to people who have no interest in that sort
• 1:22:53
  Speaker 1: of stuff? I tell them there's a great video on
• 1:22:56
  Speaker 1: YouTube with Christopher Hitchens, Dan Dennett, Sam Harris, the whole
• 1:23:02
  Speaker 1: the whole debate. So if anybody wants to really argue
• 1:23:05
  Speaker 1: with me, I said, you know what, there's four guys
• 1:23:07
  Speaker 1: on YouTube. They're much smarter than me, and they talked
• 1:23:09
  Speaker 1: for about two hours at a round table. Give that
• 1:23:11
  Speaker 1: a shot, and they come back to me when you're
• 1:23:12
  Speaker 1: after after watching that, you probably if you you're either
• 1:23:15
  Speaker 1: gonna like me, you're gonna hate me one or the other.
• 1:23:17
  Speaker 1: That that's pretty pretty hilarious. Before we get to our
• 1:23:21
  Speaker 1: eight favorite questions, Um, what else have you been looking
• 1:23:26
  Speaker 1: at focusing on noticing that you think is intriguing? Especially
• 1:23:31
  Speaker 1: what have you learned from your time in Asia? That
• 1:23:34
  Speaker 1: you wouldn't have learned if you were here in the
• 1:23:36
  Speaker 1: United States. America feels old. Feels old in what way?
• 1:23:42
  Speaker 1: The demographics, the infrastructure, the the entire society. What is
• 1:23:47
  Speaker 1: it about America that's old? Everything you just said? And
• 1:23:52
  Speaker 1: then I think also the people, the people and not
• 1:23:54
  Speaker 1: just a physical old, but a an old. We're not
• 1:24:00
  Speaker 1: belief system venturous anymore. I mean some of us are.
• 1:24:05
  Speaker 1: Some of us are. Look, you have Silicon Valley. I'm
• 1:24:07
  Speaker 1: gonna push back on you. We do have Millennials are everywhere,
• 1:24:10
  Speaker 1: They're everywhere. What they're doing, they're taking over. The millennials
• 1:24:17
  Speaker 1: are now a bigger voting block than the baby boom.
• 1:24:20
  Speaker 1: Well that's a voting really matters anymore. Well, you know,
• 1:24:23
  Speaker 1: you get to choose which one of these two it's
• 1:24:28
  Speaker 1: column Ato Columby. You don't really get to choose. You
• 1:24:30
  Speaker 1: get to choose from a pre selected course. But that said,
• 1:24:34
  Speaker 1: Silicon Valley does exceptional things. But overall, there is a feeling.
• 1:24:39
  Speaker 1: If you want me to compare and contrast, there's this energy,
• 1:24:43
  Speaker 1: there's this excitement, there's this desire. Maybe it's misplaced, maybe
• 1:24:47
  Speaker 1: it won't get where they want to go, but you
• 1:24:49
  Speaker 1: can feel it even in a Tokyo still. And I
• 1:24:52
  Speaker 1: know Tokyo is a big city and maybe the outer
• 1:24:54
  Speaker 1: areas aren't doing as well, but that energy and enthusiasm
• 1:24:58
  Speaker 1: and all the things that you may for example, infrastructure
• 1:25:01
  Speaker 1: when you see so many infrastructure projects getting off the ground.
• 1:25:05
  Speaker 1: And I'll tell you one of my damn pet peeves airlines,
• 1:25:10
  Speaker 1: specifically the staff on an airline in the United States
• 1:25:13
  Speaker 1: that's uniformly terrible. I'll give you three exceptions. Virgin, which
• 1:25:17
  Speaker 1: is British Jet Blue, which is essentially the real exception
• 1:25:22
  Speaker 1: in Southwest. Those two are the non um traditional airlines.
• 1:25:27
  Speaker 1: They're they're not the legacy airlines with all of the
• 1:25:30
  Speaker 1: UH union um baggage and all of the historical baggage.
