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Speaker 1: This is Masters in Business with Barry Ridholts on Bloomberg Radio.

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Speaker 1: Welcome to the podcast this week, I have a very

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Speaker 1: interesting person who I'm going to suspect that the average

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Speaker 1: listener is not familiar with. His name is Mike Covel.

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Speaker 1: I've I've known Mike for a long time. We share

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Speaker 1: a fascination with all things turtle, and we'll we'll discuss

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Speaker 1: that a little bit. UH. Mike is probably best known

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Speaker 1: for his book Trend Following it's sold a hundred thousand

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Speaker 1: plus copies. He goes around the world lecturing on this. UH.

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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

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Speaker 1: to John Henry to go go through the list. It's amazing. UH.

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Speaker 1: If you're interested in commodities trading specifically, or the concept

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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

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Speaker 1: I have both been completely enamored by Richard Dennis's total experiment.

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Speaker 1: And for those of you who may not be familiar

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Speaker 1: with this, UH, in Jack Schwager's Market Wizards, a classic

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Speaker 1: book on the art of trading and investing. H Richard

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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

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Speaker 1: to whether or not great traders are born or made.

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Speaker 1: And Dennis's argument was that the way they grew turtles

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Speaker 1: in the turtle farms and in the Far East is

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Speaker 1: how he could train h traders. And so they took

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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.

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Speaker 1: And and the turtle traders have put together a fairly

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Speaker 1: spectacular track record following Dennis's instructions. And so the conclusion,

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Speaker 1: by the way, the punch line to all this is

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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

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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.

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Speaker 1: And and this is really a really interesting conversation. I

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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

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Speaker 1: with Barry Ridholts on Bloomberg Radio. My special guest today

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Speaker 1: is Trader author and fellow podcaster Michael Covel. You probably

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Speaker 1: know him as the author of the best selling trend Following.

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Speaker 1: He's all so the author of Complete Total Trader, as

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Speaker 1: well as three other books. Born in Quantico, Virginia, grew

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Speaker 1: up in the US, currently residing in Saigon. Michael, Welcome

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Speaker 1: to Bloomberg. I want to jump into your background a

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Speaker 1: little bit because you wrote, you know, in finance, a

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Speaker 1: decent selling book is ten thousand, twenty thousand, you know,

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Speaker 1: unless you're Michael Lewis, you're not selling half a million copies.

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Speaker 1: But trend Following, which is really a very specific trading

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Speaker 1: um book that's old, hundreds of thousands of copies, didn't it.

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Speaker 1: I know it's sold over a hundred thousand for sure.

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Speaker 1: So yeah, that's a pretty cool thing. I feel very

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Speaker 1: fortunate to have this fantastic strategy to write about in

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Speaker 1: this cast of characters that just have changed my life

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Speaker 1: for sure. So let's talk about how you found your

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Speaker 1: way into this. You grew up your dad was in

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Speaker 1: the Navy. You grew up in Quantico. Your father was

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Speaker 1: a dentist. How do you go from being colon an

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Speaker 1: army brat but essentially a Navy brat to finding your

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Speaker 1: way into the world to final He was only in

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Speaker 1: the Navy for a little while and they started private practice.

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Speaker 1: I grew up in Vienna, Virginia, right outside Quantico, about

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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

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Speaker 1: world of finance. I have plenty of others. So, you know,

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Speaker 1: one thing let to another. I ended up in grad school,

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Speaker 1: taking a last semester in my early to mid twenties

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Speaker 1: in London, London School Economics or something unrelated. It was unrelated,

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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

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Speaker 1: find that had graduated from Florida State literally was the

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Speaker 1: recently retired CEO of Solomon Brothers. Jim Massey, and he

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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

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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,

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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?

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Speaker 1: And he said yes, really, he said, you told me

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Speaker 1: today that you wanted to be the best. You don't

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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

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Speaker 1: fascinating conversation. So how did that lead you to trend

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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

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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

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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

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Speaker 1: to do this. Now. The entire next segment of our

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Speaker 1: conversation is going to involve the turtles, So hold off

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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

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Speaker 1: Street people, how did you find your way from that

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Speaker 1: into active trading? Well, I kept going on for about

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Speaker 1: another year, and I kept bumping into other people. I

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Speaker 1: was literally coming to conferences and just seeing who I

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Speaker 1: can meet, who could I knock on the door. I

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Speaker 1: went to see Bill Dunn and Stewart floorda a long

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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.

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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

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Speaker 1: done pretty well, yeah, done pretty well. Brought them to

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Speaker 1: a World Series for the first time, a championship, done

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Speaker 1: three the first time. And I don't know how many

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Speaker 1: decades I think, and um, just just one of the

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Speaker 1: greatest track records in the history of finance. So what

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Speaker 1: sort of advice did he give to you? His advice

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Speaker 1: was short and sweet, because I said, I was looking

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Speaker 1: at him, like right after he was on the other

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Speaker 1: side of the Barings bank trade within months of that,

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Speaker 1: and he said he looked at me and he said,

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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

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Speaker 1: that pretty shy guy if anyone's ever met him, not

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Speaker 1: a very big guy, but he was. That was all

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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

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Speaker 1: the ground and you have to pick them up. It's heavy, right,

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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

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Speaker 1: and I'm not gonna go into it. Yes, I know

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Speaker 1: you want to come back to it. But putting up

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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

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Speaker 1: the website way back when? Because back then the big

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Speaker 1: picture was a Yahoo geo cities site. I always had

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Speaker 1: a legitimate domain barrier. I was always looking forward a

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Speaker 1: little bit. It was Turtle Trader dot com. You're listening

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Speaker 1: to Masters and Business on Bloomberg Radio. My special guest

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Speaker 1: today is author and trader Mike Covil. One of the

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Speaker 1: books he wrote is The Complete Turtle Trader. Those of

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Speaker 1: you who may have begun your career in finance by

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Speaker 1: reading Jack Schwager's Market Wizards. Should be familiar with the

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Speaker 1: chapter about Richard Dennis and the turtles. And I found

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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

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Speaker 1: modern terms, that's almost two million dollars. That's back when

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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

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Speaker 1: leading money manager. And I'll let you tell the story

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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

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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,

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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

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Speaker 1: hundred million total by like eighty two, and he was

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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

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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.

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Speaker 1: They went to see this movie. They walked out and

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Speaker 1: his partner Bill at Cahart said, hey, Rich, you we

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Speaker 1: can never do that. You're a savant. You're brilliant. They

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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

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Speaker 1: not special. We can teach people to do what I

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Speaker 1: do another words, come up with rules and come up

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Speaker 1: with guidelines to quantify and systematize what I kind of

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Speaker 1: learned intuitively. They put ads in barns in Wall Street Journal,

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Speaker 1: They hired trainees. They got like two thousand applications. They

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Speaker 1: gave a screening test to a true false questions asking

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Speaker 1: what your favorite movie was, these types of things, and

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Speaker 1: they selected about twenty people over two years. They gave

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Speaker 1: them approximately two weeks training, staked them with varying amounts

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Speaker 1: of cable from a couple hundred thousand to a couple

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Speaker 1: of million. They basically turned them loose for three and

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Speaker 1: a half years. At the end of that three and

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Speaker 1: a half year period, that group of approximately twenty had

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Speaker 1: made a hundred million dollars profit. I actually went to

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Speaker 1: the n f A, the National Futures Association, and I

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Speaker 1: pulled all of the original documents. When they left the

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Speaker 1: program to go registers money managers, they literally it was

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Speaker 1: like waiter kitchen help. I mean some I mean some

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Speaker 1: of them are very brilliant. Nonetheless, they've gone to great

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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

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Speaker 1: other words, the battle between nature and nurture, Dennis essentially

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Speaker 1: proved you can create a great trader. You can build

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Speaker 1: a great trader. It's not just something that you're either

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Speaker 1: born with and have or don't. I never questioned it

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Speaker 1: again myself. I think a lot of people still hear

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Speaker 1: that story and question it. I saw that story and

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Speaker 1: I was like, I saw the backgrounds, and I said,

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Speaker 1: that's it. Even if I never want to do trading,

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Speaker 1: I have to accept this as truth. It's it's an

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Speaker 1: amazing tale that the movie Trading Places inspired a real

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Speaker 1: life version of let's figure out if we can actually

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Speaker 1: create a person and turn them into a trader. So

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Speaker 1: so let's talk a little bit about the subsequent careers

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Speaker 1: of the turtles. What did they do afterwards? How did

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Speaker 1: they all work out? You know, one of them became well,

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Speaker 1: all of them started money management firms, most all of them,

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Speaker 1: and most all of them did extremely well. I mean,

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Speaker 1: making millions of dollars, you know, the typical success mark.

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Speaker 1: Everybody sees. One of them, in particular, Jerry Parker managed

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Speaker 1: over several billion for probably twenty plus years and just

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Speaker 1: made himself an incredible fortune. One of the most plane spoken,

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Speaker 1: plane talking guys. And he was here right now, he'd

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Speaker 1: be saying, Hey, it's all my success is all because

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Speaker 1: of Rich Dennis. Rich Dennis was kind enough to say,

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Speaker 1: here's how I made a fortune. Here are my rules,

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Speaker 1: go do it. So here's a quick question. Under normal circumstances,

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Speaker 1: when someone identifies an inefficiency and an inability for the

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Speaker 1: market to recognize an issue, eventually that gets arbitraged away.

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Speaker 1: Why haven't these rules been arbitraged away or copied by

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Speaker 1: enough people that they no longer have uh an effect?

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Speaker 1: And Well, the way I would answer that is the

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Speaker 1: turtles were just trend following traders, and so they weren't

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Speaker 1: the only trend following traders. Rich Dennis had Piers peers

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Speaker 1: like Bill Donne and Ed Sakota and Keith Campbell and

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Speaker 1: David Harding and Larry I and all of these guys

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Speaker 1: on affiliated with Rich Dennis. We're running trend following firms.

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Speaker 1: So if you just look at the history of this,

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Speaker 1: you say, well, why does trend following keep working? Why

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Speaker 1: is it not broken down? Well? When is human nature

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Speaker 1: going to change? That's the key to all of this

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Speaker 1: is that people are unchanging and even though we may

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Speaker 1: have high frequency trading, we may have new entrants into

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Speaker 1: the marketplace, at at the very bottom of it, it's

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Speaker 1: it's human nature that drives these things. Yeah, I mean,

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Speaker 1: we're just we want to get rich fast, and you know,

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Speaker 1: we start losing money, we just think it's gonna come back,

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Speaker 1: and then we lose all of our money. So let's

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Speaker 1: talk a little bit about trend following. Next next segment,

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Speaker 1: we'll talk a lot more about human nature and some

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Speaker 1: of the behavioral issues. But what was it about um

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Speaker 1: trend following that made it so successful? And and let's

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Speaker 1: give this a little context. These aren't people buying stocks

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Speaker 1: and bonds, They're buying futures. They're training pretty much anything

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Speaker 1: from commodities, two currencies to what have you. And they're

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Speaker 1: doing it with a lot of leverage. So how does

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Speaker 1: that translate into the trends? As your friend? And that's

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Speaker 1: how these folks made their money. I don't think instrument

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Speaker 1: is critical, it's important. I mean, futures are the best

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Speaker 1: st instrument you got, the leverage you get like liquidity,

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Speaker 1: that's the best place to be. But you want diversification.

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Speaker 1: You know, if you wake up in its early two

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Speaker 1: thousand fourteen and every economist down there is saying, hey,

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Speaker 1: you know, we don't see anything happening for oil, and

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Speaker 1: you know there's no prediction of a drop in oil.

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Speaker 1: But if you're a trend following trader, you don't have

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Speaker 1: a a mindset or a prediction of where any particular

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Speaker 1: market's going to go. So when it starts to move,

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Speaker 1: you're just following along. You're following the crowd, your indicator,

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Speaker 1: your your reason for moving is the price action. That's it.

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Speaker 1: So if you think about trend following, think about with

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Speaker 1: like five kinds of ways to think about trend find

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Speaker 1: five rules. First, what's the portfolio you're going to trade?

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Speaker 1: Trade everything? So generally trend following traders historically have chosen

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Speaker 1: diversified portfolios and your goal, your oil, the equity indices,

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Speaker 1: the interest rates, the currencies, the big liquid movers. Number

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Speaker 1: number two, when are you going to get in? What's

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Speaker 1: gonna force you to get into a position? Number three?

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Speaker 1: How much you're gonna bet? You can't bet unlimited. You

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Speaker 1: know you're gonna bet half percent, one percent, ten percent.

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Speaker 1: I can't tell you. Many times I've given a presentation,

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Speaker 1: I'll ask an audience, to be an audience of a

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Speaker 1: thousand people, how much would you bet on each trade?

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Speaker 1: People actually say tempercent. Look, come on, you know what's

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Speaker 1: gonna happen at temper cent? The last four and five?

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Speaker 1: When do you exit this trade with a winner? When

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Speaker 1: do you exit this trade with the loser? What does

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Speaker 1: this all look like when it's crunched through the system.

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Speaker 1: You're basically a venture capitalist. You're basically a film financer.

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Speaker 1: Jason Blum he finances films, right, How does he do it?

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Speaker 1: He bets on a bunch of things that cost very

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Speaker 1: little money, and he'll get one big paranormal behavior or

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Speaker 1: whatever it's called, and that's the one that makes him.

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Speaker 1: That's the one that makes the fortune and pays for

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Speaker 1: the losers. For the other ones, none of this stuff

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Speaker 1: can be predicted. I'm very ridults. You're listening to Masters

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Speaker 1: in Business on Bloomberg Radio. My guest today is Michael Covel.

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Speaker 1: He is a trader and author, probably best known for

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Speaker 1: trend following and The Complete Total Trader. He also has

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Speaker 1: an extensive podcast, over four hundred episodes. And I've really

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Speaker 1: enjoyed both listening to other people's podcast and putting together

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Speaker 1: my own little podcast. How did you find your way into? Uh? Podcasting?

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Speaker 1: We get to beat in school? Huh? We never get

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Speaker 1: out of school now, right? Absolutely, it's it's an on

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Speaker 1: from my perspective. I get to bring in some really

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Speaker 1: really smart people and say teach me. It calms me down?

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Speaker 1: Yeah did when you listen to really smart people over

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Speaker 1: and over it again, I really I find myself calmer.

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Speaker 1: I started it in January of two thousand twelve. I

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Speaker 1: my last book came out before that, about six months

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Speaker 1: before that, And I don't know, I had done short

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Speaker 1: brief podcast several years before, like five minute little speech segments,

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Speaker 1: and I just decided, well, okay, I want to do

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Speaker 1: a podcast. It was completely on a lark. It was

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Speaker 1: just let's do it. And this was before what iTunes

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Speaker 1: looks like today, so that was it was just really

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Speaker 1: and one thing led to another. Remember Jack Schweger, who

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Speaker 1: wrote the book The Market Wizards that you mentioned. When

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Speaker 1: he came on, that was when I saw my first

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Speaker 1: pop because it had been two or three months of okay,

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Speaker 1: listens are going up, and then when Jack came on

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Speaker 1: and he was promoting a new book, Uh, that was

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Speaker 1: like boom, and it's exciting what that stuff happens. Right,

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Speaker 1: Schweger is legendary. I mean, how many people do you

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Speaker 1: think the first book they read when they started in

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Speaker 1: finance was Market Wizards. So I had quick, funny digression.

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Speaker 1: I had Schwegger on the show, and when I invited him,

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Speaker 1: he said, oh for the guy who gave me that review. Absolutely, Jack,

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Speaker 1: what are you talking about? I want you on the show,

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Speaker 1: but I have no idea what you're talking about. He's like,

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Speaker 1: you wrote a review of Market Wizards on Amazon a

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Speaker 1: decade ago and it's the top. You know, it's the

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Speaker 1: it's the most influential review. It's that So I had

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Speaker 1: to go on Amazon. I'm like, oh my god, he's right,

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Speaker 1: I forgot about it? Was it? So we had really

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Speaker 1: interesting conversation. I think he's a fascinating, fascinating guy. What

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Speaker 1: was it that made you gravitate to long form podcasting?

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Speaker 1: If it was it, was it just that, hey, I

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Speaker 1: have some time to kill or what motivated that. I

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Speaker 1: was working on a new book and I knew it

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Speaker 1: was gonna be coming out immediately, and I just I

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Speaker 1: don't know. It was just it was just something where

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Speaker 1: it was in my in my soul. I want to

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Speaker 1: do this, I want to talk to people. Look, I

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Speaker 1: had done a film. I had made a film. I

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Speaker 1: traveled the world for several years. I had had a

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Speaker 1: chance to sit down and do long form interviews already.

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Speaker 1: And the film was Broke, an American uh story, so

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Speaker 1: to speak, something like that. Right there was like you

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Speaker 1: were in there, you were in there doing something. It

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Speaker 1: was called it was broke, Broke, Broke the new American jury,

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Speaker 1: new American right, My My my premise being is it

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Speaker 1: broke is the new American jury. People want to be

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Speaker 1: broke because their actions are so irrational that that makes

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Speaker 1: some interesting sense. So so let's we're gonna talk more

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Speaker 1: about broke in in a ladder segment. Let's let's keep

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Speaker 1: coming back to the to the podcast. So any of

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Speaker 1: your guests really surprised you with things they said, Yeah,

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Speaker 1: and I should. There's a timeline of like guests that

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Speaker 1: broke the podcast. First was Jack Schwegger, and then my

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Speaker 1: first guest to my first non trading guest was Dan Airily,

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Speaker 1: and then once I got Dan Eireley, I had a

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Speaker 1: guy on who had been in my film named Vernon

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Speaker 1: Smith who won the most won the Nobel Prize, and

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Speaker 1: Brian brilliant guy George Mason now somewhere in Chapman in California.

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Speaker 1: But once I had those guys on, I went for

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Speaker 1: the home run. The home run guest, the one guy

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Speaker 1: that I knew if I could get, was gonna really

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Speaker 1: help my podcast, and that was Daniel Kneman, who won

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Speaker 1: the Nobel Prize shared it with Vernon Smith, and so

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Speaker 1: I had asked him six months prior in no response,

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Speaker 1: then I sent him an email knowing that he had

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Speaker 1: won the prize the same year as Vernon Smith. They

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Speaker 1: shared it and I sent a link to Vernon Smith

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Speaker 1: and he rubbed me back and he said, I listen

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Speaker 1: to that podcast with Vernon Smith, it's very good, and

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Speaker 1: I'm sure I'll come on your show. And the thing

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Speaker 1: that he said that was so amazing to me. It's

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Speaker 1: not related to making money or investing. But he was

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Speaker 1: in Nazi occupied Paris and there was a curfew and

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Speaker 1: he was not supposed to be out, and he was

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Speaker 1: six seven eight years old and alone walking the streets

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Speaker 1: and a Nazi soldier spots him, and the Nazi soldier says,

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Speaker 1: come here, come here now. Sure Conment is thinking at

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Speaker 1: that time, I'm done. I'm done. The Nazi soldier sits

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Speaker 1: him down on his knee, pulls out his wallet and

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Speaker 1: opens up his wallet and shows him a picture of

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Speaker 1: his son. They both spoke different languages and they shared

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Speaker 1: that experience and condom and said that was what That

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Speaker 1: was what triggered me into psychology. That that fascinating moment.

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Speaker 1: I want to study people for the rest of my life.

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Speaker 1: Konomen just realizes, Wow, what we think we know about people,

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Speaker 1: it is all wrong. Those quick judgments. There's the Nazi soldier,

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Speaker 1: He's gonna kill me. I'm a I'm a Jew in

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Speaker 1: Paris on the streets. I'm gonna be killed. Didn't happen

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Speaker 1: and that caused him to reassess, take a step back,

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Speaker 1: and say, how can I how can I look at

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Speaker 1: psychology for the rest of my life? He really knew

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Speaker 1: what that instant. That's amazing, old fascinating. I'm Barry rich Helps.

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Speaker 1: You're listening to Masters in Business on Bloomberg Radio. My

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Speaker 1: guest today is trader and author Michael Covell, best known

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Speaker 1: for the trend following series of books. We were talking

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Speaker 1: before the break about Daniel Kheman's epiphany as a child

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Speaker 1: on the war torn streets of Nazi occupied Paris. Let's

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Speaker 1: let's let's talk a little bit about human behavior in psychology.

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Speaker 1: What what did you learn from Coneman about how psychology

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Speaker 1: effects investing? Loss of version? Nobody wants to take a loss.

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Speaker 1: I just had. I happened to have lunched with one

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Speaker 1: of the guys that was profiled. And Jack Schwegger's book

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Speaker 1: Larry Hyde and Larry is famous for just saying, you know,

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Speaker 1: risk management, how much can you afford to lose? That's it.

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Speaker 1: All the academics can have all the complicated stuff and

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Speaker 1: all the white papers, how much can you afford to lose?

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Speaker 1: That's your risk management, and that's loss a version tied

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Speaker 1: in with conom and that's just I think many of

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Speaker 1: the traders actually had figured out long before. It's not

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Speaker 1: taking anything away from common but clearly many traders had

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Speaker 1: figured this out. I mean, David Ricardo back in the

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00:23:30,160 --> 00:23:33,560
Speaker 1: sevent undred sure they had figured out lost reversion many many,

427
00:23:34,640 --> 00:23:37,080
Speaker 1: arguably centuries before they give out the Nobel prizes for it.

