3min chapter

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Ep. 1169: Avoid the Noise with Michael Covel on Trend Following Radio

Michael Covel's Trend Following

CHAPTER

The Post-Apocalyptic Future of the Stock Market

We're straining the financial structure of the United States to the point where now debt is more than 100%. That's getting to be pretty unusual and rarefied air. I feel like we're setting up the potential for some very large moves which trend followers are going to love. But when they win the race, they're going to look around and say, yeah, but… Michael.

00:00
Speaker 1
The trend followers are absolutely going to nail it. But when they win the race, they're going to look around and say, yeah, but… Michael. Post-apocalyptic. Tom. Yeah. I sit there and I think, okay, let's see. If you're a successful trader and you're part of the 1%, and you're looking at what it is you're supposed to be doing to position your portfolio so that you or your client can preserve purchasing power over the long run, you've got to increase your net worth to keep your net wealth the same in an era where the dollar is getting debased. It's very difficult to see how to do that. Michael. You've seen many different climates, many different markets, and many different socioeconomic political patterns. Are you expressing a feeling about 2012 and going forward that's much different than you felt in your lifetime? Tom. I feel like we're setting up the potential for some very large moves which trend followers are going to love. I'm not making predictions. I just have the sense that we're straining the financial structure of the United States to the point where now debt is more than 100%. It's like 108% of GDP. That's getting to be pretty unusual and rarefied air. In other words, if you look at the economic statistics of the United States and even the rest of the world, we're pushing to levels that have not been seen before. When you get that type of stuff you have the potential for collapses. You have the potential for bubbles and the bubbles bursting possibly. You have some very high volatility potential. I have no predictions about which way anything is going to go. I hope the trend following will probably be there to capitalize on a lot of those major moves. However, at the same time as I'm capitalizing on it, I'm concerned that the value of what you have when you're all done with it, while greater net worth than you have today, might not be worth as much to go out and buy anything with. Looking at things from a retirement situation, my grandfather lived to 98 and I'm 59 now. I'm in great health. I'm enjoying life. But if I were to live to my grandfather's age of 98, I've still got 39 years to go. That's longer than I was in business. It's pretty interesting to think in those terms, decades. I've got to manage my portfolio and figure out how to at least keep my net wealth roughly the same so I can continue to enjoy a nice retirement. That's the one thing that crosses my mind more and more lately. And it's a tough puzzle. The solution is out there in the hands of the entire country, not just me. I can't control what happens around me. I've traveled all over the world and I've thought about, now what if I moved to Australia? How would that be? Or Switzerland? Or Britain? I've been to all those places and they're all fine in their own ways. This place is to visit.

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