• 1:25:34
  Speaker 1: Outside of those, I've found that most airlines staff in
• 1:25:39
  Speaker 1: the United States States not especially accommodated. And it's completely different.
• 1:25:44
  Speaker 1: And not only do you have something uh people might say, well,
• 1:25:48
  Speaker 1: this is not really relevant. Appearance is clearly an issue
• 1:25:51
  Speaker 1: on airlines. Oh god, have you have a flown air India.
• 1:25:55
  Speaker 1: It's unbelievable. And people say Singapore Airlines is supposed to
• 1:25:59
  Speaker 1: be fed plastic. Singapore is great a and a Japan fantastic.
• 1:26:03
  Speaker 1: Even Vietnam Airline is fantastic. Now is it much more expensive?
• 1:26:06
  Speaker 1: Are they? Are the fairs regulated the way they used
• 1:26:10
  Speaker 1: to be in the United States? What's the difference. We
• 1:26:13
  Speaker 1: haven't talked to charts today, Not that I'm a chart
• 1:26:15
  Speaker 1: guy or anything, but if we look at some of
• 1:26:16
  Speaker 1: those charts, and everyone can imagine what the charts look like.
• 1:26:19
  Speaker 1: Just imagine what the US dollar looks like on a chart,
• 1:26:22
  Speaker 1: and then imagine if you're straight up for nine years,
• 1:26:25
  Speaker 1: if you're another part of the if you'r other parts
• 1:26:27
  Speaker 1: of the world, that's a good thing to be. So
• 1:26:29
  Speaker 1: in other words, a strong the strong dollar is good
• 1:26:33
  Speaker 1: for for people in Asia, is good for people elsewhere
• 1:26:35
  Speaker 1: around the It's good for Americans in Asia, well, if
• 1:26:38
  Speaker 1: you're if you're a tourist, if you're an export, or
• 1:26:40
  Speaker 1: not so much in the United States. Um, And what's
• 1:26:44
  Speaker 1: fascinating is if you're an exporter in China and the
• 1:26:48
  Speaker 1: juan is is is peg to the dollar, the strong
• 1:26:51
  Speaker 1: dollar isn't the greatest thing in the world for exports
• 1:26:55
  Speaker 1: other than to the United States. Elsewhere it makes you good,
• 1:26:58
  Speaker 1: it's a little more expensive. So, um, what else do
• 1:27:01
  Speaker 1: you see as a change that you noticed only because
• 1:27:05
  Speaker 1: you've spent so much time in Asia, a bath, the
• 1:27:08
  Speaker 1: United States, or or anything else. So commerce, I mean,
• 1:27:12
  Speaker 1: for example, look in clearly the registration requirements, the ability
• 1:27:17
  Speaker 1: to launch a restaurant, launch a store. Singapore is highly regulated,
• 1:27:22
  Speaker 1: but in many past you can't even choose. Of course,
• 1:27:26
  Speaker 1: Bangkok though, and Hong Kong and Ho Chum in City, Saigon, uh,
• 1:27:31
  Speaker 1: you know, places like Shanghai, you can get something started,
• 1:27:34
  Speaker 1: you can find out what the demand is and if
• 1:27:36
  Speaker 1: it doesn't work. I can't tell you how many times
• 1:27:38
  Speaker 1: I passed a store and Saigon was like, that store
• 1:27:41
  Speaker 1: looks kind of dead. I wonder how long they're gonna
• 1:27:42
  Speaker 1: make it, and they're gone in a month. I mean,
• 1:27:45
  Speaker 1: so people just try. There's this look. I still remember
• 1:27:48
  Speaker 1: the first time three years ago, I'm walking the streets
• 1:27:50
  Speaker 1: with this this young lady and I looked at it
• 1:27:52
  Speaker 1: and I said, where are all communists? And she didn't
• 1:27:56