428
00:23:37,680 --> 00:23:39,440
Speaker 1: I started on a trading desk and one of the

429
00:23:39,480 --> 00:23:42,560
Speaker 1: first things they teach you is it's okay to be wrong,

430
00:23:42,720 --> 00:23:46,320
Speaker 1: it's not okay to stay wrong. And that's essentially a

431
00:23:46,440 --> 00:23:50,560
Speaker 1: form of of you know, risk management. You can't hope

432
00:23:50,560 --> 00:23:52,639
Speaker 1: and wish and pray for a trade to suddenly go

433
00:23:52,760 --> 00:23:55,960
Speaker 1: your way. If it's going against you, cut your losses

434
00:23:56,000 --> 00:23:57,560
Speaker 1: and move on to the next one. You gotta have

435
00:23:57,600 --> 00:23:59,399
Speaker 1: chips to play right, that's right, and if you get

436
00:23:59,440 --> 00:24:02,720
Speaker 1: wiped out, you're done. You you move along. So, uh,

437
00:24:03,040 --> 00:24:06,800
Speaker 1: System one and system too from comment is essentially what

438
00:24:06,840 --> 00:24:11,520
Speaker 1: are what is your immediate response? That's that's the systemic

439
00:24:11,600 --> 00:24:14,119
Speaker 1: way your brain has managed to keep you alive on

440
00:24:14,160 --> 00:24:18,040
Speaker 1: the savannah. Not really well suited for for trading in

441
00:24:18,080 --> 00:24:20,720
Speaker 1: the capital markets. Is that terrible? Right? I mean, especially

442
00:24:20,760 --> 00:24:24,000
Speaker 1: if you look, I say terrible that people could say, hey,

443
00:24:24,000 --> 00:24:27,680
Speaker 1: that's Mike Covel's opinion. Terrible. If you look at the

444
00:24:27,760 --> 00:24:31,879
Speaker 1: track records of the traders that have got you know,

445
00:24:32,160 --> 00:24:36,800
Speaker 1: durations going back decades, what do they do? It's systematized,

446
00:24:37,160 --> 00:24:40,119
Speaker 1: They have rules these This is not a day to

447
00:24:40,240 --> 00:24:45,359
Speaker 1: day guessing game. There is not not gut instinct. They're

448
00:24:45,400 --> 00:24:48,080
Speaker 1: running businesses. You gotta run. This is like a business, right,

449
00:24:48,359 --> 00:24:50,720
Speaker 1: I got a gut instinct, my my stomach says, by

450
00:24:50,720 --> 00:24:53,040
Speaker 1: this and sell that not a good way to run

451
00:24:53,280 --> 00:24:55,600
Speaker 1: managed money. You know. Isn't there a story about George

452
00:24:55,600 --> 00:24:58,840
Speaker 1: Soris in his back? Yes? Absolutely, you really do you

453
00:24:58,840 --> 00:25:03,119
Speaker 1: really believe it? I believe that on a subconscious level,

454
00:25:03,280 --> 00:25:06,440
Speaker 1: his back is warning him about something that he may

455
00:25:06,440 --> 00:25:08,240
Speaker 1: not have. But do you think do you think the

456
00:25:08,280 --> 00:25:11,199
Speaker 1: buying sells signals and the risk management is attached to

457
00:25:11,280 --> 00:25:14,200
Speaker 1: his back? No, of course not. You're not running billions

458
00:25:14,200 --> 00:25:17,679
Speaker 1: of dollars and whether or not your sacrililiac is bothering

459
00:25:17,680 --> 00:25:19,680
Speaker 1: you that. But I think the average person probably hears

460
00:25:19,680 --> 00:25:21,640
Speaker 1: that story and they still think, oh, you know, it's

461
00:25:21,880 --> 00:25:24,639
Speaker 1: seat of the pants, it's instinct, it's gout, and it

462
00:25:24,640 --> 00:25:27,760
Speaker 1: really doesn't work. That way. So so let's let's delve

463
00:25:27,760 --> 00:25:32,199
Speaker 1: a little more deeper into behavioral eras that are are

464
00:25:32,480 --> 00:25:36,920
Speaker 1: fairly typical. What is the most common behavioral error that

465
00:25:37,040 --> 00:25:41,639
Speaker 1: sinks traders? We mentioned loss aversion, but I tell you

466
00:25:41,720 --> 00:25:44,720
Speaker 1: framing is one to just how does one define framing?

467
00:25:45,119 --> 00:25:46,639
Speaker 1: How does one they look? You can look at too.

468
00:25:46,640 --> 00:25:48,359
Speaker 1: You can look at a number in two different ways.

469
00:25:48,400 --> 00:25:51,920
Speaker 1: You know you can being right fifteen percent of being

470
00:25:52,000 --> 00:25:54,399
Speaker 1: you know wrong? I mean, there's let me let me

471
00:25:54,440 --> 00:25:57,480
Speaker 1: stop you right there. So doctors are trains in a

472
00:25:57,560 --> 00:26:01,240
Speaker 1: really interesting aspect of that. So if you tell a

473
00:26:01,240 --> 00:26:03,320
Speaker 1: patient I have bad news and I have good news.

474
00:26:03,320 --> 00:26:05,720
Speaker 1: The bad news is you have this fatal disease. The

475
00:26:05,760 --> 00:26:08,480
Speaker 1: good news is there's a surgery with a pretty good

476
00:26:08,480 --> 00:26:12,320
Speaker 1: track record of of of survival. You take two groups.

477
00:26:12,359 --> 00:26:14,920
Speaker 1: To group one you say you have a seventy five

478
00:26:15,040 --> 00:26:18,359
Speaker 1: chance of survival if we do this procedure. And group

479
00:26:18,400 --> 00:26:20,760
Speaker 1: to you say there's a twenty five percent chance that

480
00:26:20,840 --> 00:26:23,560
Speaker 1: you won't survive if we do this procedure. What do

481
00:26:23,600 --> 00:26:27,359
Speaker 1: you think the reaction is amongst don't want to do it?

482
00:26:27,480 --> 00:26:30,639
Speaker 1: That's right, and yet it's the same statistics. So that

483
00:26:30,680 --> 00:26:34,160
Speaker 1: applies to trading as well. How how does framing affect

484
00:26:34,200 --> 00:26:39,040
Speaker 1: what traders behave? How do they behave? Are they behave

485
00:26:39,080 --> 00:26:40,680
Speaker 1: in all the wrong ways? They behave in the ways

486
00:26:40,680 --> 00:26:44,040
Speaker 1: they don't help them. I mean, look, this is about measurement.

487
00:26:44,119 --> 00:26:46,359
Speaker 1: You have to measure how much money you have at

488
00:26:46,400 --> 00:26:50,040
Speaker 1: all times that you can't do that meaning money is

489
00:26:50,040 --> 00:26:53,680
Speaker 1: your inventory. I'm gonna quote your way to keep score.

490
00:26:53,800 --> 00:26:56,680
Speaker 1: So you know money, capital is what you have. It's

491
00:26:56,800 --> 00:26:59,000
Speaker 1: what you're gonna have to turn over. It's your inventory.

492
00:26:59,240 --> 00:27:02,280
Speaker 1: If you're running a a gap and you have a

493
00:27:02,280 --> 00:27:04,560
Speaker 1: certain number of shirts and pants in the back, you

494
00:27:04,600 --> 00:27:07,760
Speaker 1: want that inventory turning over constantly when you're running a

495
00:27:07,840 --> 00:27:12,120
Speaker 1: trading operation for yourself. Is that the way to think

496
00:27:12,160 --> 00:27:15,879
Speaker 1: about capital is its inventory that you have to manage absolutely,

497
00:27:15,880 --> 00:27:18,320
Speaker 1: because look, we know what money can be used for.

498
00:27:19,000 --> 00:27:21,200
Speaker 1: We're both in New York City. The streets are littered

499
00:27:21,240 --> 00:27:23,840
Speaker 1: with gold, there's all kinds of toys we can buy,

500
00:27:23,880 --> 00:27:26,960
Speaker 1: there's all kinds of fun, fun things to do, as

501
00:27:27,000 --> 00:27:34,040
Speaker 1: well as basic survival, security, health, etcetera. Um, that's just

502
00:27:34,080 --> 00:27:36,879
Speaker 1: where we start. There's a great trader out of London.

503
00:27:36,880 --> 00:27:39,000
Speaker 1: We'll probably end up talking about him. David Harding of

504
00:27:39,000 --> 00:27:41,280
Speaker 1: Winton Capital, and I saw him make the comment recently

505
00:27:41,800 --> 00:27:45,959
Speaker 1: it's once you reach that point where money is not

506
00:27:46,040 --> 00:27:50,240
Speaker 1: an object, your trading improves. So, in other words, the

507
00:27:50,320 --> 00:27:53,840
Speaker 1: psychology of I gotta hit a bogey this month, I

508
00:27:53,920 --> 00:27:57,080
Speaker 1: gotta make some payments. Once that pressure goes away, once

509
00:27:57,119 --> 00:28:01,119
Speaker 1: that's psyche impact is lifted, they actually get better. Then

510
00:28:01,119 --> 00:28:03,160
Speaker 1: you're just playing the board game risk, you're playing chess,

511
00:28:03,240 --> 00:28:07,199
Speaker 1: you're playing whatever skill game. You're applying the rules. When

512
00:28:07,200 --> 00:28:08,920
Speaker 1: do you think back when you're a kid, didn you

513
00:28:08,960 --> 00:28:10,720
Speaker 1: play Risk as a kid? Like when you're a kid,

514
00:28:10,760 --> 00:28:13,200
Speaker 1: you play the game the right way. You don't play

515
00:28:13,200 --> 00:28:14,960
Speaker 1: it based on whether or not I can go to

516
00:28:14,960 --> 00:28:18,359
Speaker 1: the Apple Store by the newest iPhone today. It's a

517
00:28:18,600 --> 00:28:23,119
Speaker 1: that's fascinating. So what other little psychological insights did you

518
00:28:23,240 --> 00:28:28,040
Speaker 1: garner from interviewing some of these famous Mobil Prize winning

519
00:28:28,400 --> 00:28:32,360
Speaker 1: I love gird Gig and Rendzer like that. Oh, it's

520
00:28:32,560 --> 00:28:35,719
Speaker 1: he's awesome though. Risk Savvy one of his most recent books.

521
00:28:36,160 --> 00:28:37,840
Speaker 1: One of the things that he talks about. It's not

522
00:28:37,920 --> 00:28:41,200
Speaker 1: necessarily trading, but it gets you in the probabilities mind frame.

523
00:28:41,840 --> 00:28:44,240
Speaker 1: P s A tests like you know here, I'm I'm

524
00:28:44,280 --> 00:28:46,600
Speaker 1: forty seven. You know, you're you're probably about the same

525
00:28:46,640 --> 00:28:49,920
Speaker 1: age as right, you know, so everyone wants men to

526
00:28:49,960 --> 00:28:53,200
Speaker 1: go do these tests, all right? Do these tests? These

527
00:28:53,240 --> 00:28:56,920
Speaker 1: tests kill us. These are not good things. We're all

528
00:28:56,960 --> 00:28:59,160
Speaker 1: going to have prostate problems at some point in time

529
00:28:59,200 --> 00:29:02,400
Speaker 1: of our life. But the vast majority of us don't

530
00:29:02,480 --> 00:29:05,520
Speaker 1: need the after effects of a p S A test

531
00:29:06,080 --> 00:29:08,440
Speaker 1: and continents and all kinds. You know, your wetting your genes,

532
00:29:08,480 --> 00:29:10,400
Speaker 1: who knows what's going on. We don't want that kind

533
00:29:10,440 --> 00:29:12,960
Speaker 1: of stuff. So Gird points out that you have to

534
00:29:13,000 --> 00:29:15,720
Speaker 1: look more closely at the numbers and don't just let

535
00:29:15,760 --> 00:29:18,680
Speaker 1: the fear drive you. So we've seen a number of

536
00:29:18,720 --> 00:29:22,840
Speaker 1: studies about mammograms and false positives and doctors not really

537
00:29:22,920 --> 00:29:27,840
Speaker 1: understanding how how likely it is that a positive result

538
00:29:28,560 --> 00:29:31,960
Speaker 1: is actually a false positive and not into an industry

539
00:29:32,040 --> 00:29:36,160
Speaker 1: of cancer. Is that what Geared is referring to. Look,

540
00:29:36,320 --> 00:29:40,000
Speaker 1: the vast majority of us, if we live okay, et cetera,

541
00:29:40,560 --> 00:29:43,120
Speaker 1: we're gonna be fine. There's something's going to take us

542
00:29:43,160 --> 00:29:46,000
Speaker 1: all out at some point in time. But too much testing,

543
00:29:46,520 --> 00:29:50,480
Speaker 1: too much of this stuff is absolutely harming us. So

544
00:29:50,560 --> 00:29:52,760
Speaker 1: let me ask you about a couple of your podcasts

545
00:29:52,760 --> 00:29:56,200
Speaker 1: that I have tied up but haven't listened to. Uh.

546
00:29:56,240 --> 00:29:59,880
Speaker 1: Brent Steambarger, who is somebody I've read for a year

547
00:30:00,080 --> 00:30:03,640
Speaker 1: is and really enjoyed his work. Brett, I think is

548
00:30:03,680 --> 00:30:09,520
Speaker 1: the is synonymous with practical, pragmatic. Right. He just breaks down,

549
00:30:09,640 --> 00:30:12,240
Speaker 1: so you know, if you imagine walking into his office,

550
00:30:12,240 --> 00:30:15,760
Speaker 1: as he was a practicing psychiatrist, walk in and he's

551
00:30:15,760 --> 00:30:19,280
Speaker 1: gonna take whatever drama you might have and break it

552
00:30:19,280 --> 00:30:22,320
Speaker 1: down to its component parts and get you to think

553
00:30:22,320 --> 00:30:24,880
Speaker 1: about each of the component parts. Once you do that,

554
00:30:25,520 --> 00:30:28,320
Speaker 1: it's not so scary. I mean, that's that's the brilliance

555
00:30:28,360 --> 00:30:31,400
Speaker 1: of what somebody like Brett does and how he ended

556
00:30:31,480 --> 00:30:34,200
Speaker 1: up doing a lot of work with some fairly well

557
00:30:34,240 --> 00:30:37,840
Speaker 1: known fund managers and hedges and stuff. How different is

558
00:30:37,920 --> 00:30:41,280
Speaker 1: that from just the broad based Here's here are the

559
00:30:41,320 --> 00:30:44,840
Speaker 1: cognitive arrows that humans make all the time. I think

560
00:30:44,880 --> 00:30:48,440
Speaker 1: it helps people to have a coach. Doesn't make a

561
00:30:48,440 --> 00:30:51,400
Speaker 1: difference how much money you have, how much success you have.

562
00:30:51,520 --> 00:30:55,800
Speaker 1: If somebody can walk in and analyze you unemotionally and

563
00:30:55,920 --> 00:30:59,840
Speaker 1: say here, I've broken it down, I've observed you, here's

564
00:30:59,840 --> 00:31:01,600
Speaker 1: what you need to think about. That helps I'm sure

565
00:31:01,640 --> 00:31:04,400
Speaker 1: that's one of the secrets to Brett success. So we've

566
00:31:04,400 --> 00:31:07,960
Speaker 1: talked about risk aversion, we've talked about framing. What other

567
00:31:08,160 --> 00:31:13,560
Speaker 1: cognitive errors or or behavioral problems impact traders more so

568
00:31:13,640 --> 00:31:16,400
Speaker 1: than they do other people. One of the biggest ones,

569
00:31:16,440 --> 00:31:19,440
Speaker 1: I guess would be hurting. You know, a crowd effect, Ryan,

570
00:31:19,800 --> 00:31:22,320
Speaker 1: and a crowded trade is always a dangerous place to be.

571
00:31:22,640 --> 00:31:25,040
Speaker 1: But look, if you've got a strategy to follow the crowd,

572
00:31:25,080 --> 00:31:27,880
Speaker 1: and that can be a good thing too so, but look,

573
00:31:27,920 --> 00:31:32,280
Speaker 1: too many traders don't have a sound strategy when it

574
00:31:32,280 --> 00:31:35,280
Speaker 1: comes to something like hurting. They will see the crowd move,

575
00:31:35,440 --> 00:31:37,960
Speaker 1: they'll get on board, but they don't have a full plan,

576
00:31:38,200 --> 00:31:41,680
Speaker 1: thought out. Trend following, for example, takes into account this

577
00:31:41,800 --> 00:31:44,600
Speaker 1: hurting and says, you know what, if everyone's moving that direction,

578
00:31:44,800 --> 00:31:47,480
Speaker 1: we want to be on board. Why not? Why not

579
00:31:47,600 --> 00:31:50,000
Speaker 1: let's be on board. Look, take take a restaurant. For example.

580
00:31:50,040 --> 00:31:51,680
Speaker 1: You walk into a new city like New York City.

581
00:31:51,800 --> 00:31:53,240
Speaker 1: If I walk down the street, I haven't been to

582
00:31:53,280 --> 00:31:55,440
Speaker 1: the city for four years. If I walk down the street,

583
00:31:55,480 --> 00:31:58,760
Speaker 1: I walk four blocks, I passed ten restaurants. Nine of

584
00:31:58,800 --> 00:32:02,240
Speaker 1: those restaurants are empty. One of those restaurants is packed.

585
00:32:02,320 --> 00:32:04,840
Speaker 1: Where am I eating? Of course, you're gonna follow the crowd.

586
00:32:04,880 --> 00:32:08,200
Speaker 1: They're all there for a specific reason, So you're using

587
00:32:08,240 --> 00:32:11,960
Speaker 1: the crowd as a sign that someone else has done

588
00:32:11,960 --> 00:32:15,040
Speaker 1: their homework, someone else has done the fundamental research. They're

589
00:32:15,080 --> 00:32:17,920
Speaker 1: piling in for a specific reason, and you think it's

590
00:32:17,920 --> 00:32:20,520
Speaker 1: gonna take that that trend further and you want to

591
00:32:20,560 --> 00:32:22,680
Speaker 1: participate in. I'm gonna pile into and I'm gonna have

592
00:32:22,680 --> 00:32:25,200
Speaker 1: a stop losses. I pile in stop loss in that case,

593
00:32:25,200 --> 00:32:27,440
Speaker 1: I guess would be food poisoning. But if I get that,

594
00:32:27,560 --> 00:32:29,920
Speaker 1: I'm getting out. So, Mike, if people want to find

595
00:32:29,960 --> 00:32:33,800
Speaker 1: your stuff, how can they track you down? I pretty

596
00:32:33,840 --> 00:32:35,800
Speaker 1: much own the word trend following, so you can find

597
00:32:35,840 --> 00:32:40,280
Speaker 1: me podcast, Twitter, or websites, tread following dot com. Good

598
00:32:40,360 --> 00:32:43,000
Speaker 1: good too, Good to know? UH. Be sure and stick

599
00:32:43,040 --> 00:32:45,320
Speaker 1: around and listen to our podcast extras where we keep

600
00:32:45,360 --> 00:32:48,560
Speaker 1: the tape rolling and allow the conversation UH to continue

601
00:32:48,600 --> 00:32:51,880
Speaker 1: on Be sure and check out all of our previous

602
00:32:52,400 --> 00:32:56,040
Speaker 1: seventy or so podcasts. You can find them on SoundCloud,

603
00:32:56,040 --> 00:32:59,920
Speaker 1: Bloomberg dot com, and of course on Apple iTunes. Check

604
00:33:00,040 --> 00:33:03,520
Speaker 1: out my daily column on Bloomberg View dot com or

605
00:33:03,640 --> 00:33:07,880
Speaker 1: follow me on Twitter at rid Halts. I'm Barry rit Halts.

606
00:33:07,960 --> 00:33:12,160
Speaker 1: You're listening to Masters in Business on Bloomberg Radio. Welcome

607
00:33:12,200 --> 00:33:14,719
Speaker 1: to the podcast. This is Barry Ridholts, and you've been

608
00:33:14,720 --> 00:33:18,640
Speaker 1: listening to Masters in Business on Bloomberg Radio. My special

609
00:33:18,760 --> 00:33:22,320
Speaker 1: guest today and they're always a special guest is Michael Covel,

610
00:33:22,680 --> 00:33:26,400
Speaker 1: somebody I've known for g a decade? Is it a decade?

611
00:33:26,840 --> 00:33:30,720
Speaker 1: Almost a decade for sure, pretty close to it. So

612
00:33:30,960 --> 00:33:34,520
Speaker 1: it's funny. We were talking about during the break about

613
00:33:34,560 --> 00:33:39,320
Speaker 1: about podcasts, and I do some of the same things

614
00:33:39,400 --> 00:33:41,920
Speaker 1: every time when it's the podcast time, I throw my

615
00:33:42,000 --> 00:33:44,720
Speaker 1: hands in the air. I get to like relax. It's

616
00:33:44,720 --> 00:33:47,480
Speaker 1: a deep breath because I'm not hearing in my ear

617
00:33:48,000 --> 00:33:51,959
Speaker 1: halfway one minute, thirty seconds. There are no time constraints.

618
00:33:52,080 --> 00:33:54,080
Speaker 1: It's always a challenge there too, right, You've got to

619
00:33:55,680 --> 00:33:57,440
Speaker 1: I'm doing it on the phone, you're doing it live,

620
00:33:57,480 --> 00:34:00,000
Speaker 1: but you still have to bring something out of somebody,

621
00:34:00,760 --> 00:34:03,880
Speaker 1: which for some people you just have to say, how's

622
00:34:03,880 --> 00:34:06,200
Speaker 1: it going, and there's an hour and a half and

623
00:34:06,280 --> 00:34:09,239
Speaker 1: for other people you asked these questions and you get

624
00:34:09,280 --> 00:34:13,040
Speaker 1: answers like not really, what am I gonna do with that.

625
00:34:13,040 --> 00:34:16,439
Speaker 1: That's like a giant meat ball that lands. Okay, well

626
00:34:16,480 --> 00:34:19,760
Speaker 1: that's all the time we have. It's that sort of stuff.

627
00:34:19,960 --> 00:34:21,920
Speaker 1: So the funny thing you and I were talking about

628
00:34:22,000 --> 00:34:26,080
Speaker 1: doing the podcast earlier and how this came about. When

629
00:34:26,120 --> 00:34:30,440
Speaker 1: I first started doing this, the first twenty I recorded,

630
00:34:30,440 --> 00:34:33,879
Speaker 1: but they weren't broadcast, so we had no idea were

631
00:34:33,880 --> 00:34:36,759
Speaker 1: these any good or people gonna listen to these? It

632
00:34:36,920 --> 00:34:40,239
Speaker 1: was I was behind somebody else who were. There was

633
00:34:40,280 --> 00:34:42,760
Speaker 1: a run of things that had to go out before

634
00:34:42,840 --> 00:34:45,840
Speaker 1: these started broadcasting on the radio and going up on

635
00:34:45,880 --> 00:34:49,360
Speaker 1: the site, so we really were kind of groping in

636
00:34:49,400 --> 00:34:52,160
Speaker 1: the in the dark, figuring out what works, and then

637
00:34:52,160 --> 00:34:55,960
Speaker 1: to make matters worse. I have no professional radio training.

638
00:34:56,000 --> 00:35:00,040
Speaker 1: I have no expertise. You neither, so with me, I

639
00:35:00,040 --> 00:35:04,200
Speaker 1: have to follow this format of Bloomberg Radio or any

640
00:35:04,280 --> 00:35:07,320
Speaker 1: radio for that matter, where you do the intro and

641
00:35:07,680 --> 00:35:09,920
Speaker 1: you set up the guest, and then on the longer

642
00:35:09,960 --> 00:35:13,080
Speaker 1: segments halfway through you have to reintroduce the guests. You

643
00:35:13,120 --> 00:35:15,239
Speaker 1: may have been wondering why you heard repeatedly and our

644
00:35:15,239 --> 00:35:18,200
Speaker 1: guest today because I have to reintroduce the guest, and

645
00:35:18,239 --> 00:35:19,880
Speaker 1: then you have to do the outro at the end

646
00:35:19,920 --> 00:35:22,560
Speaker 1: of the segment coming up, we can, and for the

647
00:35:22,719 --> 00:35:25,919
Speaker 1: life of me, I could not get those outros right

648
00:35:26,280 --> 00:35:31,760
Speaker 1: because it's really very, very counterintuitive. So when I first started,

649
00:35:31,800 --> 00:35:34,279
Speaker 1: it was always when we come back. No, no, it's

650
00:35:34,280 --> 00:35:36,960
Speaker 1: not when we come back. We're not going anywhere. We're here. Now.

651
00:35:37,040 --> 00:35:39,239
Speaker 1: Think about someone sitting in your car, in their car

652
00:35:39,320 --> 00:35:42,080
Speaker 1: listening to the radio. They're not going anywhere. Coming up

653
00:35:42,120 --> 00:35:44,319
Speaker 1: after that, No, it's not after the break it was.

654
00:35:44,520 --> 00:35:47,920
Speaker 1: So it took me a long time, and after about

655
00:35:48,040 --> 00:35:51,400
Speaker 1: fifty episodes, it's practically a year. So I would come

656
00:35:51,440 --> 00:35:53,960
Speaker 1: back do the podcast on a Monday, and I'd come

657
00:35:54,000 --> 00:35:56,640
Speaker 1: back on a Tuesday and do the intros and outros.

658
00:35:56,680 --> 00:35:59,720
Speaker 1: It was take me an hour to do all that stuff,

659
00:35:59,760 --> 00:36:02,600
Speaker 1: to do the intro and the ending, and now it's

660
00:36:02,640 --> 00:36:05,000
Speaker 1: a tape in my head. I don't know if you've experienced,

661
00:36:05,000 --> 00:36:09,880
Speaker 1: you've done four Love him or hate him, Howard Stern

662
00:36:10,400 --> 00:36:15,919
Speaker 1: teaches the profession of broadcasting. He's he is unbelievable. I've

663
00:36:15,960 --> 00:36:18,719
Speaker 1: thrown up some of his podcasts. I shouldn't call that.

664
00:36:18,800 --> 00:36:22,400
Speaker 1: Some of his interviews on the blog, things that Louis

665
00:36:22,440 --> 00:36:26,440
Speaker 1: c K and Madonna and James Taylor, and these are

666
00:36:26,520 --> 00:36:31,200
Speaker 1: like masterful, masterful into his Seinfeld interview of either two

667
00:36:31,200 --> 00:36:33,320
Speaker 1: thousand thirteen or two thou and fourteen on the Howard

668
00:36:33,320 --> 00:36:36,799
Speaker 1: Sterns Show, easily found on YouTube or whatever, is one

669
00:36:36,800 --> 00:36:40,840
Speaker 1: of the best pieces of listening. It's amazing. And I

670
00:36:40,920 --> 00:36:42,759
Speaker 1: went through a period listen. I used to listen to

671
00:36:42,800 --> 00:36:46,799
Speaker 1: Howard in my twenties and thirties, and you know, it

672
00:36:46,880 --> 00:36:50,440
Speaker 1: was it was sophomoric and hilarious and and great. And

673
00:36:50,440 --> 00:36:52,279
Speaker 1: then at a certain point it's like, I don't have

674
00:36:52,320 --> 00:36:54,960
Speaker 1: time for this. And then once he went to exam,

675
00:36:55,000 --> 00:36:58,839
Speaker 1: once he went to satellite radio, and really became more

676
00:36:58,960 --> 00:37:03,640
Speaker 1: interesting in many ways, more sophisticated anyway, a little less tough,

677
00:37:03,680 --> 00:37:05,880
Speaker 1: more like a little more you know, a little bit

678
00:37:05,880 --> 00:37:10,359
Speaker 1: of gravitas. He is a master in the field of broadcasting,

679
00:37:10,560 --> 00:37:12,840
Speaker 1: and people don't really think of him that way, but

680
00:37:12,960 --> 00:37:15,840
Speaker 1: they should, you know, people out there listening. Okay, so

681
00:37:15,920 --> 00:37:18,440
Speaker 1: you and I are two amateurs essentially doing this right.

682
00:37:18,560 --> 00:37:21,400
Speaker 1: So I'm hoping to achieve amateur status one day. But

683
00:37:21,680 --> 00:37:24,239
Speaker 1: you still, if you're gonna be, if you're gonna have

684
00:37:24,320 --> 00:37:27,520
Speaker 1: enough cohn is to bring on Nobel Prize winners to

685
00:37:27,520 --> 00:37:29,680
Speaker 1: your show. You've had more, You've had four, I've only

686
00:37:29,680 --> 00:37:33,840
Speaker 1: had three. Wow, I atready start looking for right on

687
00:37:33,880 --> 00:37:37,320
Speaker 1: your tail, although on a per capita basis, on ahead

688
00:37:37,320 --> 00:37:40,480
Speaker 1: of you. But it's that's true, but it's when if

689
00:37:40,480 --> 00:37:44,040
Speaker 1: you're gonna have those types of minds on, there is

690
00:37:44,080 --> 00:37:47,480
Speaker 1: a certain you have to be confident, you have to

691
00:37:47,520 --> 00:37:51,280
Speaker 1: be well researched, and you have to make those people

692
00:37:51,520 --> 00:37:54,840
Speaker 1: stimulated in such a way that they're not bored. The

693
00:37:54,880 --> 00:37:57,600
Speaker 1: worst thing is to hear a board guest on your show.

694
00:37:58,160 --> 00:38:01,960
Speaker 1: That's absolutely right. And and the way I found that

695
00:38:01,960 --> 00:38:04,759
Speaker 1: that works is we do a deep dive. My head

696
00:38:04,760 --> 00:38:07,200
Speaker 1: of research who you just signed the trend following book

697
00:38:07,239 --> 00:38:10,840
Speaker 1: Till Mike Mike Batnick. He and I sit down usually

698
00:38:10,880 --> 00:38:13,759
Speaker 1: a few days before the podcast, and the question is

699
00:38:13,760 --> 00:38:15,600
Speaker 1: what do we want each segment to be about? And

700
00:38:15,600 --> 00:38:17,920
Speaker 1: then what sort of and I he looks the world

701
00:38:18,120 --> 00:38:22,440
Speaker 1: very differently than I do, and he and I both

702
00:38:22,480 --> 00:38:25,319
Speaker 1: come up with very different questions, and a lot of

703
00:38:25,320 --> 00:38:27,440
Speaker 1: the questions that he comes up with, I'm like, you know,

704
00:38:27,480 --> 00:38:29,920
Speaker 1: I never would have thought of asking that. And between

705
00:38:29,920 --> 00:38:32,239
Speaker 1: the two of us, you know, when you're sitting down

706
00:38:32,239 --> 00:38:35,080
Speaker 1: with a guy like Leon Kooperman of Omega Advisors, who's

707
00:38:35,120 --> 00:38:38,480
Speaker 1: got a reputation being a tough guy and a difficult boss,

708
00:38:38,480 --> 00:38:40,799
Speaker 1: and he's in work at six am and he leaves

709
00:38:40,840 --> 00:38:43,279
Speaker 1: at midnight. And guy's a billionaire and he still keeps

710
00:38:43,320 --> 00:38:47,840
Speaker 1: those sort of hours. You better bring the serious questions.

711
00:38:47,880 --> 00:38:51,640
Speaker 1: You can't just lollighag through that. And uh, that's a

712
00:38:51,719 --> 00:38:54,719
Speaker 1: really really significant thing if you could get a guy

713
00:38:54,800 --> 00:38:57,800
Speaker 1: like him to say, hey, this, these are really impressive.

714
00:38:57,840 --> 00:39:02,279
Speaker 1: These are really good questions. You've gone places. And my

715
00:39:02,600 --> 00:39:07,160
Speaker 1: argument probe podcast has been, look, we don't the logo,

716
00:39:07,440 --> 00:39:10,560
Speaker 1: the model of the show is no stockpicks, no forecasts.

717
00:39:10,840 --> 00:39:13,920
Speaker 1: So right away, I'm different than those are my rules,

718
00:39:13,960 --> 00:39:17,120
Speaker 1: no podcast, all right, I never would have never had

719
00:39:17,200 --> 00:39:19,720
Speaker 1: date on the right side of of the of the

720
00:39:19,800 --> 00:39:22,839
Speaker 1: five books in I've never had anything amounting close to

721
00:39:22,880 --> 00:39:28,000
Speaker 1: a pick that's forecast. So that makes you different from

722
00:39:28,040 --> 00:39:32,399
Speaker 1: all these other all these other media, and on top

723
00:39:32,440 --> 00:39:37,640
Speaker 1: of everything else, it makes you different than the conversation.

724
00:39:37,680 --> 00:39:42,200
Speaker 1: The focus, the boredom factor goes away for a guest

725
00:39:42,560 --> 00:39:45,400
Speaker 1: who doesn't have to worry about, well, why do I

726
00:39:45,400 --> 00:39:47,239
Speaker 1: have to do a stockpick? And it is it gonna

727
00:39:47,239 --> 00:39:48,520
Speaker 1: be a good one? Is it gonna be a bad one?

728
00:39:48,640 --> 00:39:50,399
Speaker 1: A I'm gonna have to hear crap from my brother

729
00:39:50,440 --> 00:39:53,239
Speaker 1: in law. Two thanksgivings from now about this, Like those

730
00:39:53,239 --> 00:39:56,360
Speaker 1: are the sort of silly things that that takes place.

731
00:39:56,400 --> 00:40:02,239
Speaker 1: So your four hundred podcasts in memory, old guest, one

732
00:40:02,280 --> 00:40:04,839
Speaker 1: that really comes to that come to the mind. Robert

733
00:40:04,840 --> 00:40:10,840
Speaker 1: Ahman believe eighty five year old Israeli. He is he

734
00:40:10,840 --> 00:40:14,080
Speaker 1: won the Nobel Prize in game theory. Now you already

735
00:40:14,160 --> 00:40:16,120
Speaker 1: know if you you're out there in the audience, you're saying,

736
00:40:16,120 --> 00:40:18,839
Speaker 1: my gosh, I can't imagine interviewing an eight five year

737
00:40:18,880 --> 00:40:21,399
Speaker 1: old Nobel Prize winner in game theory, because the man

738
00:40:21,480 --> 00:40:23,560
Speaker 1: knows more math than we could ever attempt to know.

739
00:40:24,600 --> 00:40:27,440
Speaker 1: So I go into this episode and he's kind of

740
00:40:27,520 --> 00:40:29,919
Speaker 1: dragging this is over the phone. We get to talking

741
00:40:29,960 --> 00:40:34,320
Speaker 1: about Switzerland and we're talking a little bit about gun control,

742
00:40:34,760 --> 00:40:37,600
Speaker 1: and it might have sounded political, but we started he said, well,

743
00:40:37,600 --> 00:40:41,560
Speaker 1: why why are there fighter jets flying over He goes

744
00:40:41,600 --> 00:40:43,919
Speaker 1: to vacation in Switzerland in the summer. Why they're fighter

745
00:40:44,000 --> 00:40:46,560
Speaker 1: jets flying over Switzerland. Now, this is one of the

746
00:40:46,560 --> 00:40:49,960
Speaker 1: guys with Thomas Shelling, who basically laid out that mutually

747
00:40:50,000 --> 00:40:53,400
Speaker 1: assured destruction routine with the Soviets. So they were figuring

748
00:40:53,400 --> 00:40:55,799
Speaker 1: out the math that you have to have bombers in

749
00:40:55,800 --> 00:41:00,000
Speaker 1: the air and seven with nukes, so could you could

750
00:41:00,239 --> 00:41:05,080
Speaker 1: never have get caught unaware a surprise attack forty years

751
00:41:05,120 --> 00:41:07,160
Speaker 1: we had bombers in the air both sides, forty years

752
00:41:07,160 --> 00:41:09,520
Speaker 1: with loaded with nukes. But he brings up the point

753
00:41:09,520 --> 00:41:12,160
Speaker 1: of Switzerland, and it's the idea that you have to

754
00:41:12,200 --> 00:41:15,799
Speaker 1: have a credible threat. So, while I don't attempt to

755
00:41:15,800 --> 00:41:18,040
Speaker 1: get political, it was interesting here is a man who

756
00:41:18,080 --> 00:41:23,120
Speaker 1: was talking essentially about the idea of arming yourself to

757
00:41:23,239 --> 00:41:25,359
Speaker 1: protect yourself. Now, if you look at it strictly from

758
00:41:25,360 --> 00:41:28,680
Speaker 1: a political standpoint in America, that opens up Pandora's box.

759
00:41:28,719 --> 00:41:31,600
Speaker 1: You have both sides, everyone's arguing. But it's a challenge

760
00:41:31,600 --> 00:41:33,319
Speaker 1: when you're talking to a man who you know is

761
00:41:33,320 --> 00:41:37,840
Speaker 1: grounded and that much math. What is what is the

762
00:41:37,880 --> 00:41:42,319
Speaker 1: idea of armament? To that man? He's thinking you nobody's

763
00:41:42,320 --> 00:41:44,920
Speaker 1: it's it's the beautiful mind movie going on while you're

764
00:41:44,960 --> 00:41:47,400
Speaker 1: interviewing him, right, And he's not talking about whether you

765
00:41:47,440 --> 00:41:51,240
Speaker 1: can carry automatic weapons or or the or hidden carry

766
00:41:51,320 --> 00:41:54,520
Speaker 1: rules he's talking about how do you prevent nuclear armaged

767
00:41:55,080 --> 00:41:59,440
Speaker 1: through a series of decisions that forces everybody to simultaneously

768
00:41:59,680 --> 00:42:03,400
Speaker 1: arm up and avoid destroying each other, which is a fascinating,

769
00:42:03,440 --> 00:42:11,439
Speaker 1: fascinating thought. Douglas Emlyn animal weapons, animal weapons. I don't

770
00:42:11,440 --> 00:42:14,080
Speaker 1: recall that. Yeah, it came out recently. Basically, he wrote

771
00:42:14,120 --> 00:42:18,560
Speaker 1: about the idea that the animals that have the the elongated,

772
00:42:18,600 --> 00:42:25,520
Speaker 1: the larger. They spend so much energy trying to get

773
00:42:25,560 --> 00:42:29,600
Speaker 1: these things, and they don't survive. They usually die out.

774
00:42:29,640 --> 00:42:31,680
Speaker 1: The saber tooth cat or whatever, the saber tooth cata

775
00:42:31,680 --> 00:42:33,719
Speaker 1: barely run. It's sat in the tree and fell on

776
00:42:33,760 --> 00:42:36,000
Speaker 1: top of elephants and bit into it. I mean, so

777
00:42:36,040 --> 00:42:38,840
Speaker 1: it's you know, and he started this through the study

778
00:42:38,880 --> 00:42:42,279
Speaker 1: of dung beetles. Jack Horner on my podcast, who was

779
00:42:42,320 --> 00:42:45,560
Speaker 1: the paleontologist, must have got to get him off. He's ever.

780
00:42:46,040 --> 00:42:49,600
Speaker 1: He's fantastic. He's fantastic. There's a handful of he's building

781
00:42:49,600 --> 00:42:53,360
Speaker 1: a chick asaurus. I read about that. He's gonna basically

782
00:42:53,400 --> 00:42:55,840
Speaker 1: do his own Jurassic figured out how to make the

783
00:42:55,920 --> 00:42:59,040
Speaker 1: tail turn on the wings will go from wings to

784
00:42:59,160 --> 00:43:01,200
Speaker 1: claus and they've turned. They figured out how to turn

785
00:43:01,280 --> 00:43:05,000
Speaker 1: on teeth in the beak. Can you not wait for

786
00:43:05,280 --> 00:43:06,719
Speaker 1: you will even arm up for this if you have

787
00:43:06,760 --> 00:43:09,680
Speaker 1: to go get your latte at Starbucks right and you've

788
00:43:09,719 --> 00:43:11,279
Speaker 1: got to walk down the street in New York City

789
00:43:11,280 --> 00:43:15,520
Speaker 1: because somebody has re engineered raptors to run wild. This

790
00:43:15,560 --> 00:43:18,480
Speaker 1: is not exactly related to investing, but these guys fascinate me.

791
00:43:18,840 --> 00:43:21,680
Speaker 1: So there's a handful of astrophysicists I'm trying to get

792
00:43:21,719 --> 00:43:25,879
Speaker 1: on the program as well, because that area of how

793
00:43:26,000 --> 00:43:29,319
Speaker 1: rapidly that's been changing over the past five years is

794
00:43:29,440 --> 00:43:33,680
Speaker 1: quite fascinating. And what what I find intriguing about that, Look,

795
00:43:33,800 --> 00:43:37,360
Speaker 1: everything is epistemology. To me, everything is the study of knowledge,

796
00:43:37,360 --> 00:43:40,160
Speaker 1: the theory of how we learn and more importantly, and

797
00:43:40,160 --> 00:43:42,680
Speaker 1: this is a part that everybody in finance needs to

798
00:43:42,680 --> 00:43:45,799
Speaker 1: pay attention to. How we make mistakes and how we

799
00:43:45,840 --> 00:43:51,000
Speaker 1: subsequently learn from those eras mistakes. To quote um Thomas

800
00:43:51,120 --> 00:43:55,000
Speaker 1: Ede of Edison, failure is just bringing me that much

801
00:43:55,040 --> 00:43:58,839
Speaker 1: closer to success. And that sort of philosophy is really

802
00:43:58,960 --> 00:44:02,319
Speaker 1: quite amazing. And I see consistently among some of the

803
00:44:02,360 --> 00:44:05,279
Speaker 1: most successful people I've had on the show. You know,

804
00:44:05,320 --> 00:44:09,040
Speaker 1: we're talking about traders, some of the newer trend following

805
00:44:09,080 --> 00:44:13,879
Speaker 1: traders today, physics backgrounds huge, John Felip Buchow CFM out

806
00:44:13,880 --> 00:44:17,000
Speaker 1: of Paris. You and Kirk can Tap out of London.

807
00:44:17,080 --> 00:44:19,759
Speaker 1: David Harding went and out of London. These guys all

808
00:44:19,800 --> 00:44:24,600
Speaker 1: have physics backgrounds. Now their systems ultimately might be fairly simple.

809
00:44:24,880 --> 00:44:27,040
Speaker 1: There's a great book out right now called Simple Rules

810
00:44:27,040 --> 00:44:30,560
Speaker 1: by Kathleen Eisenheart. So you want to have simple rules,

811
00:44:30,600 --> 00:44:34,160
Speaker 1: but the thinking behind it extreme complexity. And you know,

812
00:44:34,200 --> 00:44:36,760
Speaker 1: when you look at the ability of physics to land

813
00:44:36,800 --> 00:44:41,040
Speaker 1: a craft on a moving comment right where we know

814
00:44:41,320 --> 00:44:44,200
Speaker 1: very specifically, here's what the math is behind it, here's

815
00:44:44,200 --> 00:44:48,200
Speaker 1: what the result of each subsequent action, and all these

816
00:44:48,280 --> 00:44:52,200
Speaker 1: complicated and interrelated dynamics. It's not a big surprise that

817
00:44:52,320 --> 00:44:55,400
Speaker 1: people who have an expertise in that find success in

818
00:44:55,400 --> 00:44:58,400
Speaker 1: the world of finance because there are many Certainly there

819
00:44:58,400 --> 00:45:01,640
Speaker 1: are many ways it's different, but they are many, many parallels,

820
00:45:01,880 --> 00:45:04,319
Speaker 1: and I think people forget that you take physics and

821
00:45:04,360 --> 00:45:07,320
Speaker 1: throwing a little human psychology and that's a recipe for

822
00:45:07,400 --> 00:45:09,120
Speaker 1: making When did you hit on trend following for the

823
00:45:09,120 --> 00:45:11,560
Speaker 1: first time? You were emailing me, gosh, we're probably emailing

824
00:45:11,560 --> 00:45:16,280
Speaker 1: together a decade so I began my career as a trader.

825
00:45:16,360 --> 00:45:19,280
Speaker 1: I quickly figured out that there was a tremendous noticed

826
00:45:19,320 --> 00:45:22,040
Speaker 1: I was comfortable with a flip. There the tremendous amount

827
00:45:22,080 --> 00:45:25,040
Speaker 1: of randomness, and how people you know the trader. First

828
00:45:25,040 --> 00:45:27,120
Speaker 1: of all, they don't give you any training. They take

829
00:45:27,160 --> 00:45:28,680
Speaker 1: you to the deep end of the pool and push

830
00:45:28,680 --> 00:45:30,919
Speaker 1: you in and whoever doesn't drown? All right, you guys

831
00:45:30,920 --> 00:45:33,080
Speaker 1: get a desk and yours will stake you with with

832
00:45:33,120 --> 00:45:37,000
Speaker 1: some capital. And essentially, this guy to my right is

833
00:45:37,080 --> 00:45:38,759
Speaker 1: killing it this month, and the guy on my left

834
00:45:38,800 --> 00:45:41,239
Speaker 1: is stinking it up, and next month it flips. And

835
00:45:41,239 --> 00:45:44,640
Speaker 1: I became more fascinated by why different traders were making

836
00:45:44,840 --> 00:45:47,360
Speaker 1: or losing money than what was going on in my screen.

837
00:45:47,880 --> 00:45:50,759
Speaker 1: And eventually figured and I had some great months and

838
00:45:50,840 --> 00:45:54,000
Speaker 1: some terrible months, but eventually figured out that the study

839
00:45:54,040 --> 00:45:57,480
Speaker 1: of why investors are either more or less successful than

840
00:45:57,560 --> 00:46:03,960
Speaker 1: others really took over my my daily focus. And that's

841
00:46:03,960 --> 00:46:06,960
Speaker 1: how I ended up moving into first research and then

842
00:46:07,040 --> 00:46:11,720
Speaker 1: strategy and then ultimately asset management. But the progression that

843
00:46:11,719 --> 00:46:16,759
Speaker 1: that progression comes specifically from why is this guy and

844
00:46:16,800 --> 00:46:19,560
Speaker 1: that guy who will appear to be doing the same thing,

845
00:46:21,200 --> 00:46:26,200
Speaker 1: reaching such different levels of attainment and success and inconsistent

846
00:46:26,920 --> 00:46:29,480
Speaker 1: to boot. Why is it reversing from this month of

847
00:46:29,560 --> 00:46:32,960
Speaker 1: that month? And I learned a lot just by watching people,

848
00:46:33,360 --> 00:46:36,360
Speaker 1: Like I didn't necessarily know what to do, but I

849
00:46:36,440 --> 00:46:39,200
Speaker 1: quickly figured out what not to do by watching people.

850
00:46:39,560 --> 00:46:42,160
Speaker 1: And I found myself studying other traders more than I

851
00:46:42,200 --> 00:46:44,640
Speaker 1: was wanting to stick my face in the screen. And

852
00:46:44,880 --> 00:46:47,839
Speaker 1: I love trading too much. And I that, by the way,

853
00:46:47,880 --> 00:46:50,480
Speaker 1: looking for that vein, that was like a sign, all right,

854
00:46:50,520 --> 00:46:54,440
Speaker 1: it's time to to to enter twelve step program. It was.

855
00:46:55,000 --> 00:46:58,040
Speaker 1: It was painful to move from trading to research, but

856
00:46:58,200 --> 00:47:01,680
Speaker 1: I had just a time, just enough self awareness to

857
00:47:01,760 --> 00:47:04,120
Speaker 1: know that I enjoyed it too much that I would

858
00:47:04,120 --> 00:47:06,680
Speaker 1: ever be Do you think I was a junkie? It

859
00:47:06,760 --> 00:47:10,319
Speaker 1: was like it was like the thrill as opposed to

860
00:47:10,360 --> 00:47:14,279
Speaker 1: the cold school discipline rules of the most success. I

861
00:47:14,280 --> 00:47:16,880
Speaker 1: remember going into Bill Dunn's office. Bill Donne is one

862
00:47:16,920 --> 00:47:20,360
Speaker 1: of the few investors that has a continuous track record

863
00:47:20,400 --> 00:47:24,520
Speaker 1: going on over forty years. I think it's somewhere between

864
00:47:24,560 --> 00:47:27,799
Speaker 1: sixteen and nineteen percent after fees. I mean, come on,

865
00:47:28,040 --> 00:47:30,680
Speaker 1: that's that's a that's a story and of itself. I

866
00:47:30,680 --> 00:47:32,080
Speaker 1: remember going to his office for the first time. I

867
00:47:32,120 --> 00:47:34,279
Speaker 1: believe it was nine, and I walked in. It was

868
00:47:34,320 --> 00:47:37,240
Speaker 1: in Stuart, Florida, you know, right down there near Palm Beach.