  Speaker 1: get the joke because everything I saw was selling commerce, commerce,
• 1:28:00
  Speaker 1: And that's it's not even a the government style of
• 1:28:04
  Speaker 1: Vietnam and China's communists. The people are Asian, the people
• 1:28:09
  Speaker 1: are merchants, and that is that's pure trade and you're
• 1:28:13
  Speaker 1: seeing less of that in the United States. I mean,
• 1:28:17
  Speaker 1: you know, there's some nice stores out here. I see
• 1:28:19
  Speaker 1: people selling high end goods. I see the Apple Store
• 1:28:22
  Speaker 1: and that kind of stuff, But I don't see the
• 1:28:23
  Speaker 1: ability for the average person to go jump at it
• 1:28:26
  Speaker 1: really quickly. Well not you're not going to open a
• 1:28:28
  Speaker 1: storefront on Fifth Avenue if you're a one man shop
• 1:28:31
  Speaker 1: selling widgets that you make in your basement, saying this
• 1:28:34
  Speaker 1: is good or bad. Let the market decide. We've gotten
• 1:28:37
  Speaker 1: a little overregulated on some of these things. I know
• 1:28:39
  Speaker 1: we're trying to protect everybody. I know we're trying to
• 1:28:41
  Speaker 1: make everything fair, but we all know that what's all
• 1:28:43
  Speaker 1: said and done, no one's protected. It ain't fair. S Yeah,
• 1:28:47
  Speaker 1: I've always found that to be a little bit of
• 1:28:49
  Speaker 1: a red herring, only because we have um absolutely you know,
• 1:28:54
  Speaker 1: we launched a sm management shop. It didn't take that
• 1:28:57
  Speaker 1: much time, effort of money to do. If you want
• 1:28:59
  Speaker 1: to build a restaurant or open a restaurant, all these
• 1:29:02
  Speaker 1: things take capital and if you have to jump through
• 1:29:05
  Speaker 1: a few regulatory hoops, it's not the worst thing in
• 1:29:07
  Speaker 1: the world. Your audience listening right now that knows you've
• 1:29:10
  Speaker 1: not been to Asia knows that when you come in
• 1:29:12
  Speaker 1: two thousand and six, that all right. In the last
• 1:29:16
  Speaker 1: ten minutes we have, let's work through our ten favorite questions. Uh,
• 1:29:22
  Speaker 1: you already asked the first one about how your background
• 1:29:25
  Speaker 1: led you to finance. Let's go to the second one.
• 1:29:29
  Speaker 1: Who were your early mentors? I mentioned Jim Massey and
• 1:29:36
  Speaker 1: Solomon Brothers because when he told me you don't want
• 1:29:41
  Speaker 1: to be the best, you just want to win. That
• 1:29:43
  Speaker 1: forces you, as a young man, you realize, Okay, I've
• 1:29:46
  Speaker 1: got diarrhea of the mouth, I'm just talking. And that
• 1:29:50
  Speaker 1: forces you to realize, this is a game you play
• 1:29:53
  Speaker 1: to win. This isn't it, This isn't This is no
• 1:29:56
  Speaker 1: longer kumbae ya. Everyone gets a trophy. This is playing
• 1:30:00
  Speaker 1: for keeps and that and that instant changed me. I
• 1:30:04
  Speaker 1: didn't really have much more involvement after that with him.
• 1:30:07
  Speaker 1: He did get me an interview at Solomon Brothers in
• 1:30:09
  Speaker 1: nineteen nine four during the Bondmarket massacre, which really didn't
• 1:30:12
  Speaker 1: help much, But uh, that was that was a change.
• 1:30:16
  Speaker 1: So did you decide that you wanted to be the
• 1:30:19
  Speaker 1: best or did you just sign that you wanted to
• 1:30:21
  Speaker 1: win the best? Is some nebulous, who knows what best means?