869
00:47:37,800 --> 00:47:40,440
Speaker 1: And I walked in and there was no one in

870
00:47:40,440 --> 00:47:43,760
Speaker 1: the waiting room, there was no secretary. There was several

871
00:47:43,800 --> 00:47:46,080
Speaker 1: magazines that were I looked at them. They were several

872
00:47:46,120 --> 00:47:49,560
Speaker 1: years old. There was no one in the office looking

873
00:47:49,560 --> 00:47:52,360
Speaker 1: at a screen, and they were running billions of dollars.

874
00:47:52,520 --> 00:47:55,800
Speaker 1: It felt like a c P A office. That experience also,

875
00:47:55,840 --> 00:47:57,880
Speaker 1: because here you are, you're talking about all the excitement,

876
00:47:57,920 --> 00:47:59,640
Speaker 1: You're talking about veins and all that kind of stuff.

877
00:47:59,800 --> 00:48:02,520
Speaker 1: My first experiences were the exact opposite. I was looking

878
00:48:02,560 --> 00:48:04,560
Speaker 1: at these guys that were treating trading like a law off.

879
00:48:04,560 --> 00:48:06,279
Speaker 1: It's like a c P A firm, And so I

880
00:48:06,360 --> 00:48:08,799
Speaker 1: never had the experience that you're talking about. Well, but

881
00:48:09,360 --> 00:48:12,440
Speaker 1: it was really clear very quickly that if there, if

882
00:48:12,440 --> 00:48:14,319
Speaker 1: you're doing this for the thrill, if you're doing this

883
00:48:14,840 --> 00:48:17,360
Speaker 1: for the buzz, you're doing it for all the wrong reasons,

884
00:48:17,760 --> 00:48:21,799
Speaker 1: and you need to be cold and bluntless and disciplines

885
00:48:22,000 --> 00:48:25,760
Speaker 1: and be able to just treat it like a dentist.

886
00:48:25,880 --> 00:48:28,920
Speaker 1: Off is not treated like you're going to Vegas and

887
00:48:28,960 --> 00:48:32,080
Speaker 1: it's a party, because it shouldn't be look look good.

888
00:48:32,120 --> 00:48:35,480
Speaker 1: Good investing should be boring, and I think really successful

889
00:48:35,520 --> 00:48:39,400
Speaker 1: trading should be I don't want to say mechanical, but certainly,

890
00:48:40,360 --> 00:48:43,440
Speaker 1: can you say mechanics. I would say the vast majority

891
00:48:43,480 --> 00:48:45,680
Speaker 1: look trend following is my world. I would say the

892
00:48:45,719 --> 00:48:49,800
Speaker 1: vast majority of trend following traders are mechanical. Mechanical, mechanical.

893
00:48:49,800 --> 00:48:53,160
Speaker 1: In fact, I'm fairly certain you. And Kirk told me

894
00:48:53,200 --> 00:48:55,319
Speaker 1: on the show that he has an algorithm pick the

895
00:48:55,360 --> 00:48:59,720
Speaker 1: picks lunch for the day. That's a little insane, picks

896
00:48:59,800 --> 00:49:02,160
Speaker 1: love for the fairly certain you, And if I'm wrong,

897
00:49:03,239 --> 00:49:05,840
Speaker 1: that's amazing. See now, I could never have an algorithm

898
00:49:05,840 --> 00:49:09,040
Speaker 1: that picks lunch for the day because I have too

899
00:49:09,040 --> 00:49:11,319
Speaker 1: many lunch choices in and about New York, and I

900
00:49:11,320 --> 00:49:16,320
Speaker 1: would rather the very swartz part. So let's talk a

901
00:49:16,360 --> 00:49:19,279
Speaker 1: little bit about that. If that's an issue that I've

902
00:49:19,320 --> 00:49:21,520
Speaker 1: never had a hard time with. I know a lot

903
00:49:21,520 --> 00:49:24,120
Speaker 1: of people are paradise you like you like your choice.

904
00:49:24,560 --> 00:49:26,960
Speaker 1: I'm an I'm an aberration. You can make a decision, Yeah,

905
00:49:27,120 --> 00:49:30,600
Speaker 1: I'm well, first of all. So here's where the algorithm

906
00:49:30,640 --> 00:49:35,759
Speaker 1: comes in. I have some my own internalized rules that

907
00:49:35,800 --> 00:49:38,600
Speaker 1: you give me a list of eighty things. I don't

908
00:49:38,600 --> 00:49:40,879
Speaker 1: care what it is. It could be eighty different hot sources,

909
00:49:40,920 --> 00:49:43,960
Speaker 1: a thousand different restaurants. There is a series of steps

910
00:49:44,000 --> 00:49:46,959
Speaker 1: you can take, process of elimination. Okay, get rid of these,

911
00:49:46,960 --> 00:49:48,480
Speaker 1: get rid of those, get rid of these. I want

912
00:49:48,520 --> 00:49:50,839
Speaker 1: something with a little of this. And right away that

913
00:49:50,960 --> 00:49:53,480
Speaker 1: list of ten thousand is now four, and you have

914
00:49:53,520 --> 00:49:56,879
Speaker 1: to choose from four. So there are ways to deal

915
00:49:56,920 --> 00:49:59,960
Speaker 1: with that, that that paradox of choice. But I think

916
00:50:00,200 --> 00:50:04,440
Speaker 1: most people can't don't have a systemic approach to that

917
00:50:04,600 --> 00:50:06,840
Speaker 1: sort of thing. And and a lot of this comes

918
00:50:06,880 --> 00:50:11,720
Speaker 1: from just experience where you're confronted with that. You either

919
00:50:11,840 --> 00:50:16,440
Speaker 1: succumb to that paralysis or develop some methodology of dealing

920
00:50:16,520 --> 00:50:19,400
Speaker 1: with it. But I we've had this debate. My favorite

921
00:50:19,400 --> 00:50:23,600
Speaker 1: example of this is the advantages of a benevolent dictatorship

922
00:50:23,640 --> 00:50:27,960
Speaker 1: over a democracy. Mostly in summer beach house shares, and

923
00:50:28,040 --> 00:50:30,799
Speaker 1: you learn that you never ask a room full of

924
00:50:30,840 --> 00:50:34,080
Speaker 1: people what they want for dinner or what the movie

925
00:50:34,120 --> 00:50:36,319
Speaker 1: they want to see, because if you do that, you

926
00:50:36,360 --> 00:50:38,759
Speaker 1: set off a twenty minute debate and you ultimately end

927
00:50:38,880 --> 00:50:45,839
Speaker 1: up paralyzed. The paradox of choice. The benevolent dictatorship says, hey,

928
00:50:45,880 --> 00:50:48,359
Speaker 1: I'm going for slice of pizza. Anyone want to join me?

929
00:50:49,040 --> 00:50:52,200
Speaker 1: And you make a decision and the crowd comes. If

930
00:50:52,280 --> 00:50:55,960
Speaker 1: someone else says no, I'd prefer a hamburger, you have

931
00:50:56,000 --> 00:50:59,399
Speaker 1: to make a split second decision do we start this

932
00:50:59,600 --> 00:51:04,200
Speaker 1: mic ration or um because if you say that sounds good,

933
00:51:04,280 --> 00:51:07,120
Speaker 1: let's do that. I just had pizza yesterday. Now someone

934
00:51:07,160 --> 00:51:09,439
Speaker 1: else wants a hot dog and it's a whole bunch

935
00:51:09,480 --> 00:51:14,240
Speaker 1: of craziness. So that take that benevolent dictator and expand

936
00:51:14,239 --> 00:51:17,120
Speaker 1: it geo politically. I currently live and spend the vast

937
00:51:17,120 --> 00:51:21,640
Speaker 1: majority of my time in Southeast Asia, specifically Saigon, Vietnam. Okay,

938
00:51:21,800 --> 00:51:24,719
Speaker 1: benevolent dictator. You might not think that's how you would

939
00:51:24,760 --> 00:51:27,200
Speaker 1: describe a communist country. I think you could put that

940
00:51:27,320 --> 00:51:33,479
Speaker 1: term Singapore benevolent dictator, Vietnam benevolent dictator, China benevolent dictator. Look,

941
00:51:33,760 --> 00:51:37,080
Speaker 1: those guys want the power in those countries, but they

942
00:51:37,160 --> 00:51:40,080
Speaker 1: let the people get rich, they let the people keep improving,

943
00:51:40,320 --> 00:51:43,080
Speaker 1: and they make the big decisions. New York City as

944
00:51:43,120 --> 00:51:44,959
Speaker 1: I walk around for the first time in four years.

945
00:51:45,120 --> 00:51:48,160
Speaker 1: This city can never be rebuilt in two thousand and fifteen. Never,

946
00:51:48,480 --> 00:51:50,680
Speaker 1: people would never allow it to happen. There'd be too

947
00:51:50,760 --> 00:51:53,719
Speaker 1: many hands in the cookie jar, there's too many environmental

948
00:51:53,760 --> 00:51:56,839
Speaker 1: This environmental that the benevolent dictator solves those issues. It

949
00:51:56,880 --> 00:51:59,160
Speaker 1: just takes, for your point even to another step further.

950
00:51:59,239 --> 00:52:00,759
Speaker 1: We're gonna build this it in. If you don't like

951
00:52:00,800 --> 00:52:02,200
Speaker 1: it too bad, and if there's a lot of smog

952
00:52:02,280 --> 00:52:04,520
Speaker 1: and no one could breathe, we'll worry about that later.

953
00:52:04,560 --> 00:52:07,000
Speaker 1: That seems to be approach, which brings me to the question.

954
00:52:07,080 --> 00:52:08,719
Speaker 1: There was probably some smog here though, in the back

955
00:52:08,719 --> 00:52:10,080
Speaker 1: in the day at one point in time, while you

956
00:52:10,080 --> 00:52:12,520
Speaker 1: have the e p A pass rules and response to

957
00:52:12,840 --> 00:52:16,720
Speaker 1: under President Nixon, in response to people really being concerned

958
00:52:16,760 --> 00:52:18,640
Speaker 1: about health and what have you. But I want to

959
00:52:18,680 --> 00:52:22,799
Speaker 1: ask you, what makes a kid from Virginia's decide I'm

960
00:52:22,800 --> 00:52:25,719
Speaker 1: gonna pick up and go to Asia. How did that

961
00:52:25,760 --> 00:52:29,200
Speaker 1: come about? Well, I was living most of my life

962
00:52:29,200 --> 00:52:33,800
Speaker 1: in Vienna, Virginia, uh two thousand eight, working on this film.

963
00:52:33,800 --> 00:52:35,960
Speaker 1: When you were kind enough to appear in my film,

964
00:52:36,080 --> 00:52:39,239
Speaker 1: I I knew I moved to San Diego, and I

965
00:52:39,239 --> 00:52:42,520
Speaker 1: was living in San Diego. I started this podcast, and

966
00:52:42,760 --> 00:52:46,680
Speaker 1: actually starting the podcast got me to Asia because I

967
00:52:46,719 --> 00:52:49,960
Speaker 1: started doing yoga in two thousand and twelve and a

968
00:52:50,000 --> 00:52:53,720
Speaker 1: guy listening to my podcasts said, Hey, I really like yoga.

969
00:52:54,160 --> 00:52:55,640
Speaker 1: My friend of mine. A friend of mine runs the

970
00:52:55,640 --> 00:52:58,400
Speaker 1: c l s A office and U c ls A

971
00:52:58,440 --> 00:53:01,279
Speaker 1: Hong Kong brokerage firm runs the c l A c

972
00:53:01,560 --> 00:53:03,720
Speaker 1: l s A office in Tokyo. When you come speak,

973
00:53:04,120 --> 00:53:06,000
Speaker 1: I had done a gig for them before I said sure.

974
00:53:06,640 --> 00:53:08,960
Speaker 1: They called me up. They said, let's let's have you over.

975
00:53:09,360 --> 00:53:12,360
Speaker 1: At that moment, I he said, well, let's book the

976
00:53:12,360 --> 00:53:14,279
Speaker 1: ticket for you. And I said, well, so where are

977
00:53:14,280 --> 00:53:16,560
Speaker 1: you flying from? And I said, well, I'm gonna already

978
00:53:16,560 --> 00:53:19,920
Speaker 1: be in Asia. I wasn't already going to be in Asia.

979
00:53:20,120 --> 00:53:22,200
Speaker 1: I just said this at that moment. He then said

980
00:53:22,200 --> 00:53:25,000
Speaker 1: to me, Hey, would you like to speak for us

981
00:53:25,560 --> 00:53:33,279
Speaker 1: in Beijing, Shanghai, Guangzhou, shan Jen, Kuala Lumpur, Singapore in

982
00:53:33,360 --> 00:53:35,759
Speaker 1: Hong Kong. I said, and we'll pay you the same

983
00:53:35,920 --> 00:53:39,759
Speaker 1: for each each day over four months. And I said, oh,

984
00:53:39,920 --> 00:53:42,359
Speaker 1: thank you, twist marm. Yes, we've got a deal. A

985
00:53:42,400 --> 00:53:46,040
Speaker 1: paid trip seeing all of the best of Asia. Yes,

986
00:53:46,200 --> 00:53:48,359
Speaker 1: so that had to be a fascinating Yeah. By four

987
00:53:48,440 --> 00:53:52,120
Speaker 1: first four months of two thousand thirteen, and my last stop,

988
00:53:52,160 --> 00:53:55,280
Speaker 1: I was doing this around the world fair and first

989
00:53:55,320 --> 00:53:59,000
Speaker 1: class on United or something, and I my last stop

990
00:53:59,040 --> 00:54:01,640
Speaker 1: was Bali. And I was in Bali and I was like, Okay,

991
00:54:01,760 --> 00:54:03,560
Speaker 1: I'm not going back to San Diego. I'm gonna live

992
00:54:03,560 --> 00:54:06,879
Speaker 1: in Asia. But I can't stand Bali after two weeks,

993
00:54:06,920 --> 00:54:09,239
Speaker 1: and I said to myself, where did I have the

994
00:54:09,360 --> 00:54:14,920
Speaker 1: most fun over the last four months? And it was Saigon, Vietnam,

995
00:54:15,040 --> 00:54:18,920
Speaker 1: now known as Ho Chi Min's City. And so communists,

996
00:54:19,320 --> 00:54:22,920
Speaker 1: wasn't that what originally known as Hochi originally not originally

997
00:54:22,920 --> 00:54:26,279
Speaker 1: known as Saigon renamed Hochi Min City after we left

998
00:54:26,320 --> 00:54:29,600
Speaker 1: in seventy five? And so you you've been there for

999
00:54:29,760 --> 00:54:33,840
Speaker 1: two years now, is that right? Two thousand, half of thirteen,

1000
00:54:33,880 --> 00:54:36,960
Speaker 1: all of fourteen or fifteen on three years? How do

1001
00:54:37,000 --> 00:54:38,880
Speaker 1: you find it? How do you find the people they

1002
00:54:38,880 --> 00:54:42,440
Speaker 1: are given our little adventure there in the sixties and seventies,

1003
00:54:42,680 --> 00:54:46,360
Speaker 1: How is an American abroad treated in Saigon slash Ho

1004
00:54:46,520 --> 00:54:53,040
Speaker 1: Chi Min City? Fantastic? I've never i have never had

1005
00:54:53,080 --> 00:54:56,640
Speaker 1: anybody bring up the war with me, really, not one,

1006
00:54:57,600 --> 00:55:00,759
Speaker 1: not one. And just for numbers, people can wrap their

1007
00:55:00,840 --> 00:55:04,160
Speaker 1: arms around this. Most of us in America, no, since

1008
00:55:04,239 --> 00:55:06,759
Speaker 1: I my family lives about fifteen miles outside Washington, d C.

1009
00:55:07,000 --> 00:55:11,200
Speaker 1: Most of us know that about sixty Americans died during

1010
00:55:11,239 --> 00:55:13,759
Speaker 1: the Vietnamese War. Less but yeah, that's that's the number.

1011
00:55:14,640 --> 00:55:17,840
Speaker 1: Uh some and the Vietnamese. The Vietnamese number is somewhere

1012
00:55:17,840 --> 00:55:21,120
Speaker 1: between three point five and five million. It's an amazing

1013
00:55:21,520 --> 00:55:23,719
Speaker 1: So you get over there and you're like, whoa. It

1014
00:55:23,960 --> 00:55:25,880
Speaker 1: really forces you. And of course then you have the

1015
00:55:25,920 --> 00:55:30,440
Speaker 1: whole come to Jesus, like why were we even here?

1016
00:55:30,480 --> 00:55:34,720
Speaker 1: Because look, we thought that, you know, there's this Domino theory,

1017
00:55:34,920 --> 00:55:38,719
Speaker 1: and apparently nobody in the State Department bothered to understand

1018
00:55:38,719 --> 00:55:41,719
Speaker 1: that the Vietnamese hate the Chinese. The Vietnamese didn't really

1019
00:55:41,719 --> 00:55:43,920
Speaker 1: like the Russians, and they just wanted their own damn

1020
00:55:43,960 --> 00:55:47,360
Speaker 1: country after being dominated for a thousand years by the Chinese,

1021
00:55:47,400 --> 00:55:49,840
Speaker 1: the French, and the Americans. And so somehow another we

1022
00:55:49,880 --> 00:55:51,880
Speaker 1: decided that was gonna be the Domino theory. And it

1023
00:55:51,960 --> 00:55:55,080
Speaker 1: was a huge mistake. You know, it's fascinating for people

1024
00:55:55,120 --> 00:55:59,239
Speaker 1: who aren't familiar with Asia. The different cultural groups of

1025
00:55:59,320 --> 00:56:03,520
Speaker 1: different countries and their long history. It's no different than Europe.

1026
00:56:04,040 --> 00:56:08,600
Speaker 1: We just look at them in a different perspective. Japan, Korea, China, Vietnam.

1027
00:56:09,400 --> 00:56:13,400
Speaker 1: There's a long history of life, the Philippines of different

1028
00:56:13,440 --> 00:56:17,440
Speaker 1: parts of that world, disliking and engaging in warfare. Everybody

1029
00:56:17,480 --> 00:56:19,880
Speaker 1: seems to have have had a fight with the Japanese

1030
00:56:19,960 --> 00:56:22,960
Speaker 1: at one point in time. Uh. In Asia, it's really

1031
00:56:23,200 --> 00:56:26,120
Speaker 1: quite fascinating, but it's not all that different from what

1032
00:56:26,200 --> 00:56:28,600
Speaker 1: took place in Europe or what took place, you know,

1033
00:56:29,120 --> 00:56:31,520
Speaker 1: on on this half of the world. So, so you

1034
00:56:31,640 --> 00:56:34,040
Speaker 1: end up in Saigon, cost of living has got to

1035
00:56:34,080 --> 00:56:37,239
Speaker 1: be next to nothing there. It's not bad. I'm I

1036
00:56:37,400 --> 00:56:40,919
Speaker 1: I stay at a pretty cool place. It's uh, it's

1037
00:56:40,920 --> 00:56:42,839
Speaker 1: not bad. It's not New York City, for sure. It's

1038
00:56:42,840 --> 00:56:45,200
Speaker 1: not Tokyo. I was just in Tokyo. Love Tokyo. But

1039
00:56:46,080 --> 00:56:47,560
Speaker 1: you know, it's not even the cost of living. It's

1040
00:56:47,600 --> 00:56:52,480
Speaker 1: there's a there's a cowboy feel. It's the it's the

1041
00:56:52,520 --> 00:56:55,359
Speaker 1: wild West of capitalists, West of capitalism. I mean, it's

1042
00:56:55,360 --> 00:56:57,799
Speaker 1: just everything's under construction that the Japanese are building their

1043
00:56:57,800 --> 00:57:01,120
Speaker 1: first metro there. I just you know, there's a million motorbikes.

1044
00:57:01,160 --> 00:57:03,560
Speaker 1: I mean, right now, I have I could. I'm looking

1045
00:57:03,560 --> 00:57:06,080
Speaker 1: out of this Bloomberg facility, and I can imagine if

1046
00:57:06,120 --> 00:57:08,160
Speaker 1: I was to walk out here in Saigon, there could

1047
00:57:08,200 --> 00:57:12,160
Speaker 1: be two of motorbikes going in different directions. And as

1048
00:57:12,160 --> 00:57:15,200
Speaker 1: an American, I would have absolutely no problem walking straight

1049
00:57:15,200 --> 00:57:17,360
Speaker 1: out into the middle of it and not even blinking,

1050
00:57:17,360 --> 00:57:21,360
Speaker 1: because I know how they think and how how do

1051
00:57:21,440 --> 00:57:25,200
Speaker 1: they think? It's very zen and it's Buddhists trying to

1052
00:57:25,280 --> 00:57:28,440
Speaker 1: kill you. There's trying to get somewhere, you know, So hey,

1053
00:57:28,440 --> 00:57:32,520
Speaker 1: I want to wait, wait, Vietnam is Buddhist. They didn't

1054
00:57:32,520 --> 00:57:35,480
Speaker 1: realize that. Yeah, that's quite fascinating. So you're about to

1055
00:57:35,520 --> 00:57:36,960
Speaker 1: say I was about to say, you know, on this

1056
00:57:36,960 --> 00:57:39,560
Speaker 1: this little excursion, I told you about this four month

1057
00:57:39,600 --> 00:57:42,120
Speaker 1: tour that got me to Asia. One of the fascinating

1058
00:57:42,160 --> 00:57:45,840
Speaker 1: things about that was it was four months of speaking

1059
00:57:45,880 --> 00:57:48,760
Speaker 1: to the biggest funds in Asia. So when I was

1060
00:57:48,800 --> 00:57:51,160
Speaker 1: in China, I was speaking to China Asset Management, which

1061
00:57:51,200 --> 00:57:53,920
Speaker 1: is their largest sovereign wealth phone. When I was in Singapore,

1062
00:57:54,000 --> 00:57:56,320
Speaker 1: g I see their sovereign wealth fund and just to

1063
00:57:56,360 --> 00:57:58,840
Speaker 1: share some fun stories about how things go down in

1064
00:57:58,920 --> 00:58:01,800
Speaker 1: different parts of the world. So I'm presenting a trend

1065
00:58:01,840 --> 00:58:05,280
Speaker 1: following presentation to a group of people at China Asset Management.

1066
00:58:05,280 --> 00:58:07,840
Speaker 1: This is the largest fund in the country, so there's

1067
00:58:07,840 --> 00:58:10,920
Speaker 1: twenty five You have to assume the smartest people in

1068
00:58:10,960 --> 00:58:13,000
Speaker 1: the country at one point four billion. You know, they've

1069
00:58:13,040 --> 00:58:15,040
Speaker 1: gone through who knows how many tests to get to

1070
00:58:15,120 --> 00:58:19,720
Speaker 1: that room. And I give this presentation. There's a translator.

1071
00:58:20,280 --> 00:58:23,240
Speaker 1: I talked for a sentence translated. At the end of it,

1072
00:58:23,280 --> 00:58:26,360
Speaker 1: I say, Hey, any questions. The lead guy very first question,

1073
00:58:26,840 --> 00:58:31,400
Speaker 1: perfect English, room, perfect English, Perfect English. And then they

1074
00:58:31,600 --> 00:58:34,560
Speaker 1: immediately got so excited because they were like, oh my gosh.

1075
00:58:34,560 --> 00:58:36,360
Speaker 1: So this trader we all know about in China who

1076
00:58:36,360 --> 00:58:38,760
Speaker 1: has made billions of dollars, and what he does is

1077
00:58:38,800 --> 00:58:41,520
Speaker 1: he buys right before the market goes limit up. And

1078
00:58:41,560 --> 00:58:44,480
Speaker 1: so they all China, of all the countries that I've

1079
00:58:44,480 --> 00:58:49,400
Speaker 1: been to, instinctively understands momentum and trend. It's in their

1080
00:58:49,480 --> 00:58:53,880
Speaker 1: blood because they do go back trust the fundamentals. They

1081
00:58:53,880 --> 00:58:56,440
Speaker 1: don't trust the fundamentals. They've learned not to believe. They

1082
00:58:56,440 --> 00:58:58,240
Speaker 1: don't believe anything in the fundamentals. The only thing they

1083
00:58:58,280 --> 00:59:01,280
Speaker 1: believe is the momentum. That's funny because you think the Japanese,

1084
00:59:01,280 --> 00:59:05,280
Speaker 1: we've had candlestick charting for centuries. You would think they

1085
00:59:05,280 --> 00:59:08,680
Speaker 1: would be the ones that would be more likely to

1086
00:59:07,480 --> 00:59:11,800
Speaker 1: uh to, to buy into that sort of stuff. I

1087
00:59:11,800 --> 00:59:13,440
Speaker 1: find it's just the opposite. I find every time I'm

1088
00:59:13,440 --> 00:59:16,800
Speaker 1: in Tokyo. Everyone's super nice, but their interest level is

1089
00:59:16,880 --> 00:59:18,920
Speaker 1: kind of like a you know, it's like a pulse,

1090
00:59:18,920 --> 00:59:22,560
Speaker 1: that's this flatline. Huh. The Chinese, the Chinese when it

1091
00:59:22,600 --> 00:59:25,840
Speaker 1: comes to you know, bitcoin betting, it's I mean, look,

1092
00:59:25,880 --> 00:59:28,640
Speaker 1: I was in an event in Beijing in June. Uh.

1093
00:59:28,840 --> 00:59:31,480
Speaker 1: Most of the men will work and then the women

1094
00:59:31,480 --> 00:59:34,760
Speaker 1: will go to financial conferences. So it's six women ages

1095
00:59:34,800 --> 00:59:38,480
Speaker 1: forty to seventy. The excitement level to sit there and

1096
00:59:38,520 --> 00:59:42,400
Speaker 1: talk about technical trend following off the charts? Well, isn't

1097
00:59:42,440 --> 00:59:45,120
Speaker 1: it true that over a thousand it was crazy? That?

1098
00:59:45,280 --> 00:59:48,960
Speaker 1: Isn't it true that the I forgot the Chinese word

1099
00:59:49,040 --> 00:59:52,360
Speaker 1: for housewives? Are who are have been opening all these

1100
00:59:52,400 --> 00:59:57,360
Speaker 1: brokerage accounts in China and leveraging up and day trading.

1101
00:59:57,800 --> 01:00:01,160
Speaker 1: And that's why even after a four percent drop in

1102
01:00:01,200 --> 01:00:04,080
Speaker 1: the Shanghai Index year to date, or at least this

1103
01:00:04,200 --> 01:00:07,280
Speaker 1: is true as of August or September, was still like

1104
01:00:07,400 --> 01:00:11,560
Speaker 1: marginally positive that they have had such a spectacular run

1105
01:00:12,040 --> 01:00:15,400
Speaker 1: for the past few years. That whack is really just

1106
01:00:15,560 --> 01:00:19,000
Speaker 1: seems to be a minor setback to UH to the

1107
01:00:19,080 --> 01:00:21,560
Speaker 1: day traders in China. I'll share I'll share another one

1108
01:00:21,560 --> 01:00:24,440
Speaker 1: with you, so that during that period I spoke with

1109
01:00:24,600 --> 01:00:27,640
Speaker 1: the Sovereign Wealth Fund in Singapore and so here I

1110
01:00:27,680 --> 01:00:30,200
Speaker 1: am at this very nice offices it's called G I

1111
01:00:30,240 --> 01:00:33,400
Speaker 1: C and three people there are three key people and

1112
01:00:33,720 --> 01:00:35,720
Speaker 1: give a presentation on trend following. And the first guy

1113
01:00:35,760 --> 01:00:38,640
Speaker 1: immediately says, ah, we can't do any of this. This

1114
01:00:38,920 --> 01:00:42,360
Speaker 1: week were value guys, were fundamental guys. We can't do

1115
01:00:42,400 --> 01:00:45,400
Speaker 1: any of this. This is just not us. And over

1116
01:00:45,440 --> 01:00:46,919
Speaker 1: there on the other side was one of the three

1117
01:00:46,960 --> 01:00:51,080
Speaker 1: main guys contemplating, and then he bursts out and he says, oh, man,

1118
01:00:51,160 --> 01:00:53,120
Speaker 1: we can't keep doing this stuff. It's not working. We

1119
01:00:53,240 --> 01:00:54,880
Speaker 1: just read the condom in book. None of this is

1120
01:00:55,080 --> 01:00:58,120
Speaker 1: We've got to do some other stuff. So it's interesting

1121
01:00:58,160 --> 01:01:01,680
Speaker 1: to see, even at the highest re chees UH about

1122
01:01:01,680 --> 01:01:04,120
Speaker 1: you know, one of the wealthiest countries in the world,

1123
01:01:04,920 --> 01:01:10,080
Speaker 1: the desire to hold on and the desire to or

1124
01:01:10,120 --> 01:01:14,120
Speaker 1: the need to break away and do something different. That's amazing.

1125
01:01:14,680 --> 01:01:18,400
Speaker 1: You would think that these are just people in different slots,

1126
01:01:18,400 --> 01:01:20,600
Speaker 1: and it doesn't matter whether it's a Chinese sovereign wealth

1127
01:01:20,640 --> 01:01:24,200
Speaker 1: fund or a day trading housewife in China. It's still

1128
01:01:24,240 --> 01:01:26,920
Speaker 1: a human being making decisions, and whether it's successful or

1129
01:01:26,920 --> 01:01:29,760
Speaker 1: not is what motivates them to Let's try something else,

1130
01:01:29,840 --> 01:01:32,840
Speaker 1: maybe that'll work. Every place is different, every every speaking

1131
01:01:32,840 --> 01:01:35,600
Speaker 1: in Hong Kong. Uh, nobody in Hong Kong is interested

1132
01:01:35,600 --> 01:01:39,120
Speaker 1: in the subject of trend following. It's just ex pat

1133
01:01:39,160 --> 01:01:42,680
Speaker 1: white guys that know everything both they don't want to

1134
01:01:42,680 --> 01:01:45,560
Speaker 1: know anything else. It's funny. So but I find so

1135
01:01:45,680 --> 01:01:48,600
Speaker 1: why is that? Are they successful enough on their own

1136
01:01:48,760 --> 01:01:51,440
Speaker 1: that they don't feel the need to keep growing or

1137
01:01:51,560 --> 01:01:54,720
Speaker 1: is it just arrogance? All right? Well that that's not

1138
01:01:55,160 --> 01:01:58,040
Speaker 1: a big shakra. And and are these former Brits what

1139
01:01:58,120 --> 01:02:00,600
Speaker 1: sort of what sort of background are these people? So

1140
01:02:00,640 --> 01:02:05,240
Speaker 1: a little opera class British and hubrists. Chinese aren't like that.

1141
01:02:05,240 --> 01:02:07,880
Speaker 1: The Chinese just want to win, right, you know? And

1142
01:02:08,000 --> 01:02:10,200
Speaker 1: look and the other thing is too, is it? I

1143
01:02:10,320 --> 01:02:12,800
Speaker 1: find every time that I've been in mainland China. The

1144
01:02:12,960 --> 01:02:16,400
Speaker 1: reception and the warmth is off the charts really, So

1145
01:02:16,480 --> 01:02:18,160
Speaker 1: you know, we have this, we have the media and

1146
01:02:18,160 --> 01:02:20,600
Speaker 1: the States talking about a war and this and that,

1147
01:02:20,880 --> 01:02:23,600
Speaker 1: and every time I go there, they treat me like royalty.

1148
01:02:23,640 --> 01:02:27,120
Speaker 1: They're so nice. They want to engage, they want to talk.

1149
01:02:27,640 --> 01:02:29,520
Speaker 1: You know, they're not happy about the Japanese. They're free

1150
01:02:29,520 --> 01:02:32,120
Speaker 1: to tell you that. Nobody, nobody in Asia seems to

1151
01:02:32,120 --> 01:02:35,600
Speaker 1: be happy about the Japanese. No, the Vietnamese love the Japanese. Really,

1152
01:02:35,640 --> 01:02:41,320
Speaker 1: why is that? I think, Well, the Japanese been huge

1153
01:02:41,360 --> 01:02:43,840
Speaker 1: investors in Vietnam, so the Singaporeans and the and the

1154
01:02:43,920 --> 01:02:47,120
Speaker 1: Japanese invest huge in Vietnam. I wonder why that is

1155
01:02:47,600 --> 01:02:52,560
Speaker 1: just an opportunity. Or ninety million people, forty five million

1156
01:02:52,600 --> 01:02:54,479
Speaker 1: of them are under the age of thirty. That means

1157
01:02:54,520 --> 01:02:57,120
Speaker 1: forty five million people were born after the war. So

1158
01:02:57,160 --> 01:02:59,160
Speaker 1: they don't care. They're all young people that just want

1159
01:02:59,160 --> 01:03:02,120
Speaker 1: to get ahead. It's you know, look, it doesn't make

1160
01:03:02,120 --> 01:03:05,040
Speaker 1: a difference where we're at. But the real issue when

1161
01:03:05,080 --> 01:03:07,320
Speaker 1: I travel the world and seeing Asian it passed along

1162
01:03:07,320 --> 01:03:12,520
Speaker 1: some insights. Demographics. Look at the demographics Japan. The demographist' terrible. Yeah,

1163
01:03:12,560 --> 01:03:15,360
Speaker 1: everyone's old everyone in Vietnam, and Vietnam is like going

1164
01:03:15,400 --> 01:03:18,240
Speaker 1: to a party. And what's going on with China? Now

1165
01:03:18,280 --> 01:03:22,040
Speaker 1: that they've overturned the the one child or family rule,

1166
01:03:22,080 --> 01:03:24,080
Speaker 1: are they going to run into the same issue where

1167
01:03:24,120 --> 01:03:25,880
Speaker 1: they don't have enough young people and they're gonna have

1168
01:03:25,920 --> 01:03:27,920
Speaker 1: a bunch of aging single people. And I think that's

1169
01:03:27,960 --> 01:03:31,400
Speaker 1: why they did it. Yeah, one would expect. So what

1170
01:03:31,400 --> 01:03:34,120
Speaker 1: what what's your read of of the demographics in China?

1171
01:03:34,240 --> 01:03:36,440
Speaker 1: Or is it just so big and so vast and

1172
01:03:36,480 --> 01:03:40,760
Speaker 1: so varied you can't draw any single conclusion exactly. It's

1173
01:03:40,800 --> 01:03:43,360
Speaker 1: it's it's a it's a it's a really big ship.

1174
01:03:43,680 --> 01:03:46,680
Speaker 1: What about Korea? Pass something along about interesting about China? Though?

1175
01:03:46,680 --> 01:03:48,800
Speaker 1: When I presented there in Beijing of this year, I

1176
01:03:48,840 --> 01:03:50,880
Speaker 1: guess it was over in front of about a thousand people,

1177
01:03:51,240 --> 01:03:55,280
Speaker 1: and the translation was really rough. The translation was not good.

1178
01:03:55,320 --> 01:03:58,320
Speaker 1: How do you know? Well, the crowd started getting restless.

1179
01:03:58,880 --> 01:04:01,760
Speaker 1: I'm in front of a thousand people. Okay, I mean,

1180
01:04:01,760 --> 01:04:03,800
Speaker 1: do you speak Man's No, I don't speak anything. So

1181
01:04:03,840 --> 01:04:06,840
Speaker 1: the translation I speak for thirty seconds, there is a translation.

1182
01:04:07,480 --> 01:04:10,080
Speaker 1: The audience starts getting restless. All of a sudden, they

1183
01:04:10,120 --> 01:04:15,160
Speaker 1: start talking. People talking at once, right, so I can't

1184
01:04:15,160 --> 01:04:18,560
Speaker 1: hear myself, so we we had to stop the It

1185
01:04:18,600 --> 01:04:23,040
Speaker 1: was basically a mutiny the audiences. The audience decided that

1186
01:04:23,120 --> 01:04:26,520
Speaker 1: the translators were so bad. They then commandeer and found

1187
01:04:26,520 --> 01:04:29,640
Speaker 1: people in the audience from Malaysia spoke English, English and

1188
01:04:29,680 --> 01:04:32,280
Speaker 1: Mandarin who had read my books. Brought the guy up

1189
01:04:32,280 --> 01:04:33,920
Speaker 1: out of the audience and he translated for the rest

1190
01:04:33,920 --> 01:04:36,800
Speaker 1: of the event. It made me realize about China, that

1191
01:04:36,920 --> 01:04:40,720
Speaker 1: the that the the leaders of China have to give

1192
01:04:41,360 --> 01:04:43,960
Speaker 1: that crowd what they want or they have some real

1193
01:04:44,000 --> 01:04:46,520
Speaker 1: trouble facing that way. And I think they're doing a

1194
01:04:46,520 --> 01:04:48,520
Speaker 1: pretty good job of that. I mean, anyone's been a Shanghai,

1195
01:04:49,240 --> 01:04:51,240
Speaker 1: you know. I mean, Hong Kong continues to do well,

1196
01:04:51,240 --> 01:04:53,440
Speaker 1: but Shanghai is the real jewel. So and I mean,

1197
01:04:53,440 --> 01:04:55,080
Speaker 1: what is there. I don't know how many cities there

1198
01:04:55,080 --> 01:04:59,680
Speaker 1: are in China with over a population one million, it's huge. So,

1199
01:05:00,320 --> 01:05:02,880
Speaker 1: you know, the big challenge China faced where they had

1200
01:05:02,880 --> 01:05:06,360
Speaker 1: all these billion seven coming up on two billion people

1201
01:05:07,240 --> 01:05:09,720
Speaker 1: with half of the country is still living on the farm.

1202
01:05:10,120 --> 01:05:13,760
Speaker 1: Have they successfully moved people into the cities or is

1203
01:05:13,800 --> 01:05:16,040
Speaker 1: that still work in progress? I took the bullet train

1204
01:05:16,080 --> 01:05:18,680
Speaker 1: from Shanghai to Beijing, which is about the same distance

1205
01:05:18,720 --> 01:05:22,800
Speaker 1: from Washington, d C. To Orlando, and the entire way

1206
01:05:23,080 --> 01:05:26,880
Speaker 1: was construction cranes and condos. Whether they've moved everyone into

1207
01:05:26,880 --> 01:05:29,280
Speaker 1: those or not, I don't know. That's the direction it's going.

1208
01:05:29,720 --> 01:05:31,840
Speaker 1: How long did that trip take that That would have

1209
01:05:31,880 --> 01:05:34,280
Speaker 1: been the equivalent of eight hours here in the States,

1210
01:05:34,400 --> 01:05:37,040
Speaker 1: about the same distance as the Exceller from New York

1211
01:05:37,040 --> 01:05:39,960
Speaker 1: to d C. So three hours here or four hours. Yeah,

1212
01:05:40,080 --> 01:05:42,000
Speaker 1: so they're going quick. They've actually got bullet trains. What

1213
01:05:42,040 --> 01:05:44,200
Speaker 1: we have I'm not really sure. No, we have a

1214
01:05:44,320 --> 01:05:49,360
Speaker 1: routing infrastructure and of government, the benevolent, the benevolent dictators

1215
01:05:49,360 --> 01:05:52,920
Speaker 1: on infrastructure. Uh, you know, it helps to say to

1216
01:05:52,960 --> 01:05:55,760
Speaker 1: say the least. It helps to say the absolute least.

1217
01:05:56,120 --> 01:05:58,320
Speaker 1: Um Korea. That's the one place you haven't mentioned. Did

1218
01:05:58,320 --> 01:05:59,760
Speaker 1: you make your way over the Soul? I have not

1219
01:06:00,000 --> 01:06:02,280
Speaker 1: into Korea yet. I've not been to Korea, and I

1220
01:06:02,360 --> 01:06:03,920
Speaker 1: have to make it. My first trip I want to

1221
01:06:03,920 --> 01:06:08,240
Speaker 1: go in the new year is Miamar Burma. Yep. That's

1222
01:06:08,520 --> 01:06:10,480
Speaker 1: the only thing I know about. Burma is down by

1223
01:06:10,560 --> 01:06:12,800
Speaker 1: mc Sorley's that used to be a Burmese restaurant that

1224
01:06:12,960 --> 01:06:15,800
Speaker 1: was quite fantastic twenty years ago. I don't I don't

1225
01:06:15,840 --> 01:06:18,320
Speaker 1: know if it's still there. Uh. Speaking of food and

1226
01:06:19,040 --> 01:06:22,320
Speaker 1: the paradox of choice, Singapore is supposed to be the

1227
01:06:22,360 --> 01:06:27,880
Speaker 1: food capital of Asia. Tokyo, Tokyo more Michelin Star restaurants

1228
01:06:27,880 --> 01:06:30,280
Speaker 1: in Tokyo that anywhere else in the world. Oh really, Yeah,

1229
01:06:30,840 --> 01:06:33,720
Speaker 1: Singapore is supposed to basically be the crossroads of Asian.

1230
01:06:33,760 --> 01:06:36,560
Speaker 1: You could get any type of Asian. I have some

1231
01:06:36,680 --> 01:06:40,440
Speaker 1: fantastic Singaporean friends. I love them to death. If I've

1232
01:06:40,480 --> 01:06:43,520
Speaker 1: given a choice of food, I'm gonna go right alongside

1233
01:06:43,560 --> 01:06:46,360
Speaker 1: Bourdaine and we're gonna go to Tokyo. By the way,

1234
01:06:46,400 --> 01:06:48,920
Speaker 1: he's someone who's on my list to uh to get

1235
01:06:48,960 --> 01:06:52,040
Speaker 1: on the show. I've had Bobby Flay, who was fascinating

1236
01:06:52,040 --> 01:06:53,840
Speaker 1: guy real New York and we left. We took the

1237
01:06:53,880 --> 01:06:56,720
Speaker 1: subway downtown and as we're walking down the street, people like,

1238
01:06:56,760 --> 01:06:59,000
Speaker 1: oh my god, it's Bobby Flay and he's like nods

1239
01:06:59,080 --> 01:07:01,200
Speaker 1: and we get in the subway. Like talk about in

1240
01:07:01,240 --> 01:07:05,280
Speaker 1: New Yorker Boor Dane is really a fascinating character. Um,

1241
01:07:05,320 --> 01:07:07,160
Speaker 1: he would he would be really interesting you in the

1242
01:07:07,240 --> 01:07:10,280
Speaker 1: choice on food, I should add I could go through

1243
01:07:10,280 --> 01:07:14,479
Speaker 1: the rest of my life with somebody else choosing for me. Really, yeah,

1244
01:07:15,000 --> 01:07:21,600
Speaker 1: that's amazing. Why not control? It's control thing it's to

1245
01:07:21,640 --> 01:07:23,680
Speaker 1: think about. Think about living in a place like Vietnam

1246
01:07:23,960 --> 01:07:26,680
Speaker 1: where you don't know most of the menu, you can't

1247
01:07:26,720 --> 01:07:30,440
Speaker 1: read it. They have pictures on the menus. Can you

1248
01:07:30,480 --> 01:07:32,919
Speaker 1: point this, this, and this a little and you don't

1249
01:07:32,920 --> 01:07:35,320
Speaker 1: speak vietnames at all? You get by with English without

1250
01:07:37,240 --> 01:07:39,840
Speaker 1: right a little bit, a little bit. You speak very

1251
01:07:39,920 --> 01:07:42,440
Speaker 1: little bit, very little. If you had to not speak

1252
01:07:43,480 --> 01:07:47,880
Speaker 1: try deep thang right, left, straight ahead. But but how

1253
01:07:48,000 --> 01:07:50,880
Speaker 1: how fluent are you? If you couldn't use English? You'd

1254
01:07:50,880 --> 01:07:53,640
Speaker 1: be in trouble there. You bring up a good point. Generally,

1255
01:07:53,840 --> 01:07:56,720
Speaker 1: I see this in Tokyo. Now, to English is really permeating.

1256
01:07:56,800 --> 01:07:59,680
Speaker 1: It's it's permating because look, it's the business language. And

1257
01:07:59,680 --> 01:08:02,520
Speaker 1: I'm not being a cocky American or listen, it's arrogant.

1258
01:08:02,520 --> 01:08:04,960
Speaker 1: It's not not us. The Brits are the one who

1259
01:08:05,040 --> 01:08:10,040
Speaker 1: who made English the English England. The English are the

1260
01:08:10,040 --> 01:08:14,600
Speaker 1: ones who made English the global language, not us ugly Americans.

1261
01:08:15,000 --> 01:08:17,280
Speaker 1: You know, the old joke is two people separated by

1262
01:08:17,280 --> 01:08:19,439
Speaker 1: a common language. Let me give one tip to your audience.

1263
01:08:19,439 --> 01:08:20,960
Speaker 1: I don't think this tip has been given yet on

1264
01:08:21,000 --> 01:08:25,480
Speaker 1: your show. If you want to take an interesting vacation,

1265
01:08:26,960 --> 01:08:31,080
Speaker 1: just go to Saigon. Trust me, go to Saigon. Don't

1266
01:08:31,080 --> 01:08:33,599
Speaker 1: go to Thailand, don't go to Singapore, don't go to Tokyo.

1267
01:08:33,600 --> 01:08:34,720
Speaker 1: I mean, you can go to all those places, they're

1268
01:08:34,720 --> 01:08:37,280
Speaker 1: all fine, but go to the place that's off the

1269
01:08:37,320 --> 01:08:41,320
Speaker 1: beaten track. You will be shocked. My parents just came back.

1270
01:08:41,600 --> 01:08:43,439
Speaker 1: I don't think my father is gonna stop talking about

1271
01:08:43,520 --> 01:08:46,720
Speaker 1: Vietnam until the day died. Really, he's in love with it.

1272
01:08:46,720 --> 01:08:51,080
Speaker 1: It's it's it's probably my favorite food in the world, Vietnamese.

1273
01:08:51,600 --> 01:08:54,840
Speaker 1: It's what's amazing about New York, which has every fantastic

1274
01:08:54,920 --> 01:08:58,400
Speaker 1: restaurant you can find. It's much harder to find a

1275
01:08:58,400 --> 01:09:01,160
Speaker 1: good Vietnamese restaurant here. Then, say, if you go to

1276
01:09:01,520 --> 01:09:05,920
Speaker 1: San Francisco or even Montreal, you can can't walk a

1277
01:09:06,000 --> 01:09:09,679
Speaker 1: block without in Quebeca, Montreal without finding a bun Me shop.