• 1:30:25
  Speaker 1: That doesn't mean anything, right. You want to win, however,
• 1:30:28
  Speaker 1: you're going to measure winning at least you gotta be
• 1:30:29
  Speaker 1: able to measure it in some way. Kind of interesting
• 1:30:33
  Speaker 1: and Bill Done too, Bill Done, the trader that I
• 1:30:35
  Speaker 1: mentioned with a forty year track record, seeing him in person,
• 1:30:38
  Speaker 1: and I remember this is South Florida, Yeah, South Florida.
• 1:30:42
  Speaker 1: And it was a crazy, a crazy small world story
• 1:30:45
  Speaker 1: where my baseball coach when I was sixteen ended up
• 1:30:49
  Speaker 1: in today he's the president of Dunk Capital. I don't
• 1:30:51
  Speaker 1: know how that even happened, crazy small world story. But
• 1:30:54
  Speaker 1: when he got me an informational interview with Bill Done in,
• 1:30:58
  Speaker 1: I remember he Bill Done call me up on the phone.
• 1:31:01
  Speaker 1: He knew I was coming down, and he said, so,
• 1:31:04
  Speaker 1: do you want to come down here and press me?
• 1:31:07
  Speaker 1: And I remember being a little bit scared because I
• 1:31:09
  Speaker 1: knew I was talking to a guy worth hundreds of
• 1:31:11
  Speaker 1: millions of dollars, he's managing billions. But I saw it
• 1:31:14
  Speaker 1: within him too, was again that Jim Massey, that attitude
• 1:31:18
  Speaker 1: that I'm you know, just this tough atted is former
• 1:31:22
  Speaker 1: marine for marine physicists, but that those things instilled in me,
• 1:31:26
  Speaker 1: even if it wasn't my personality to show those to
• 1:31:29
  Speaker 1: other people, Deep in my gut, deep in my mind,
• 1:31:32
  Speaker 1: I knew those were changing me. Huh, that's quite fascinating.
• 1:31:41
  Speaker 1: Next question, Um, so you you mentioned a couple of mentors.
• 1:31:45
  Speaker 1: What other investors influenced your approach to investing? Obviously Richard
• 1:31:50
  Speaker 1: Dennis Key guy who else influenced the way you think
• 1:31:54
  Speaker 1: about deploying capital at risk? You know, there's a whole
• 1:31:58
  Speaker 1: team of people that we've talked about today, but I'll
• 1:32:00
  Speaker 1: bring up somebody that I've mentioned briefly, which is David
• 1:32:03
  Speaker 1: Harding of Winding Capital. And David is probably considered today
• 1:32:07
  Speaker 1: the most successful trend following Trader. His fund is around
• 1:32:11
  Speaker 1: thirty billion dollars to in n it was five million,
• 1:32:17
  Speaker 1: I believe, so he took five million up to thirty
• 1:32:19
  Speaker 1: billion or Some of this is obviously, of course inflows,
• 1:32:22
  Speaker 1: but but still it's a it's a tremendous success. He
• 1:32:25
  Speaker 1: had one stretch of twenty years after fees and the
• 1:32:31
  Speaker 1: first time I met him, I was in his office
• 1:32:33
  Speaker 1: in London, and to watch his competitiveness struck me because
• 1:32:39
  Speaker 1: he wanted to talk about Jim Simmons and I didn't
• 1:32:42
  Speaker 1: say I don't. I said, I don't know much about
• 1:32:44
  Speaker 1: Jim Simmons right now. He's in my white well. I
• 1:32:46
  Speaker 1: have Dalya and Jim side. I don't, I said, I
• 1:32:48
  Speaker 1: don't have any I don't have any experience with him.