1278
01:09:09,960 --> 01:09:13,360
Speaker 1: And if you go to San Francisco, there's some fantastic Vietnamese,

1279
01:09:13,880 --> 01:09:16,400
Speaker 1: few and far between on the East Coast, and and

1280
01:09:16,479 --> 01:09:20,799
Speaker 1: I'm surprised given sushi and a million varieties of different

1281
01:09:20,840 --> 01:09:24,559
Speaker 1: other Asian cuisines. From Korean. There's a huge Korean town

1282
01:09:24,600 --> 01:09:27,280
Speaker 1: in in Down on thirty second Street in Broadway. That's

1283
01:09:27,400 --> 01:09:30,240
Speaker 1: that's a fast NAT off the island. Barry, what the

1284
01:09:30,280 --> 01:09:34,559
Speaker 1: off island of Manhattan. I'm I'm I'm in this general region,

1285
01:09:34,600 --> 01:09:37,400
Speaker 1: but I travel around the country pretty regularly for work.

1286
01:09:37,840 --> 01:09:41,000
Speaker 1: I would. I have not done Asia, and that's something

1287
01:09:41,040 --> 01:09:43,599
Speaker 1: I really want to put some time in. Stop into

1288
01:09:43,600 --> 01:09:46,880
Speaker 1: Tokyo in the twelve to fourteen hours, six more hours

1289
01:09:46,920 --> 01:09:51,280
Speaker 1: to Southeast Asia. You can cover Bangkoks Singapore. I had city,

1290
01:09:51,400 --> 01:09:54,240
Speaker 1: I had an event It's calling you supposed to speak

1291
01:09:54,280 --> 01:09:58,520
Speaker 1: at a couple of years ago, and then some international

1292
01:09:58,560 --> 01:10:02,400
Speaker 1: thing happened in the event gat Camp consult So um,

1293
01:10:02,520 --> 01:10:04,880
Speaker 1: I need to get over there. It's certainly on my

1294
01:10:05,000 --> 01:10:07,840
Speaker 1: shortlist of places to go. You brought something up a

1295
01:10:07,840 --> 01:10:09,600
Speaker 1: side ago that I want to circle back to. You

1296
01:10:09,600 --> 01:10:13,040
Speaker 1: were talking about we're talking about risk essentially. One of

1297
01:10:13,040 --> 01:10:15,040
Speaker 1: the things I find really fascinating about the world that

1298
01:10:15,040 --> 01:10:18,080
Speaker 1: I'm in is I shift out of Vietnamese food is

1299
01:10:18,160 --> 01:10:20,960
Speaker 1: draw down. And when I had Ben Carlson of your

1300
01:10:21,000 --> 01:10:23,200
Speaker 1: firm on my show, we talked about this We specifically

1301
01:10:23,200 --> 01:10:26,080
Speaker 1: talked about Warren Buffett because in my world, the trend

1302
01:10:26,080 --> 01:10:29,080
Speaker 1: following world, it's not unusual to have your capital go

1303
01:10:29,160 --> 01:10:31,400
Speaker 1: down a significant amount. I mean, look, if you're if

1304
01:10:31,439 --> 01:10:33,719
Speaker 1: you're trying to jump on a trend and you can't

1305
01:10:33,720 --> 01:10:36,160
Speaker 1: predict the trends direction and you've got to take a

1306
01:10:36,200 --> 01:10:38,759
Speaker 1: bite of the apple and you lose, those little losses

1307
01:10:38,800 --> 01:10:42,400
Speaker 1: can add up, right. So Bended pointed something out in

1308
01:10:42,439 --> 01:10:47,280
Speaker 1: his book about the number of down moves that Buffett

1309
01:10:47,280 --> 01:10:50,640
Speaker 1: had taken in the last years. I think it was

1310
01:10:50,720 --> 01:10:55,760
Speaker 1: five and two of those, we're minus fift Buffet in

1311
01:10:55,760 --> 01:11:00,519
Speaker 1: the last twenty five years. That that right there, amazing

1312
01:11:00,960 --> 01:11:03,680
Speaker 1: for people that don't understand trading, or even people that

1313
01:11:03,800 --> 01:11:07,160
Speaker 1: do understand trading. The Warren Buffets allowing himself to take

1314
01:11:07,200 --> 01:11:12,679
Speaker 1: five plus drawtowns a lot of wisdom in that statement

1315
01:11:12,720 --> 01:11:14,920
Speaker 1: and that bit of evidence to break apart for sure.

1316
01:11:15,160 --> 01:11:16,800
Speaker 1: So one of the columns I had done for the

1317
01:11:16,840 --> 01:11:21,200
Speaker 1: Washington Post was it last summer was looking at Apple

1318
01:11:21,240 --> 01:11:25,880
Speaker 1: and saying, people talk about Apple up seven thousand percent

1319
01:11:26,000 --> 01:11:28,479
Speaker 1: over the past thirty years. And now he's laughed whenever

1320
01:11:28,560 --> 01:11:31,280
Speaker 1: anyone says I wish I could I could have brought

1321
01:11:31,280 --> 01:11:34,000
Speaker 1: Apple way back when my answer is why, what makes

1322
01:11:34,040 --> 01:11:36,320
Speaker 1: you think you would have held it through the number

1323
01:11:36,320 --> 01:11:39,080
Speaker 1: of forget thirty or fifty row bounds? How about the

1324
01:11:40,400 --> 01:11:44,680
Speaker 1: downs they've had repeatedly throughout their history. You would not

1325
01:11:44,800 --> 01:11:48,360
Speaker 1: have anybody who tells me if only I held Apple

1326
01:11:48,479 --> 01:11:50,880
Speaker 1: over the past thirty unless you put in a draw

1327
01:11:50,960 --> 01:11:54,080
Speaker 1: and forgot you had it, you would not have rode Apple.

1328
01:11:54,680 --> 01:11:57,679
Speaker 1: Think think about the near death experience in the late nineties,

1329
01:11:58,000 --> 01:12:01,040
Speaker 1: think about the seventy rash in the in the mid

1330
01:12:01,080 --> 01:12:04,519
Speaker 1: two thousand's, think about the most recent drop. It's one

1331
01:12:04,520 --> 01:12:08,280
Speaker 1: of those things that people just can't live through. I'm

1332
01:12:08,280 --> 01:12:10,320
Speaker 1: trying to find you a pick right now that you

1333
01:12:10,600 --> 01:12:14,400
Speaker 1: I know, given that you're an Apple guy, I'm a

1334
01:12:14,439 --> 01:12:19,240
Speaker 1: Mac fanboy since my classic in nine. Really, so hold on,

1335
01:12:19,240 --> 01:12:22,280
Speaker 1: it goes back to nine. Just keep keep talking. How

1336
01:12:22,320 --> 01:12:26,240
Speaker 1: to find this picture for you? Or the heck? Is it?

1337
01:12:26,400 --> 01:12:30,240
Speaker 1: You will? You will be just you? And Steve Jobs,

1338
01:12:30,240 --> 01:12:33,000
Speaker 1: is that what you're gonna show me? Come on, man,

1339
01:12:34,680 --> 01:12:39,920
Speaker 1: you and was very nice Saigon Airport. Oh really, he

1340
01:12:40,080 --> 01:12:43,000
Speaker 1: looks genuinely happy to Usually you take a selfie with

1341
01:12:43,040 --> 01:12:45,519
Speaker 1: a guy like that and they're they're rolling their eyes

1342
01:12:45,560 --> 01:12:47,439
Speaker 1: at that. Come. I look, I'm like you, I have

1343
01:12:47,479 --> 01:12:48,960
Speaker 1: to ask a lot of interesting people to come on

1344
01:12:49,000 --> 01:12:50,960
Speaker 1: a podcast, so you've got to do the approach right

1345
01:12:51,160 --> 01:12:53,920
Speaker 1: get So I'm yeah, I'm sitting there minding my own business.

1346
01:12:53,960 --> 01:12:55,760
Speaker 1: This guy taps me on the shoulder. I'm sitting with

1347
01:12:55,760 --> 01:12:57,720
Speaker 1: my parents. Guy taps him in the shoulder. I got

1348
01:12:57,760 --> 01:13:00,120
Speaker 1: my cell phone plugged in behind me, says, hey, can

1349
01:13:00,160 --> 01:13:01,760
Speaker 1: I share it? Can I plug my splitter in and

1350
01:13:01,840 --> 01:13:04,479
Speaker 1: share your power? And in that quarter second, I looked

1351
01:13:04,520 --> 01:13:05,960
Speaker 1: at his face and I said, sure, as long as

1352
01:13:06,000 --> 01:13:08,960
Speaker 1: you give me a selfie and he said yes, Oh

1353
01:13:09,000 --> 01:13:11,640
Speaker 1: that's great. So I know I only have you for

1354
01:13:11,680 --> 01:13:14,320
Speaker 1: a certain amount of time, and I want to get

1355
01:13:14,360 --> 01:13:17,679
Speaker 1: to some of my favorite questions. What's our hard stop

1356
01:13:17,800 --> 01:13:24,320
Speaker 1: on the recording today? At alright, So so we are

1357
01:13:24,400 --> 01:13:26,760
Speaker 1: down to our last half hour. I have my eight

1358
01:13:26,800 --> 01:13:29,519
Speaker 1: favorite questions. I'll come back to them in about ten minutes.

1359
01:13:29,920 --> 01:13:31,840
Speaker 1: I want to stick with some of the things we've

1360
01:13:31,840 --> 01:13:35,439
Speaker 1: been talking about. We discussed Asia. I have to ask

1361
01:13:35,479 --> 01:13:40,360
Speaker 1: you about Broke the New American Dream. What motivated you

1362
01:13:40,600 --> 01:13:47,320
Speaker 1: a trading guy to make a movie about pre financial crisis?

1363
01:13:47,840 --> 01:13:50,880
Speaker 1: About what was going on in the housing market and

1364
01:13:50,960 --> 01:13:55,640
Speaker 1: the huge shifts in in American economic demographics. So a

1365
01:13:55,720 --> 01:13:58,680
Speaker 1: budget was put together and there was going to be

1366
01:13:58,880 --> 01:14:05,360
Speaker 1: a reality show on the Turtles. Huh. Then at the

1367
01:14:05,400 --> 01:14:08,479
Speaker 1: process of doing my Turtle book, a lot of the

1368
01:14:08,520 --> 01:14:12,320
Speaker 1: Turtles started throwing, uh, look, this was a secretive thing.

1369
01:14:12,360 --> 01:14:14,000
Speaker 1: People didn't want this out. So I got a I

1370
01:14:14,000 --> 01:14:16,840
Speaker 1: got a few legal a few legal notices here and there,

1371
01:14:17,479 --> 01:14:19,599
Speaker 1: and not today, but back in the day there was

1372
01:14:19,800 --> 01:14:23,040
Speaker 1: there was a concern, and so we shifted on a

1373
01:14:23,080 --> 01:14:25,000
Speaker 1: dime and I had I had hired a director and

1374
01:14:25,040 --> 01:14:27,080
Speaker 1: we were gonna do a retrospective on the dot com bubble.

1375
01:14:27,880 --> 01:14:31,599
Speaker 1: And she said, Michael, I want to do a story

1376
01:14:31,680 --> 01:14:34,160
Speaker 1: on a guy that started with nothing, went to a

1377
01:14:34,160 --> 01:14:36,280
Speaker 1: billion and lost it all. And I said, well, that's great.

1378
01:14:36,880 --> 01:14:39,680
Speaker 1: We don't have that person. And she said, well, I

1379
01:14:39,720 --> 01:14:42,240
Speaker 1: know someone that that that happened to. And I said, oh,

1380
01:14:42,240 --> 01:14:45,320
Speaker 1: really who. I looked up the guy's name and he

1381
01:14:45,400 --> 01:14:47,680
Speaker 1: was an heir to the Nestley family fortune. And I said, well,

1382
01:14:47,920 --> 01:14:50,000
Speaker 1: I can't use this guy. It's not gonna work. And

1383
01:14:50,040 --> 01:14:51,960
Speaker 1: she said, Michael, don't worry about it. The audience will

1384
01:14:52,000 --> 01:14:54,080
Speaker 1: believe anything we tell them to believe, and I said, okay,

1385
01:14:54,080 --> 01:14:58,200
Speaker 1: you're fired. So long story short, long story short, um

1386
01:14:58,240 --> 01:15:01,320
Speaker 1: I ended up becoming the director, and it was meant

1387
01:15:01,360 --> 01:15:03,880
Speaker 1: to be a trend following picture. That's where there's so

1388
01:15:03,880 --> 01:15:06,880
Speaker 1: many trend following traders in it. And as we were

1389
01:15:06,920 --> 01:15:12,080
Speaker 1: filming it, we were stumbling into the crisis. So the crisis.

1390
01:15:12,960 --> 01:15:15,400
Speaker 1: So it wasn't planned, and I wasn't really trying to

1391
01:15:15,439 --> 01:15:18,280
Speaker 1: make any kind of a fundamental statement other than, look

1392
01:15:18,280 --> 01:15:20,800
Speaker 1: what can happen when you lever up and you really

1393
01:15:20,800 --> 01:15:23,000
Speaker 1: don't think about bubbles? So that was really the premise.

1394
01:15:23,040 --> 01:15:25,639
Speaker 1: It wasn't I wasn't trying to make any grand statement

1395
01:15:25,640 --> 01:15:28,240
Speaker 1: about you know, where things can go. Of course, in

1396
01:15:28,280 --> 01:15:30,639
Speaker 1: the middle of it, I took some shots at things

1397
01:15:30,680 --> 01:15:33,000
Speaker 1: like state lotteries, which are a boondoggle. But can I

1398
01:15:33,040 --> 01:15:36,839
Speaker 1: tell you that's one of my many pet peeves in

1399
01:15:36,840 --> 01:15:39,439
Speaker 1: in I forgot what piece I had written this in

1400
01:15:39,600 --> 01:15:42,679
Speaker 1: not too long ago. Do you realize that across the country,

1401
01:15:42,720 --> 01:15:46,919
Speaker 1: state lottos make more money then all of professional sports,

1402
01:15:47,400 --> 01:15:51,160
Speaker 1: all of movies, all of music, all of books an

1403
01:15:51,320 --> 01:15:55,640
Speaker 1: Apple app store combined. I think the stats and I'm

1404
01:15:55,640 --> 01:15:59,800
Speaker 1: gonna try and go from memory five of the p

1405
01:16:00,080 --> 01:16:03,360
Speaker 1: bull that play the lottery, I think it's their best

1406
01:16:03,520 --> 01:16:07,600
Speaker 1: chance for making a half million dollars for retirement. That's insane.

1407
01:16:07,880 --> 01:16:10,360
Speaker 1: It's sad because it's and it's mostly people who really

1408
01:16:10,360 --> 01:16:12,639
Speaker 1: can't afford the most. And what's and what's sad about

1409
01:16:12,680 --> 01:16:14,320
Speaker 1: it is like if we had to really make a

1410
01:16:14,360 --> 01:16:16,920
Speaker 1: moral type statement, no one's gonna care, no one's gonna

1411
01:16:16,920 --> 01:16:19,400
Speaker 1: do anything, the country is too big, whatever. But it

1412
01:16:19,479 --> 01:16:23,240
Speaker 1: really is something where the government is truly abusing the

1413
01:16:23,280 --> 01:16:28,040
Speaker 1: disadvantaged class for abusing the look Mark Twain called gambling

1414
01:16:28,040 --> 01:16:32,240
Speaker 1: attack on the stupid, and this is your taxing the poorest,

1415
01:16:32,880 --> 01:16:36,240
Speaker 1: least capable people of of paying this bill. It's it's awful.

1416
01:16:36,560 --> 01:16:40,479
Speaker 1: So from that from gambling, how did you see the

1417
01:16:40,479 --> 01:16:44,320
Speaker 1: parallels too? You know the stripper with six houses and

1418
01:16:44,360 --> 01:16:47,280
Speaker 1: other people speculating, and that was just add a little color.

1419
01:16:47,360 --> 01:16:49,519
Speaker 1: But and all the flip bears the poker though the

1420
01:16:49,560 --> 01:16:52,040
Speaker 1: poker was the real thing. The poker was, you know,

1421
01:16:52,080 --> 01:16:53,960
Speaker 1: getting the poker players in the film because that has

1422
01:16:54,000 --> 01:16:56,360
Speaker 1: so many people talking about poker, whether it was the

1423
01:16:56,400 --> 01:16:59,400
Speaker 1: trend following traders or at the time Bill Miller and

1424
01:16:59,400 --> 01:17:01,840
Speaker 1: Michael Mobus down there like Mason. I know he's Mike,

1425
01:17:02,240 --> 01:17:05,640
Speaker 1: Mike's moved Yeah, yeah so, but also a guest on

1426
01:17:05,680 --> 01:17:08,160
Speaker 1: the show and he's been on your you know, just

1427
01:17:08,520 --> 01:17:11,360
Speaker 1: a side tangent note. Did you read the last read

1428
01:17:11,400 --> 01:17:14,479
Speaker 1: more than you know? The book after the Skill and

1429
01:17:15,560 --> 01:17:19,960
Speaker 1: Um what is the name of it? I could punch

1430
01:17:20,000 --> 01:17:23,080
Speaker 1: it up. It's it's a look at at skill and

1431
01:17:23,160 --> 01:17:28,000
Speaker 1: luck in business, sports and investment. Yeah, you know, success equation. Listen.

1432
01:17:28,000 --> 01:17:29,920
Speaker 1: You know what what's great about what Michael did? Michael

1433
01:17:29,960 --> 01:17:32,439
Speaker 1: really made it I don't want to say fashionable, that

1434
01:17:32,479 --> 01:17:35,519
Speaker 1: sounds trite, but he made it very acceptable to take

1435
01:17:35,920 --> 01:17:39,400
Speaker 1: all these disparate disciplines and use them to make a

1436
01:17:39,479 --> 01:17:42,599
Speaker 1: point in investing. He was doing that in the late nineties. Yeah,

1437
01:17:42,600 --> 01:17:44,559
Speaker 1: his stuff is fascinating. Again, you could, by the way,

1438
01:17:44,560 --> 01:17:46,680
Speaker 1: you could pull I don't know if it's still on

1439
01:17:46,720 --> 01:17:49,120
Speaker 1: the leg Mason side, but it used to be all

1440
01:17:49,120 --> 01:17:52,800
Speaker 1: of his quarterly missives, which are eight page works of

1441
01:17:53,160 --> 01:17:55,800
Speaker 1: I have him from his before, like Mason when he

1442
01:17:55,800 --> 01:17:58,320
Speaker 1: was at Credit Swiss before, because he came back to

1443
01:17:58,360 --> 01:18:00,200
Speaker 1: Credit Swiss now, so I've got all of his old

1444
01:18:00,200 --> 01:18:02,880
Speaker 1: ones from the nineties. There really are that that's a

1445
01:18:02,920 --> 01:18:05,599
Speaker 1: book in and of itself, someone someone to tell him

1446
01:18:05,640 --> 01:18:08,920
Speaker 1: to uh, to crank that out. So you put out

1447
01:18:09,040 --> 01:18:12,600
Speaker 1: the the movie. What did you learn from the experience

1448
01:18:12,600 --> 01:18:17,240
Speaker 1: of doing it and and what did you learn from

1449
01:18:17,320 --> 01:18:21,600
Speaker 1: um the actual I learned, don't submit your film to

1450
01:18:21,720 --> 01:18:27,600
Speaker 1: Sundance in September of oh eight because I was the

1451
01:18:27,640 --> 01:18:31,040
Speaker 1: deadline September eight, mid mid September of eight was I

1452
01:18:31,080 --> 01:18:33,600
Speaker 1: had to submit the film to Sundance, So you know,

1453
01:18:33,640 --> 01:18:35,360
Speaker 1: of course, and I think that the thing that I

1454
01:18:35,400 --> 01:18:39,000
Speaker 1: really learned is that you need to have time. So

1455
01:18:39,040 --> 01:18:41,040
Speaker 1: if there's going to be a big event, you really

1456
01:18:41,080 --> 01:18:42,960
Speaker 1: can't be first. You needn't have time for people to

1457
01:18:43,000 --> 01:18:45,479
Speaker 1: settle on it. Even though I thought my message was

1458
01:18:45,680 --> 01:18:49,600
Speaker 1: important for people to really think about the bubbles and

1459
01:18:49,640 --> 01:18:52,920
Speaker 1: whatnot and how to how to prepare, it was too early.

1460
01:18:52,960 --> 01:18:55,960
Speaker 1: And I think also I wasn't blaming anybody except the

1461
01:18:56,040 --> 01:18:59,640
Speaker 1: end user. I was blaming us. I didn't blame you know,

1462
01:18:59,760 --> 01:19:05,519
Speaker 1: all these boogeyman up here on Wall Street and you know, yeah,

1463
01:19:05,520 --> 01:19:07,240
Speaker 1: I didn't blame Dick follow. I mean, look, the FED

1464
01:19:07,640 --> 01:19:09,920
Speaker 1: is done what they've done. But ultimately we're the people.

1465
01:19:10,160 --> 01:19:11,800
Speaker 1: We do it, you know, we've we vote for it.

1466
01:19:11,880 --> 01:19:15,160
Speaker 1: We support it. I know there's there's guys behind the

1467
01:19:15,200 --> 01:19:17,040
Speaker 1: curtain up here in OZ and stuff like that, but

1468
01:19:18,040 --> 01:19:20,320
Speaker 1: you know, ultimately we all wanted to get rich. We

1469
01:19:20,360 --> 01:19:23,800
Speaker 1: all had no problem getting a million dollar mortgage from

1470
01:19:23,840 --> 01:19:27,080
Speaker 1: WAMO in two thousand and three with no no docks down.

1471
01:19:27,680 --> 01:19:30,799
Speaker 1: So I'll never have told this story so many times

1472
01:19:31,479 --> 01:19:34,560
Speaker 1: that the first house I owned, we bought and I

1473
01:19:34,600 --> 01:19:36,840
Speaker 1: want to say two thousand and two thousand one, not

1474
01:19:36,920 --> 01:19:40,800
Speaker 1: counting apartments in the city, first free standing house in suburbia,

1475
01:19:41,320 --> 01:19:45,479
Speaker 1: and we had done a refine oh five. Absolutely true story.

1476
01:19:46,240 --> 01:19:49,120
Speaker 1: And this was back in the day when the bank

1477
01:19:49,200 --> 01:19:52,040
Speaker 1: would come to your house. Guy pulls into a driveway,

1478
01:19:52,160 --> 01:19:55,200
Speaker 1: flings the door open to his car, leaves the engine running,

1479
01:19:55,600 --> 01:19:59,639
Speaker 1: runs in with some papers, really apologetic. I'm really sorry.

1480
01:19:59,720 --> 01:20:02,599
Speaker 1: I a closing on a new sale a few blocks

1481
01:20:02,600 --> 01:20:06,759
Speaker 1: from here, signed sign initial initial his check for thirty

1482
01:20:07,080 --> 01:20:09,800
Speaker 1: Now is that your cash outrefly? Thank you so much.

1483
01:20:09,920 --> 01:20:12,439
Speaker 1: I gotta go and he he was in and out

1484
01:20:12,520 --> 01:20:15,960
Speaker 1: in two minutes. And as he leaves the driveway, I

1485
01:20:16,000 --> 01:20:19,040
Speaker 1: say to my wife, this this is a bad thing.

1486
01:20:19,240 --> 01:20:22,960
Speaker 1: Some something like it started me looking at how insane

1487
01:20:23,080 --> 01:20:25,920
Speaker 1: has housing become, and I had been looking at that

1488
01:20:25,960 --> 01:20:29,800
Speaker 1: space for a while, but that experience was so surreal

1489
01:20:30,960 --> 01:20:33,360
Speaker 1: compared to the most recent house we bought a year ago.

1490
01:20:33,479 --> 01:20:36,200
Speaker 1: Was the polar opposite. All Right, we need a uh,

1491
01:20:39,280 --> 01:20:41,479
Speaker 1: I need a pint of blood, we need some hair samples,

1492
01:20:41,479 --> 01:20:43,920
Speaker 1: a little d n A. Alright, we'll be checking your

1493
01:20:43,920 --> 01:20:46,120
Speaker 1: stool sample every month for a year, just to make

1494
01:20:46,160 --> 01:20:48,840
Speaker 1: sure that you can can repay this. It was. It

1495
01:20:48,920 --> 01:20:53,960
Speaker 1: was insane. It was good column fodder, but it was

1496
01:20:54,000 --> 01:20:58,040
Speaker 1: absolutely insane this go round, the last one. We looked

1497
01:20:58,040 --> 01:21:00,080
Speaker 1: at each other and just like, okay, let's read do

1498
01:21:00,160 --> 01:21:02,640
Speaker 1: the kitchen. It was. It was that simple and and

1499
01:21:02,720 --> 01:21:07,040
Speaker 1: that crazy. Um what did you learn? Not so much

1500
01:21:07,120 --> 01:21:10,640
Speaker 1: about the subject matter of finance, but what did you

1501
01:21:10,720 --> 01:21:13,519
Speaker 1: learn about the Um? Oh, we have plenty of time.

1502
01:21:13,560 --> 01:21:15,639
Speaker 1: I'm afraid we're gonna run out of time for our questions.

1503
01:21:15,960 --> 01:21:18,439
Speaker 1: What did you learn about the process of making a film?

1504
01:21:18,439 --> 01:21:21,519
Speaker 1: Would you ever make a film again? Or a television show?

1505
01:21:21,520 --> 01:21:25,479
Speaker 1: Are you interested in that in the least if I

1506
01:21:25,520 --> 01:21:28,000
Speaker 1: don't have to finance any of it, right, well, that's

1507
01:21:28,000 --> 01:21:30,639
Speaker 1: a given. Um. If I don't have to finance any

1508
01:21:30,680 --> 01:21:33,160
Speaker 1: of it, and you know, I found in making a

1509
01:21:33,160 --> 01:21:37,280
Speaker 1: film there's two types of staff. There's really the people

1510
01:21:37,320 --> 01:21:39,640
Speaker 1: that will come along and work their butt off and

1511
01:21:39,640 --> 01:21:42,040
Speaker 1: they really want to make creative magic, and then there's

1512
01:21:42,040 --> 01:21:44,360
Speaker 1: the other people that just want to paycheck. So there's

1513
01:21:44,400 --> 01:21:47,080
Speaker 1: a whole I think it's of the film world is

1514
01:21:47,160 --> 01:21:49,160
Speaker 1: like just kind of you know, they know there's these

1515
01:21:49,160 --> 01:21:51,000
Speaker 1: budgets and they're gonna get a paycheck, and they're really

1516
01:21:51,080 --> 01:21:53,920
Speaker 1: like half isn't that true? And everything every endeavor there

1517
01:21:53,920 --> 01:21:55,679
Speaker 1: are people who do it for the love of the job,

1518
01:21:55,720 --> 01:21:57,880
Speaker 1: and there are people who work for the love of

1519
01:21:57,920 --> 01:22:02,559
Speaker 1: the paycheck. It's fun. Art is fun. We're gonna We're

1520
01:22:02,560 --> 01:22:05,200
Speaker 1: gonna of course, we're gonna die. We're all gonna die.

1521
01:22:05,600 --> 01:22:09,280
Speaker 1: Make art. Whether it's a book, whether it's a podcast,

1522
01:22:09,520 --> 01:22:11,880
Speaker 1: whether it's a trading system. I don't care. Make art.

1523
01:22:11,880 --> 01:22:15,200
Speaker 1: You're gonna die. We're all gonna die. Make art. Mike Covil,

1524
01:22:16,120 --> 01:22:18,920
Speaker 1: uh that that's your philosophy of life summed up in

1525
01:22:18,920 --> 01:22:21,280
Speaker 1: in one's It's true. So we're all gonna die. Make art.

1526
01:22:21,320 --> 01:22:22,639
Speaker 1: But I think a lot of people don't think they're

1527
01:22:22,640 --> 01:22:24,840
Speaker 1: gonna die, so they don't do anything. Who doesn't think

1528
01:22:24,840 --> 01:22:28,559
Speaker 1: they're gonna die. I'm really curious about you know, normally,

1529
01:22:28,640 --> 01:22:31,320
Speaker 1: I'm I'm making these arguments as to why you have

1530
01:22:31,400 --> 01:22:33,320
Speaker 1: to look at the data and why you need to

1531
01:22:33,920 --> 01:22:36,599
Speaker 1: make sure you're fact based and logical and and don't

1532
01:22:36,640 --> 01:22:42,559
Speaker 1: have some glaring blind spots blind um spots that you're

1533
01:22:42,600 --> 01:22:45,679
Speaker 1: you're unaware of where you're making errors. But when someone's

1534
01:22:45,720 --> 01:22:50,960
Speaker 1: fundamental premise of life is clearly false, how do you

1535
01:22:51,040 --> 01:22:53,360
Speaker 1: respond to people who have no interest in that sort

1536
01:22:53,360 --> 01:22:56,559
Speaker 1: of stuff? I tell them there's a great video on

1537
01:22:56,600 --> 01:23:02,920
Speaker 1: YouTube with Christopher Hitchens, Dan Dennett, Sam Harris, the whole

1538
01:23:02,960 --> 01:23:05,840
Speaker 1: the whole debate. So if anybody wants to really argue

1539
01:23:05,840 --> 01:23:07,120
Speaker 1: with me, I said, you know what, there's four guys

1540
01:23:07,160 --> 01:23:09,519
Speaker 1: on YouTube. They're much smarter than me, and they talked

1541
01:23:09,520 --> 01:23:11,439
Speaker 1: for about two hours at a round table. Give that

1542
01:23:11,520 --> 01:23:12,920
Speaker 1: a shot, and they come back to me when you're

1543
01:23:12,960 --> 01:23:15,679
Speaker 1: after after watching that, you probably if you you're either

1544
01:23:15,680 --> 01:23:17,320
Speaker 1: gonna like me, you're gonna hate me one or the other.

1545
01:23:17,760 --> 01:23:20,800
Speaker 1: That that's pretty pretty hilarious. Before we get to our

1546
01:23:21,439 --> 01:23:26,040
Speaker 1: eight favorite questions, Um, what else have you been looking

1547
01:23:26,080 --> 01:23:31,920
Speaker 1: at focusing on noticing that you think is intriguing? Especially

1548
01:23:31,960 --> 01:23:34,599
Speaker 1: what have you learned from your time in Asia? That

1549
01:23:34,680 --> 01:23:36,519
Speaker 1: you wouldn't have learned if you were here in the

1550
01:23:36,560 --> 01:23:42,760
Speaker 1: United States. America feels old. Feels old in what way?

1551
01:23:42,800 --> 01:23:47,479
Speaker 1: The demographics, the infrastructure, the the entire society. What is

1552
01:23:47,520 --> 01:23:52,160
Speaker 1: it about America that's old? Everything you just said? And

1553
01:23:52,200 --> 01:23:54,720
Speaker 1: then I think also the people, the people and not

1554
01:23:54,880 --> 01:24:00,439
Speaker 1: just a physical old, but a an old. We're not

1555
01:24:00,840 --> 01:24:05,000
Speaker 1: belief system venturous anymore. I mean some of us are.

1556
01:24:05,160 --> 01:24:07,639
Speaker 1: Some of us are. Look, you have Silicon Valley. I'm

1557
01:24:07,640 --> 01:24:11,400
Speaker 1: gonna push back on you. We do have Millennials are everywhere,

1558
01:24:10,960 --> 01:24:16,960
Speaker 1: They're everywhere. What they're doing, they're taking over. The millennials

1559
01:24:17,120 --> 01:24:19,920
Speaker 1: are now a bigger voting block than the baby boom.

1560
01:24:20,040 --> 01:24:22,880
Speaker 1: Well that's a voting really matters anymore. Well, you know,

1561
01:24:23,000 --> 01:24:28,080
Speaker 1: you get to choose which one of these two it's

1562
01:24:28,120 --> 01:24:30,439
Speaker 1: column Ato Columby. You don't really get to choose. You

1563
01:24:30,439 --> 01:24:34,040
Speaker 1: get to choose from a pre selected course. But that said,

1564
01:24:34,360 --> 01:24:39,120
Speaker 1: Silicon Valley does exceptional things. But overall, there is a feeling.

1565
01:24:39,200 --> 01:24:42,799
Speaker 1: If you want me to compare and contrast, there's this energy,

1566
01:24:43,120 --> 01:24:47,400
Speaker 1: there's this excitement, there's this desire. Maybe it's misplaced, maybe

1567
01:24:47,400 --> 01:24:49,439
Speaker 1: it won't get where they want to go, but you

1568
01:24:49,479 --> 01:24:52,880
Speaker 1: can feel it even in a Tokyo still. And I

1569
01:24:52,920 --> 01:24:54,639
Speaker 1: know Tokyo is a big city and maybe the outer

1570
01:24:54,760 --> 01:24:58,760
Speaker 1: areas aren't doing as well, but that energy and enthusiasm

1571
01:24:58,840 --> 01:25:01,200
Speaker 1: and all the things that you may for example, infrastructure

1572
01:25:01,200 --> 01:25:04,799
Speaker 1: when you see so many infrastructure projects getting off the ground.

1573
01:25:05,360 --> 01:25:08,960
Speaker 1: And I'll tell you one of my damn pet peeves airlines,

1574
01:25:10,080 --> 01:25:13,320
Speaker 1: specifically the staff on an airline in the United States

1575
01:25:13,360 --> 01:25:17,439
Speaker 1: that's uniformly terrible. I'll give you three exceptions. Virgin, which

1576
01:25:17,520 --> 01:25:22,519
Speaker 1: is British Jet Blue, which is essentially the real exception

1577
01:25:22,560 --> 01:25:27,360
Speaker 1: in Southwest. Those two are the non um traditional airlines.

1578
01:25:27,360 --> 01:25:30,360
Speaker 1: They're they're not the legacy airlines with all of the

1579
01:25:30,439 --> 01:25:34,720
Speaker 1: UH union um baggage and all of the historical baggage.

1580
01:25:34,960 --> 01:25:38,960
Speaker 1: Outside of those, I've found that most airlines staff in

1581
01:25:39,000 --> 01:25:44,200
Speaker 1: the United States States not especially accommodated. And it's completely different.

1582
01:25:44,240 --> 01:25:48,120
Speaker 1: And not only do you have something uh people might say, well,

1583
01:25:48,160 --> 01:25:51,200
Speaker 1: this is not really relevant. Appearance is clearly an issue

1584
01:25:51,800 --> 01:25:54,920
Speaker 1: on airlines. Oh god, have you have a flown air India.

1585
01:25:55,080 --> 01:25:59,559
Speaker 1: It's unbelievable. And people say Singapore Airlines is supposed to

1586
01:25:59,560 --> 01:26:02,960
Speaker 1: be fed plastic. Singapore is great a and a Japan fantastic.

1587
01:26:03,520 --> 01:26:06,800
Speaker 1: Even Vietnam Airline is fantastic. Now is it much more expensive?

1588
01:26:06,960 --> 01:26:10,320
Speaker 1: Are they? Are the fairs regulated the way they used

1589
01:26:10,360 --> 01:26:12,960
Speaker 1: to be in the United States? What's the difference. We

1590
01:26:13,000 --> 01:26:15,360
Speaker 1: haven't talked to charts today, Not that I'm a chart

1591
01:26:15,400 --> 01:26:16,720
Speaker 1: guy or anything, but if we look at some of

1592
01:26:16,720 --> 01:26:18,960
Speaker 1: those charts, and everyone can imagine what the charts look like.

1593
01:26:19,840 --> 01:26:22,479
Speaker 1: Just imagine what the US dollar looks like on a chart,

1594
01:26:22,920 --> 01:26:25,280
Speaker 1: and then imagine if you're straight up for nine years,

1595
01:26:25,280 --> 01:26:26,960
Speaker 1: if you're another part of the if you'r other parts

1596
01:26:27,000 --> 01:26:29,600
Speaker 1: of the world, that's a good thing to be. So

1597
01:26:29,640 --> 01:26:33,000
Speaker 1: in other words, a strong the strong dollar is good

1598
01:26:33,000 --> 01:26:35,679
Speaker 1: for for people in Asia, is good for people elsewhere

1599
01:26:35,720 --> 01:26:38,519
Speaker 1: around the It's good for Americans in Asia, well, if

1600
01:26:38,600 --> 01:26:40,600
Speaker 1: you're if you're a tourist, if you're an export, or

1601
01:26:40,600 --> 01:26:44,439
Speaker 1: not so much in the United States. Um, And what's

1602
01:26:44,439 --> 01:26:48,000
Speaker 1: fascinating is if you're an exporter in China and the

1603
01:26:48,120 --> 01:26:51,599
Speaker 1: juan is is is peg to the dollar, the strong

1604
01:26:51,640 --> 01:26:54,680
Speaker 1: dollar isn't the greatest thing in the world for exports

1605
01:26:55,439 --> 01:26:58,160
Speaker 1: other than to the United States. Elsewhere it makes you good,

1606
01:26:58,160 --> 01:27:01,439
Speaker 1: it's a little more expensive. So, um, what else do

1607
01:27:01,520 --> 01:27:05,559
Speaker 1: you see as a change that you noticed only because

1608
01:27:05,600 --> 01:27:08,680
Speaker 1: you've spent so much time in Asia, a bath, the

1609
01:27:08,760 --> 01:27:11,960
Speaker 1: United States, or or anything else. So commerce, I mean,

1610
01:27:12,000 --> 01:27:17,360
Speaker 1: for example, look in clearly the registration requirements, the ability

1611
01:27:17,439 --> 01:27:22,519
Speaker 1: to launch a restaurant, launch a store. Singapore is highly regulated,

1612
01:27:22,520 --> 01:27:25,719
Speaker 1: but in many past you can't even choose. Of course,

1613
01:27:26,120 --> 01:27:31,320
Speaker 1: Bangkok though, and Hong Kong and Ho Chum in City, Saigon, uh,

1614
01:27:31,360 --> 01:27:34,839
Speaker 1: you know, places like Shanghai, you can get something started,

1615
01:27:34,880 --> 01:27:36,840
Speaker 1: you can find out what the demand is and if

1616
01:27:36,840 --> 01:27:38,360
Speaker 1: it doesn't work. I can't tell you how many times

1617
01:27:38,439 --> 01:27:41,000
Speaker 1: I passed a store and Saigon was like, that store

1618
01:27:41,040 --> 01:27:42,719
Speaker 1: looks kind of dead. I wonder how long they're gonna

1619
01:27:42,760 --> 01:27:45,040
Speaker 1: make it, and they're gone in a month. I mean,

1620
01:27:45,080 --> 01:27:48,080
Speaker 1: so people just try. There's this look. I still remember

1621
01:27:48,120 --> 01:27:50,120
Speaker 1: the first time three years ago, I'm walking the streets

1622
01:27:50,120 --> 01:27:52,640
Speaker 1: with this this young lady and I looked at it

1623
01:27:52,640 --> 01:27:56,240
Speaker 1: and I said, where are all communists? And she didn't

1624
01:27:56,240 --> 01:28:00,600
Speaker 1: get the joke because everything I saw was selling commerce, commerce,

1625
01:28:00,880 --> 01:28:04,400
Speaker 1: And that's it's not even a the government style of

1626
01:28:04,479 --> 01:28:08,799
Speaker 1: Vietnam and China's communists. The people are Asian, the people

1627
01:28:09,040 --> 01:28:13,960
Speaker 1: are merchants, and that is that's pure trade and you're

1628
01:28:13,960 --> 01:28:17,880
Speaker 1: seeing less of that in the United States. I mean,

1629
01:28:17,920 --> 01:28:19,599
Speaker 1: you know, there's some nice stores out here. I see

1630
01:28:19,600 --> 01:28:22,080
Speaker 1: people selling high end goods. I see the Apple Store

1631
01:28:22,080 --> 01:28:23,720
Speaker 1: and that kind of stuff, But I don't see the

1632
01:28:23,760 --> 01:28:26,200
Speaker 1: ability for the average person to go jump at it

1633
01:28:26,240 --> 01:28:28,200
Speaker 1: really quickly. Well not you're not going to open a

1634
01:28:28,240 --> 01:28:31,519
Speaker 1: storefront on Fifth Avenue if you're a one man shop

1635
01:28:31,600 --> 01:28:34,080
Speaker 1: selling widgets that you make in your basement, saying this

1636
01:28:34,160 --> 01:28:37,040
Speaker 1: is good or bad. Let the market decide. We've gotten

1637
01:28:37,080 --> 01:28:39,559
Speaker 1: a little overregulated on some of these things. I know

1638
01:28:39,640 --> 01:28:41,400
Speaker 1: we're trying to protect everybody. I know we're trying to

1639
01:28:41,400 --> 01:28:43,920
Speaker 1: make everything fair, but we all know that what's all

1640
01:28:43,920 --> 01:28:47,280
Speaker 1: said and done, no one's protected. It ain't fair. S Yeah,

1641
01:28:47,320 --> 01:28:49,000
Speaker 1: I've always found that to be a little bit of

1642
01:28:49,040 --> 01:28:54,720
Speaker 1: a red herring, only because we have um absolutely you know,

1643
01:28:54,800 --> 01:28:57,200
Speaker 1: we launched a sm management shop. It didn't take that

1644
01:28:57,280 --> 01:28:59,760
Speaker 1: much time, effort of money to do. If you want

1645
01:28:59,760 --> 01:29:02,439
Speaker 1: to build a restaurant or open a restaurant, all these

1646
01:29:02,439 --> 01:29:05,760
Speaker 1: things take capital and if you have to jump through

1647
01:29:05,760 --> 01:29:07,800
Speaker 1: a few regulatory hoops, it's not the worst thing in

1648
01:29:07,840 --> 01:29:10,439
Speaker 1: the world. Your audience listening right now that knows you've

1649
01:29:10,479 --> 01:29:12,920
Speaker 1: not been to Asia knows that when you come in

1650
01:29:12,960 --> 01:29:16,960
Speaker 1: two thousand and six, that all right. In the last

1651
01:29:16,960 --> 01:29:22,080
Speaker 1: ten minutes we have, let's work through our ten favorite questions. Uh,

1652
01:29:22,120 --> 01:29:25,880
Speaker 1: you already asked the first one about how your background

1653
01:29:25,960 --> 01:29:28,920
Speaker 1: led you to finance. Let's go to the second one.

1654
01:29:29,439 --> 01:29:36,720
Speaker 1: Who were your early mentors? I mentioned Jim Massey and

1655
01:29:36,840 --> 01:29:41,000
Speaker 1: Solomon Brothers because when he told me you don't want

1656
01:29:41,000 --> 01:29:43,840
Speaker 1: to be the best, you just want to win. That

1657
01:29:43,920 --> 01:29:46,840
Speaker 1: forces you, as a young man, you realize, Okay, I've

1658
01:29:46,880 --> 01:29:50,000
Speaker 1: got diarrhea of the mouth, I'm just talking. And that

1659
01:29:50,120 --> 01:29:53,800
Speaker 1: forces you to realize, this is a game you play

1660
01:29:53,880 --> 01:29:56,479
Speaker 1: to win. This isn't it, This isn't This is no

1661
01:29:56,560 --> 01:30:00,280
Speaker 1: longer kumbae ya. Everyone gets a trophy. This is playing

1662
01:30:00,320 --> 01:30:04,439
Speaker 1: for keeps and that and that instant changed me. I

1663
01:30:04,479 --> 01:30:07,160
Speaker 1: didn't really have much more involvement after that with him.

1664
01:30:07,280 --> 01:30:09,080
Speaker 1: He did get me an interview at Solomon Brothers in

1665
01:30:09,120 --> 01:30:12,160
Speaker 1: nineteen nine four during the Bondmarket massacre, which really didn't

1666
01:30:12,160 --> 01:30:16,160
Speaker 1: help much, But uh, that was that was a change.

1667
01:30:16,479 --> 01:30:19,320
Speaker 1: So did you decide that you wanted to be the

1668
01:30:19,320 --> 01:30:21,360
Speaker 1: best or did you just sign that you wanted to

1669
01:30:21,400 --> 01:30:25,240
Speaker 1: win the best? Is some nebulous, who knows what best means?

1670
01:30:25,280 --> 01:30:28,360
Speaker 1: That doesn't mean anything, right. You want to win, however,

1671
01:30:28,360 --> 01:30:29,880
Speaker 1: you're going to measure winning at least you gotta be

1672
01:30:29,880 --> 01:30:32,720
Speaker 1: able to measure it in some way. Kind of interesting

1673
01:30:33,200 --> 01:30:35,360
Speaker 1: and Bill Done too, Bill Done, the trader that I

1674
01:30:35,400 --> 01:30:38,479
Speaker 1: mentioned with a forty year track record, seeing him in person,

1675
01:30:38,880 --> 01:30:42,080
Speaker 1: and I remember this is South Florida, Yeah, South Florida.

1676
01:30:42,240 --> 01:30:45,719
Speaker 1: And it was a crazy, a crazy small world story

1677
01:30:45,840 --> 01:30:49,400
Speaker 1: where my baseball coach when I was sixteen ended up

1678
01:30:49,400 --> 01:30:51,280
Speaker 1: in today he's the president of Dunk Capital. I don't

1679
01:30:51,280 --> 01:30:54,519
Speaker 1: know how that even happened, crazy small world story. But

1680
01:30:54,640 --> 01:30:57,360
Speaker 1: when he got me an informational interview with Bill Done in,

1681
01:30:58,760 --> 01:31:01,200
Speaker 1: I remember he Bill Done call me up on the phone.

1682
01:31:01,560 --> 01:31:04,160
Speaker 1: He knew I was coming down, and he said, so,

1683
01:31:04,280 --> 01:31:06,280
Speaker 1: do you want to come down here and press me?

1684
01:31:07,760 --> 01:31:09,479
Speaker 1: And I remember being a little bit scared because I

1685
01:31:09,520 --> 01:31:11,000
Speaker 1: knew I was talking to a guy worth hundreds of

1686
01:31:11,000 --> 01:31:14,200
Speaker 1: millions of dollars, he's managing billions. But I saw it

1687
01:31:14,280 --> 01:31:17,800
Speaker 1: within him too, was again that Jim Massey, that attitude

1688
01:31:18,520 --> 01:31:22,000
Speaker 1: that I'm you know, just this tough atted is former

1689
01:31:22,040 --> 01:31:26,040
Speaker 1: marine for marine physicists, but that those things instilled in me,

1690
01:31:26,080 --> 01:31:29,280
Speaker 1: even if it wasn't my personality to show those to

1691
01:31:29,360 --> 01:31:32,519
Speaker 1: other people, Deep in my gut, deep in my mind,

1692
01:31:32,920 --> 01:31:36,400
Speaker 1: I knew those were changing me. Huh, that's quite fascinating.

1693
01:31:41,240 --> 01:31:45,000
Speaker 1: Next question, Um, so you you mentioned a couple of mentors.