• 1:32:50
  Speaker 1: And you know, Harding was making the case that for
• 1:32:54
  Speaker 1: somebody to do as well as Simmons had did and
• 1:32:58
  Speaker 1: has done, that there had to be a trend following component. Now,
• 1:33:02
  Speaker 1: what's interesting if you list Simon's If you listen to
• 1:33:06
  Speaker 1: Simon's though everything he says publicly, and I've listened almost
• 1:33:10
  Speaker 1: everything he said publicly, there's not much sounds like a
• 1:33:14
  Speaker 1: trend following trader if and until and when some type
• 1:33:19
  Speaker 1: of subject on the short term comes up. So I
• 1:33:21
  Speaker 1: just thought it was an interesting conversation. One of my
• 1:33:23
  Speaker 1: first conversations with David Harding that as a man who
• 1:33:27
  Speaker 1: was very firmly in the asset management space, the competitiveness
• 1:33:33
  Speaker 1: that which he had to look at his peers, so
• 1:33:37
  Speaker 1: that that affected me to just it shows you behind
• 1:33:40
  Speaker 1: the curtain. You know how these guys are thinking, you
• 1:33:41
  Speaker 1: know how the best in the world are thinking. And
• 1:33:44
  Speaker 1: whether or not you use that experience or not. You
• 1:33:46
  Speaker 1: now know how the game is played. That's fascinating. I
• 1:33:49
  Speaker 1: look at Simon's is such a different approach then trend following.
• 1:33:54
  Speaker 1: I'm surprised to hear a successful trend follower sort of
• 1:33:59
  Speaker 1: of you know that that becomes his moby dick at
• 1:34:02
  Speaker 1: that point. Okay, but here's so, here's the thing, do
• 1:34:05
  Speaker 1: you does anybody really know exactly what renaissance does? We
• 1:34:09
  Speaker 1: know some of it. We know that there's a lot
• 1:34:11
  Speaker 1: of They were an early adopter of high frequency trading
• 1:34:13
  Speaker 1: that he essentially was hiring mathematicians and physicists twenty years ago,
• 1:34:20
  Speaker 1: but he was never hiring people from Wall Street. Everything
• 1:34:23
  Speaker 1: he built was strictly from And my contact with him
• 1:34:28
  Speaker 1: is when I started at Stony Brook as an undergrad.
• 1:34:31
  Speaker 1: I was applied physics and applied mathematics and physics major.
• 1:34:35
  Speaker 1: He was the outgoing chairman of the math department. And
• 1:34:38
  Speaker 1: by the way, if you would have met him in
• 1:34:39
  Speaker 1: nineteen seventy nine when I started college, you would have said, wait,
• 1:34:43
  Speaker 1: that chain smoking, bearded guy. I'm not going to give
• 1:34:46
  Speaker 1: him two cents. He would never earn a million years.
• 1:34:49
  Speaker 1: I think this is gonna got the guy that's going
• 1:34:51
  Speaker 1: to mass a forty year on near annual track record.
• 1:34:55
  Speaker 1: It's it's insane. You know they're real because they returned
• 1:34:58
  Speaker 1: after a few years, returned the outside investors money and
• 1:35:01
  Speaker 1: said we're good women. And just one of the things
• 1:35:03
  Speaker 1: that really triggered me early on. And I'm just thinking
• 1:35:06
  Speaker 1: about Simon's and his track record. With trend following traders
• 1:35:10
  Speaker 1: being regulated by the CFTC, the n f A, you
• 1:35:13
  Speaker 1: could always do a foiler request and get their disclosure documents.
• 1:35:16
  Speaker 1: So for me earlier, do they really reveal a whole
• 1:35:18
  Speaker 1: lot in the documents? What what is your their monthly performance?