1694
01:31:45,080 --> 01:31:50,920
Speaker 1: What other investors influenced your approach to investing? Obviously Richard

1695
01:31:50,960 --> 01:31:54,719
Speaker 1: Dennis Key guy who else influenced the way you think

1696
01:31:54,760 --> 01:31:58,559
Speaker 1: about deploying capital at risk? You know, there's a whole

1697
01:31:58,600 --> 01:32:00,519
Speaker 1: team of people that we've talked about today, but I'll

1698
01:32:00,800 --> 01:32:03,679
Speaker 1: bring up somebody that I've mentioned briefly, which is David

1699
01:32:03,720 --> 01:32:07,160
Speaker 1: Harding of Winding Capital. And David is probably considered today

1700
01:32:07,280 --> 01:32:11,679
Speaker 1: the most successful trend following Trader. His fund is around

1701
01:32:11,760 --> 01:32:17,240
Speaker 1: thirty billion dollars to in n it was five million,

1702
01:32:17,320 --> 01:32:19,920
Speaker 1: I believe, so he took five million up to thirty

1703
01:32:19,920 --> 01:32:22,440
Speaker 1: billion or Some of this is obviously, of course inflows,

1704
01:32:22,520 --> 01:32:25,559
Speaker 1: but but still it's a it's a tremendous success. He

1705
01:32:25,880 --> 01:32:31,120
Speaker 1: had one stretch of twenty years after fees and the

1706
01:32:31,160 --> 01:32:33,880
Speaker 1: first time I met him, I was in his office

1707
01:32:33,880 --> 01:32:39,400
Speaker 1: in London, and to watch his competitiveness struck me because

1708
01:32:39,400 --> 01:32:42,000
Speaker 1: he wanted to talk about Jim Simmons and I didn't

1709
01:32:42,000 --> 01:32:44,559
Speaker 1: say I don't. I said, I don't know much about

1710
01:32:44,600 --> 01:32:46,519
Speaker 1: Jim Simmons right now. He's in my white well. I

1711
01:32:46,560 --> 01:32:48,360
Speaker 1: have Dalya and Jim side. I don't, I said, I

1712
01:32:48,400 --> 01:32:50,320
Speaker 1: don't have any I don't have any experience with him.

1713
01:32:50,320 --> 01:32:54,840
Speaker 1: And you know, Harding was making the case that for

1714
01:32:54,920 --> 01:32:58,880
Speaker 1: somebody to do as well as Simmons had did and

1715
01:32:58,960 --> 01:33:02,880
Speaker 1: has done, that there had to be a trend following component. Now,

1716
01:33:02,880 --> 01:33:06,040
Speaker 1: what's interesting if you list Simon's If you listen to

1717
01:33:06,120 --> 01:33:10,400
Speaker 1: Simon's though everything he says publicly, and I've listened almost

1718
01:33:10,439 --> 01:33:14,840
Speaker 1: everything he said publicly, there's not much sounds like a

1719
01:33:14,880 --> 01:33:18,960
Speaker 1: trend following trader if and until and when some type

1720
01:33:19,000 --> 01:33:21,800
Speaker 1: of subject on the short term comes up. So I

1721
01:33:21,840 --> 01:33:23,760
Speaker 1: just thought it was an interesting conversation. One of my

1722
01:33:23,800 --> 01:33:27,479
Speaker 1: first conversations with David Harding that as a man who

1723
01:33:27,560 --> 01:33:33,800
Speaker 1: was very firmly in the asset management space, the competitiveness

1724
01:33:33,880 --> 01:33:37,479
Speaker 1: that which he had to look at his peers, so

1725
01:33:37,600 --> 01:33:40,160
Speaker 1: that that affected me to just it shows you behind

1726
01:33:40,160 --> 01:33:41,840
Speaker 1: the curtain. You know how these guys are thinking, you

1727
01:33:41,880 --> 01:33:44,160
Speaker 1: know how the best in the world are thinking. And

1728
01:33:44,160 --> 01:33:46,360
Speaker 1: whether or not you use that experience or not. You

1729
01:33:46,400 --> 01:33:49,840
Speaker 1: now know how the game is played. That's fascinating. I

1730
01:33:49,880 --> 01:33:54,160
Speaker 1: look at Simon's is such a different approach then trend following.

1731
01:33:54,400 --> 01:33:59,160
Speaker 1: I'm surprised to hear a successful trend follower sort of

1732
01:33:59,160 --> 01:34:02,880
Speaker 1: of you know that that becomes his moby dick at

1733
01:34:02,920 --> 01:34:05,240
Speaker 1: that point. Okay, but here's so, here's the thing, do

1734
01:34:05,280 --> 01:34:09,240
Speaker 1: you does anybody really know exactly what renaissance does? We

1735
01:34:09,320 --> 01:34:11,040
Speaker 1: know some of it. We know that there's a lot

1736
01:34:11,080 --> 01:34:13,839
Speaker 1: of They were an early adopter of high frequency trading

1737
01:34:13,920 --> 01:34:19,760
Speaker 1: that he essentially was hiring mathematicians and physicists twenty years ago,

1738
01:34:20,520 --> 01:34:23,240
Speaker 1: but he was never hiring people from Wall Street. Everything

1739
01:34:23,280 --> 01:34:28,280
Speaker 1: he built was strictly from And my contact with him

1740
01:34:28,360 --> 01:34:31,280
Speaker 1: is when I started at Stony Brook as an undergrad.

1741
01:34:31,680 --> 01:34:35,040
Speaker 1: I was applied physics and applied mathematics and physics major.

1742
01:34:35,360 --> 01:34:38,120
Speaker 1: He was the outgoing chairman of the math department. And

1743
01:34:38,160 --> 01:34:39,479
Speaker 1: by the way, if you would have met him in

1744
01:34:39,560 --> 01:34:43,840
Speaker 1: nineteen seventy nine when I started college, you would have said, wait,

1745
01:34:43,920 --> 01:34:46,320
Speaker 1: that chain smoking, bearded guy. I'm not going to give

1746
01:34:46,400 --> 01:34:49,160
Speaker 1: him two cents. He would never earn a million years.

1747
01:34:49,520 --> 01:34:51,240
Speaker 1: I think this is gonna got the guy that's going

1748
01:34:51,280 --> 01:34:55,240
Speaker 1: to mass a forty year on near annual track record.

1749
01:34:55,240 --> 01:34:58,040
Speaker 1: It's it's insane. You know they're real because they returned

1750
01:34:58,160 --> 01:35:01,400
Speaker 1: after a few years, returned the outside investors money and

1751
01:35:01,400 --> 01:35:03,599
Speaker 1: said we're good women. And just one of the things

1752
01:35:03,680 --> 01:35:06,439
Speaker 1: that really triggered me early on. And I'm just thinking

1753
01:35:06,479 --> 01:35:09,880
Speaker 1: about Simon's and his track record. With trend following traders

1754
01:35:10,560 --> 01:35:13,080
Speaker 1: being regulated by the CFTC, the n f A, you

1755
01:35:13,120 --> 01:35:16,080
Speaker 1: could always do a foiler request and get their disclosure documents.

1756
01:35:16,360 --> 01:35:18,639
Speaker 1: So for me earlier, do they really reveal a whole

1757
01:35:18,720 --> 01:35:22,160
Speaker 1: lot in the documents? What what is your their monthly performance?

1758
01:35:22,240 --> 01:35:24,559
Speaker 1: Oh so you're actually getting those numbers? Yeah, yeah, yeah,

1759
01:35:24,600 --> 01:35:26,719
Speaker 1: so I mean you can look at I mean, that's

1760
01:35:26,760 --> 01:35:28,559
Speaker 1: that was the foundation for all of my books. I

1761
01:35:28,600 --> 01:35:33,640
Speaker 1: couldn't write about trend following unless I had the performance

1762
01:35:33,840 --> 01:35:37,320
Speaker 1: that said, okay, look look at the correlation between Bill Done,

1763
01:35:37,439 --> 01:35:41,280
Speaker 1: John Henry, David Harding, the Turtles, Larry Height. And when

1764
01:35:41,320 --> 01:35:43,640
Speaker 1: you start to look at the correlation performance and you're like, oh,

1765
01:35:43,840 --> 01:35:47,400
Speaker 1: all these different people, different walks of life, different training,

1766
01:35:47,720 --> 01:35:51,519
Speaker 1: unaffiliated are making money in the same months and losing

1767
01:35:51,520 --> 01:35:53,560
Speaker 1: money in the same months. They're obviously doing something and

1768
01:35:53,560 --> 01:35:54,920
Speaker 1: then you can. Then you can look at the markets.

1769
01:35:54,920 --> 01:35:57,000
Speaker 1: You can realize, oh yeah, crew just moved big that month,

1770
01:35:57,040 --> 01:36:00,000
Speaker 1: and you know what's going on. Huh. That's that's interesting.

1771
01:36:00,000 --> 01:36:02,760
Speaker 1: In outside of your own books, what are some of

1772
01:36:02,800 --> 01:36:05,960
Speaker 1: your favorite books written by other people? I love Blue

1773
01:36:05,960 --> 01:36:09,280
Speaker 1: Ocean Strategy, Blue Ocean Strategy. Yeah, you know that one.

1774
01:36:09,320 --> 01:36:12,200
Speaker 1: I think, Yeah, I don't. Yeah, it's just, you know,

1775
01:36:12,320 --> 01:36:18,519
Speaker 1: to sum it up, it's steering clear of Look, we're

1776
01:36:18,960 --> 01:36:22,800
Speaker 1: in this facility right now where everyone is seeing the

1777
01:36:22,880 --> 01:36:26,479
Speaker 1: same thing. So how do how does one go ahead

1778
01:36:26,760 --> 01:36:28,640
Speaker 1: and find a different place to be? I mean that

1779
01:36:28,680 --> 01:36:30,680
Speaker 1: sums up Blue Ocean Strategy. And I know one that

1780
01:36:30,720 --> 01:36:32,920
Speaker 1: you would hate for me to say, go ahead, but

1781
01:36:33,000 --> 01:36:35,960
Speaker 1: I tell you, I do love it. I still love

1782
01:36:36,080 --> 01:36:40,960
Speaker 1: the the the energy and the thought process, the thinking

1783
01:36:42,439 --> 01:36:45,360
Speaker 1: of the main character in The fountain Head. It's not

1784
01:36:45,439 --> 01:36:49,000
Speaker 1: that I hate iron Rand. I just found her to

1785
01:36:49,040 --> 01:36:52,040
Speaker 1: be pedantic and boring. I mean, oh yeah, of course

1786
01:36:52,080 --> 01:36:58,840
Speaker 1: that was sru there's a nightmare, so it's not Listen,

1787
01:36:59,479 --> 01:37:02,760
Speaker 1: she comes from the Soviet Union, what a shocker. She's

1788
01:37:02,800 --> 01:37:09,479
Speaker 1: against totalitarianism and and champions the the genius of of

1789
01:37:09,920 --> 01:37:13,320
Speaker 1: the individual. That's not a surprise, but it shouldn't take

1790
01:37:13,400 --> 01:37:17,360
Speaker 1: eight pages. That's the old joke is I apologize for

1791
01:37:17,400 --> 01:37:20,040
Speaker 1: the lengthless letter. I didn't have time to make it shorter.

1792
01:37:20,680 --> 01:37:26,040
Speaker 1: She never learned that. Seth Godin's lynch Pen a simple book.

1793
01:37:26,160 --> 01:37:28,479
Speaker 1: The first thirty pages. If you if you know a

1794
01:37:28,479 --> 01:37:32,080
Speaker 1: young person or anybody that's confused about their career, what

1795
01:37:32,120 --> 01:37:34,880
Speaker 1: they want to do in life. He's one of these

1796
01:37:34,880 --> 01:37:37,240
Speaker 1: guys that basically says, you know what, You've got all

1797
01:37:37,240 --> 01:37:40,880
Speaker 1: the tools you need. You've got the internet, Go make

1798
01:37:40,920 --> 01:37:43,360
Speaker 1: some art, go do something. Chris Van who's the head

1799
01:37:43,400 --> 01:37:47,360
Speaker 1: of planning in my office, is an absolute goden acolyte

1800
01:37:47,520 --> 01:37:50,840
Speaker 1: loves him. Yeah, it's great stuff. Lynch Pin is the

1801
01:37:50,880 --> 01:37:53,519
Speaker 1: name of the book. And you google google my name.

1802
01:37:53,560 --> 01:37:55,800
Speaker 1: I know I've got a couple recommended book lists out there.

1803
01:37:55,800 --> 01:37:57,280
Speaker 1: If you just type in my name and give me

1804
01:37:57,360 --> 01:37:59,639
Speaker 1: one more, one more book that you are are really

1805
01:37:59,680 --> 01:38:02,640
Speaker 1: in true buck. I like the Dan Eily stuff. I

1806
01:38:02,680 --> 01:38:05,719
Speaker 1: like the thing. I like the thinking fast, thinking slow.

1807
01:38:07,080 --> 01:38:09,599
Speaker 1: That by the way, I like the first three quarters

1808
01:38:09,640 --> 01:38:12,280
Speaker 1: of that book. Is is fantastic. Michael Mobison more than

1809
01:38:12,320 --> 01:38:16,799
Speaker 1: you know. Um Doug Emlyn's Animal Weapons, which I've mentioned.

1810
01:38:17,479 --> 01:38:20,559
Speaker 1: Animal Weapons is a really interesting concept. I have to

1811
01:38:20,560 --> 01:38:22,960
Speaker 1: put that in like, yeah, it's he has started with

1812
01:38:22,960 --> 01:38:27,799
Speaker 1: a study of dung beetles. Just really uh fascinating stuff.

1813
01:38:27,840 --> 01:38:29,880
Speaker 1: I don't you know these things. The list goes on forever.

1814
01:38:30,479 --> 01:38:33,320
Speaker 1: The other thing of the old stuff that I really like, ah,

1815
01:38:33,439 --> 01:38:35,719
Speaker 1: one of my favorite authors think it's called The Wisdom

1816
01:38:35,800 --> 01:38:42,519
Speaker 1: of Insecurity by Alan Watts, who introduced Buddhism and Zen

1817
01:38:42,640 --> 01:38:45,639
Speaker 1: to the to the Western world back in the fifties.

1818
01:38:45,760 --> 01:38:49,600
Speaker 1: And in fact, if you google Alan Watts, go to YouTube,

1819
01:38:50,760 --> 01:38:52,479
Speaker 1: much of the stuff that he has on YouTube is

1820
01:38:52,520 --> 01:38:56,000
Speaker 1: just absolutely fabulous. Just calm you down, because look and look,

1821
01:38:56,000 --> 01:38:57,879
Speaker 1: if you're gonna be a traitor, you're gonna be an investor.

1822
01:38:58,240 --> 01:39:01,879
Speaker 1: If there's any one type of thinking that's just really

1823
01:39:02,000 --> 01:39:05,200
Speaker 1: nice for trading and investing is a Zen mindset, to

1824
01:39:05,240 --> 01:39:08,400
Speaker 1: say the least, it's great. So let's let's continue on

1825
01:39:08,400 --> 01:39:12,160
Speaker 1: our Zen list. So since you started writing about trading

1826
01:39:12,160 --> 01:39:15,920
Speaker 1: and writing about trend following, what major changes has hit

1827
01:39:16,880 --> 01:39:21,599
Speaker 1: the futures industry? All these blow ups, right, all these

1828
01:39:21,640 --> 01:39:23,920
Speaker 1: sort of blow ups, those don't help confidence. So I

1829
01:39:23,960 --> 01:39:25,880
Speaker 1: think that's that's that's the biggest thing. And I think

1830
01:39:25,880 --> 01:39:28,640
Speaker 1: also for example, in the trend following space. If you

1831
01:39:28,680 --> 01:39:32,000
Speaker 1: look at the last since the biggest I mean two

1832
01:39:32,040 --> 01:39:33,760
Speaker 1: thousand and four team is a pretty good year because

1833
01:39:33,800 --> 01:39:36,240
Speaker 1: of the oil moved down. But if you look at uh,

1834
01:39:36,640 --> 01:39:41,519
Speaker 1: two thousand and eight was the last really fantastic year

1835
01:39:41,600 --> 01:39:43,639
Speaker 1: and then a lot of kind of ups and downs. Look,

1836
01:39:43,680 --> 01:39:45,760
Speaker 1: as a trend following trader, you can't control these ups

1837
01:39:45,800 --> 01:39:47,760
Speaker 1: and downs. So I think, what's gonna be interesting to

1838
01:39:47,840 --> 01:39:52,400
Speaker 1: see as we watch interest rates change, as we watch

1839
01:39:52,800 --> 01:39:55,439
Speaker 1: you know, we have another ten years of equity markets

1840
01:39:55,520 --> 01:39:58,920
Speaker 1: just marching up. I don't know who knows who could?

1841
01:39:59,200 --> 01:40:01,880
Speaker 1: You could and if that would be good, Any of

1842
01:40:01,880 --> 01:40:03,479
Speaker 1: these things in the trend would be good for there,

1843
01:40:03,920 --> 01:40:05,680
Speaker 1: you've got it. You've got it. It depends though, if

1844
01:40:05,680 --> 01:40:09,320
Speaker 1: you've got a diversified portfolio, you've got to take positions

1845
01:40:09,320 --> 01:40:11,639
Speaker 1: in some markets that might be going different than equities.

1846
01:40:11,640 --> 01:40:15,000
Speaker 1: You might get stopped out. So you can't just be

1847
01:40:15,040 --> 01:40:18,200
Speaker 1: a trend following trader on one market, which if you

1848
01:40:18,200 --> 01:40:20,560
Speaker 1: wanted to sum up one of the issues that we

1849
01:40:20,640 --> 01:40:23,519
Speaker 1: talked about two is the death cross. Uh, the whole

1850
01:40:23,520 --> 01:40:26,320
Speaker 1: death cross. I agree with your analysis on it. I

1851
01:40:26,360 --> 01:40:28,320
Speaker 1: think the thing that Jerry Parker one of the turtles

1852
01:40:28,360 --> 01:40:31,640
Speaker 1: was saying was yes, but the death cross can be

1853
01:40:31,680 --> 01:40:35,639
Speaker 1: the initial signal for a trend that might develop. It's

1854
01:40:35,640 --> 01:40:38,240
Speaker 1: not a forecast that never works. And I agree with

1855
01:40:38,280 --> 01:40:40,680
Speaker 1: your analysis on that. Well, we want you know, it's

1856
01:40:40,680 --> 01:40:42,400
Speaker 1: one of these things you hear about over and over

1857
01:40:42,439 --> 01:40:44,479
Speaker 1: again and then you go out and look at the

1858
01:40:44,560 --> 01:40:47,679
Speaker 1: numbers and what's the subsequent track record of this? Turns

1859
01:40:47,680 --> 01:40:49,680
Speaker 1: out it's terrible. But but but if you if you

1860
01:40:49,800 --> 01:40:52,960
Speaker 1: had a death cross and a diversified portfolio and it

1861
01:40:53,040 --> 01:40:56,760
Speaker 1: was your signal for entry with a stop loss, that's

1862
01:40:56,840 --> 01:40:59,760
Speaker 1: different than all the technical walks out there that say, oh,

1863
01:40:59,800 --> 01:41:01,840
Speaker 1: here's the death cross. This means six months from now,

1864
01:41:01,880 --> 01:41:05,400
Speaker 1: this is gonna happen. That's all last two questions, and

1865
01:41:05,439 --> 01:41:08,400
Speaker 1: these are my two favorites. What advice would you give

1866
01:41:08,439 --> 01:41:10,680
Speaker 1: to a millennial or someone who just got out of

1867
01:41:10,720 --> 01:41:20,920
Speaker 1: college who was interested in the career in finance. You

1868
01:41:20,960 --> 01:41:24,280
Speaker 1: gotta do it yourself. Gotta do it yourself. Yeah, no

1869
01:41:24,360 --> 01:41:28,280
Speaker 1: safe spaces and do it yourself. And now our final question,

1870
01:41:29,000 --> 01:41:30,880
Speaker 1: because I see they're ready to kick the door down,

1871
01:41:31,000 --> 01:41:32,760
Speaker 1: do it yourself in the sense of like, don't try

1872
01:41:32,800 --> 01:41:35,320
Speaker 1: and get hired by anybody that's over. I think that's over.

1873
01:41:35,920 --> 01:41:41,160
Speaker 1: You're a free agent. You're free. Yeah. Why why? Why

1874
01:41:41,280 --> 01:41:42,720
Speaker 1: do you really want to I mean, do you really

1875
01:41:42,760 --> 01:41:44,680
Speaker 1: want to spend your life working for someone else? No,

1876
01:41:45,160 --> 01:41:46,720
Speaker 1: you don't, look at you. I can see those eyes

1877
01:41:46,800 --> 01:41:49,760
Speaker 1: right now. You want to know part of it? And

1878
01:41:49,800 --> 01:41:52,240
Speaker 1: our final question, what is it that you know about

1879
01:41:52,280 --> 01:41:55,519
Speaker 1: investing today that you wish you knew twenty years or

1880
01:41:55,520 --> 01:42:00,080
Speaker 1: so when you began the psychology part of it? M

1881
01:42:00,240 --> 01:42:03,680
Speaker 1: HM expand on that, Well, the rules have not necessarily

1882
01:42:03,760 --> 01:42:06,240
Speaker 1: changed that much. People might argue that the rules have changed,

1883
01:42:06,240 --> 01:42:09,120
Speaker 1: but they really haven't changed. It's understanding the human condition

1884
01:42:09,160 --> 01:42:12,160
Speaker 1: because it really calms you down. You realize, Hey, look

1885
01:42:12,200 --> 01:42:14,800
Speaker 1: there's a lot of luck in this world. Things are random,

1886
01:42:14,800 --> 01:42:16,760
Speaker 1: you know. I think anybody can go out and figure

1887
01:42:16,760 --> 01:42:19,400
Speaker 1: out a way to make their first million dollars. But

1888
01:42:19,479 --> 01:42:21,200
Speaker 1: you know, it's a little luck sometimes if you're gonna

1889
01:42:21,200 --> 01:42:23,080
Speaker 1: make a billion, So don't kill yourself trying to think

1890
01:42:23,080 --> 01:42:24,920
Speaker 1: you're gonna make a billion. You're probably not gonna be

1891
01:42:24,920 --> 01:42:28,439
Speaker 1: suckerberg to say the least. Mike, thank you so much

1892
01:42:28,439 --> 01:42:31,240
Speaker 1: for being so generous with your time. This has been

1893
01:42:31,280 --> 01:42:34,760
Speaker 1: absolutely fascinating. Uh, For those people who want to learn

1894
01:42:34,800 --> 01:42:38,479
Speaker 1: more about Mike Coval, just go to trend following dot

1895
01:42:38,520 --> 01:42:42,400
Speaker 1: com or on Twitter at trend following. It'll get to me,

1896
01:42:42,479 --> 01:42:44,919
Speaker 1: it'll get to him. I want to thank my producer,

1897
01:42:45,040 --> 01:42:48,240
Speaker 1: Charlie Valmer, our head of research, Michael bat Nick. I'm

1898
01:42:48,280 --> 01:42:51,240
Speaker 1: Barry Ridults. You've been listening to Masters in Business on

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01:42:51,320 --> 01:42:52,320
Speaker 1: Bloomberg Radio.