• 1:35:22
  Speaker 1: Oh so you're actually getting those numbers? Yeah, yeah, yeah,
• 1:35:24
  Speaker 1: so I mean you can look at I mean, that's
• 1:35:26
  Speaker 1: that was the foundation for all of my books. I
• 1:35:28
  Speaker 1: couldn't write about trend following unless I had the performance
• 1:35:33
  Speaker 1: that said, okay, look look at the correlation between Bill Done,
• 1:35:37
  Speaker 1: John Henry, David Harding, the Turtles, Larry Height. And when
• 1:35:41
  Speaker 1: you start to look at the correlation performance and you're like, oh,
• 1:35:43
  Speaker 1: all these different people, different walks of life, different training,
• 1:35:47
  Speaker 1: unaffiliated are making money in the same months and losing
• 1:35:51
  Speaker 1: money in the same months. They're obviously doing something and
• 1:35:53
  Speaker 1: then you can. Then you can look at the markets.
• 1:35:54
  Speaker 1: You can realize, oh yeah, crew just moved big that month,
• 1:35:57
  Speaker 1: and you know what's going on. Huh. That's that's interesting.
• 1:36:00
  Speaker 1: In outside of your own books, what are some of
• 1:36:02
  Speaker 1: your favorite books written by other people? I love Blue
• 1:36:05
  Speaker 1: Ocean Strategy, Blue Ocean Strategy. Yeah, you know that one.
• 1:36:09
  Speaker 1: I think, Yeah, I don't. Yeah, it's just, you know,
• 1:36:12
  Speaker 1: to sum it up, it's steering clear of Look, we're
• 1:36:18
  Speaker 1: in this facility right now where everyone is seeing the
• 1:36:22
  Speaker 1: same thing. So how do how does one go ahead
• 1:36:26
  Speaker 1: and find a different place to be? I mean that
• 1:36:28
  Speaker 1: sums up Blue Ocean Strategy. And I know one that
• 1:36:30
  Speaker 1: you would hate for me to say, go ahead, but
• 1:36:33
  Speaker 1: I tell you, I do love it. I still love
• 1:36:36
  Speaker 1: the the the energy and the thought process, the thinking
• 1:36:42
  Speaker 1: of the main character in The fountain Head. It's not
• 1:36:45
  Speaker 1: that I hate iron Rand. I just found her to
• 1:36:49
  Speaker 1: be pedantic and boring. I mean, oh yeah, of course
• 1:36:52
  Speaker 1: that was sru there's a nightmare, so it's not Listen,
• 1:36:59
  Speaker 1: she comes from the Soviet Union, what a shocker. She's
• 1:37:02
  Speaker 1: against totalitarianism and and champions the the genius of of
• 1:37:09
  Speaker 1: the individual. That's not a surprise, but it shouldn't take
• 1:37:13
  Speaker 1: eight pages. That's the old joke is I apologize for
• 1:37:17
  Speaker 1: the lengthless letter. I didn't have time to make it shorter.
• 1:37:20
  Speaker 1: She never learned that. Seth Godin's lynch Pen a simple book.
• 1:37:26
  Speaker 1: The first thirty pages. If you if you know a
• 1:37:28
  Speaker 1: young person or anybody that's confused about their career, what
• 1:37:32
  Speaker 1: they want to do in life. He's one of these
• 1:37:34
  Speaker 1: guys that basically says, you know what, You've got all
• 1:37:37
  Speaker 1: the tools you need. You've got the internet, Go make
• 1:37:40
  Speaker 1: some art, go do something. Chris Van who's the head
• 1:37:43
  Speaker 1: of planning in my office, is an absolute goden acolyte
• 1:37:47
  Speaker 1: loves him. Yeah, it's great stuff. Lynch Pin is the
• 1:37:50
  Speaker 1: name of the book. And you google google my name.
• 1:37:53
  Speaker 1: I know I've got a couple recommended book lists out there.
• 1:37:55
  Speaker 1: If you just type in my name and give me
• 1:37:57
  Speaker 1: one more, one more book that you are are really
• 1:37:59
  Speaker 1: in true buck. I like the Dan Eily stuff. I
• 1:38:02
  Speaker 1: like the thing. I like the thinking fast, thinking slow.
• 1:38:07
  Speaker 1: That by the way, I like the first three quarters
• 1:38:09
  Speaker 1: of that book. Is is fantastic. Michael Mobison more than
• 1:38:12
  Speaker 1: you know. Um Doug Emlyn's Animal Weapons, which I've mentioned.
• 1:38:17
  Speaker 1: Animal Weapons is a really interesting concept. I have to
• 1:38:20
  Speaker 1: put that in like, yeah, it's he has started with
• 1:38:22
  Speaker 1: a study of dung beetles. Just really uh fascinating stuff.
• 1:38:27
  Speaker 1: I don't you know these things. The list goes on forever.
• 1:38:30
  Speaker 1: The other thing of the old stuff that I really like, ah,
• 1:38:33
  Speaker 1: one of my favorite authors think it's called The Wisdom
• 1:38:35
  Speaker 1: of Insecurity by Alan Watts, who introduced Buddhism and Zen
• 1:38:42
  Speaker 1: to the to the Western world back in the fifties.
• 1:38:45
  Speaker 1: And in fact, if you google Alan Watts, go to YouTube,
• 1:38:50
  Speaker 1: much of the stuff that he has on YouTube is
• 1:38:52
  Speaker 1: just absolutely fabulous. Just calm you down, because look and look,
• 1:38:56
  Speaker 1: if you're gonna be a traitor, you're gonna be an investor.
• 1:38:58
  Speaker 1: If there's any one type of thinking that's just really
• 1:39:02
  Speaker 1: nice for trading and investing is a Zen mindset, to
• 1:39:05
  Speaker 1: say the least, it's great. So let's let's continue on
• 1:39:08
  Speaker 1: our Zen list. So since you started writing about trading
• 1:39:12
  Speaker 1: and writing about trend following, what major changes has hit
• 1:39:16
  Speaker 1: the futures industry? All these blow ups, right, all these
• 1:39:21
  Speaker 1: sort of blow ups, those don't help confidence. So I
• 1:39:23
  Speaker 1: think that's that's that's the biggest thing. And I think
• 1:39:25
  Speaker 1: also for example, in the trend following space. If you
• 1:39:28
  Speaker 1: look at the last since the biggest I mean two
• 1:39:32
  Speaker 1: thousand and four team is a pretty good year because
• 1:39:33
  Speaker 1: of the oil moved down. But if you look at uh,
• 1:39:36
  Speaker 1: two thousand and eight was the last really fantastic year
• 1:39:41
  Speaker 1: and then a lot of kind of ups and downs. Look,
• 1:39:43
  Speaker 1: as a trend following trader, you can't control these ups
• 1:39:45
  Speaker 1: and downs. So I think, what's gonna be interesting to
• 1:39:47
  Speaker 1: see as we watch interest rates change, as we watch
• 1:39:52
  Speaker 1: you know, we have another ten years of equity markets
• 1:39:55
  Speaker 1: just marching up. I don't know who knows who could?
• 1:39:59
  Speaker 1: You could and if that would be good, Any of
• 1:40:01
  Speaker 1: these things in the trend would be good for there,
• 1:40:03
  Speaker 1: you've got it. You've got it. It depends though, if
• 1:40:05
  Speaker 1: you've got a diversified portfolio, you've got to take positions
• 1:40:09
  Speaker 1: in some markets that might be going different than equities.
• 1:40:11
  Speaker 1: You might get stopped out. So you can't just be
• 1:40:15
  Speaker 1: a trend following trader on one market, which if you
• 1:40:18
  Speaker 1: wanted to sum up one of the issues that we
• 1:40:20
  Speaker 1: talked about two is the death cross. Uh, the whole
• 1:40:23
  Speaker 1: death cross. I agree with your analysis on it. I
• 1:40:26
  Speaker 1: think the thing that Jerry Parker one of the turtles
• 1:40:28
  Speaker 1: was saying was yes, but the death cross can be
• 1:40:31
  Speaker 1: the initial signal for a trend that might develop. It's
• 1:40:35
  Speaker 1: not a forecast that never works. And I agree with
• 1:40:38
  Speaker 1: your analysis on that. Well, we want you know, it's
• 1:40:40
  Speaker 1: one of these things you hear about over and over
• 1:40:42
  Speaker 1: again and then you go out and look at the
• 1:40:44
  Speaker 1: numbers and what's the subsequent track record of this? Turns
• 1:40:47
  Speaker 1: out it's terrible. But but but if you if you
• 1:40:49
  Speaker 1: had a death cross and a diversified portfolio and it
• 1:40:53
  Speaker 1: was your signal for entry with a stop loss, that's
• 1:40:56
  Speaker 1: different than all the technical walks out there that say, oh,
• 1:40:59
  Speaker 1: here's the death cross. This means six months from now,
• 1:41:01
  Speaker 1: this is gonna happen. That's all last two questions, and
• 1:41:05
  Speaker 1: these are my two favorites. What advice would you give
• 1:41:08
  Speaker 1: to a millennial or someone who just got out of
• 1:41:10
  Speaker 1: college who was interested in the career in finance. You
• 1:41:20
  Speaker 1: gotta do it yourself. Gotta do it yourself. Yeah, no
• 1:41:24
  Speaker 1: safe spaces and do it yourself. And now our final question,
• 1:41:29
  Speaker 1: because I see they're ready to kick the door down,
• 1:41:31
  Speaker 1: do it yourself in the sense of like, don't try
• 1:41:32
  Speaker 1: and get hired by anybody that's over. I think that's over.
• 1:41:35
  Speaker 1: You're a free agent. You're free. Yeah. Why why? Why
• 1:41:41
  Speaker 1: do you really want to I mean, do you really
• 1:41:42
  Speaker 1: want to spend your life working for someone else? No,
• 1:41:45
  Speaker 1: you don't, look at you. I can see those eyes
• 1:41:46
  Speaker 1: right now. You want to know part of it? And
• 1:41:49
  Speaker 1: our final question, what is it that you know about
• 1:41:52
  Speaker 1: investing today that you wish you knew twenty years or
• 1:41:55
  Speaker 1: so when you began the psychology part of it? M
• 1:42:00
  Speaker 1: HM expand on that, Well, the rules have not necessarily
• 1:42:03
  Speaker 1: changed that much. People might argue that the rules have changed,
• 1:42:06
  Speaker 1: but they really haven't changed. It's understanding the human condition
• 1:42:09
  Speaker 1: because it really calms you down. You realize, Hey, look
• 1:42:12
  Speaker 1: there's a lot of luck in this world. Things are random,
• 1:42:14
  Speaker 1: you know. I think anybody can go out and figure
• 1:42:16
  Speaker 1: out a way to make their first million dollars. But
• 1:42:19
  Speaker 1: you know, it's a little luck sometimes if you're gonna
• 1:42:21
  Speaker 1: make a billion, So don't kill yourself trying to think
• 1:42:23
  Speaker 1: you're gonna make a billion. You're probably not gonna be
• 1:42:24
  Speaker 1: suckerberg to say the least. Mike, thank you so much
• 1:42:28
  Speaker 1: for being so generous with your time. This has been
• 1:42:31
  Speaker 1: absolutely fascinating. Uh, For those people who want to learn
• 1:42:34
  Speaker 1: more about Mike Coval, just go to trend following dot
• 1:42:38
  Speaker 1: com or on Twitter at trend following. It'll get to me,
• 1:42:42
  Speaker 1: it'll get to him. I want to thank my producer,
• 1:42:45
  Speaker 1: Charlie Valmer, our head of research, Michael bat Nick. I'm
• 1:42:48
  Speaker 1: Barry Ridults. You've been listening to Masters in Business on
• 1:42:51
  Speaker 1: Bloomberg Radio.