Ep. 1335: Thinking for a Living with Michael Covel on Trend Following Radio
Apr 21, 2025
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Eric Crittenden, a trend-following managed futures trader at Standpoint Funds, shares insights on disciplined investing and the importance of independent thinking. He discusses evolving investment opportunities for everyday investors and the role of failure as a learning tool in both finance and sports. Crittenden emphasizes the significance of preparedness in navigating market risks and explores the impact of AI on financial analysis, while also touching on personal lifestyle changes and societal health trends.
Adopting a strong mindset and having a clear investment plan are essential for navigating market uncertainties successfully.
Discipline in adhering to a defined trading strategy is crucial for achieving long-term success amidst market fluctuations.
Understanding that not frequently changing a successful strategy is key to effective risk management helps traders withstand market volatilities.
Learning from failures offers valuable insights that enhance trading strategies and improve decision-making in unpredictable market conditions.
Deep dives
Mindset as the Foundation
In uncertain times, adopting a specific mindset is crucial for navigating market chaos. Emphasizing the importance of having a plan, the speaker highlights how individuals without a clear strategy may find themselves at a disadvantage. A strong mindset not only promotes clarity during volatile periods but also enables proactive decision-making. Overall, embracing the right mindset is presented as the foundational step toward success in any unpredictable environment.
The Importance of Discipline
Discipline emerges as a key theme in the discussion of trading and investment strategies, emphasizing the need to stick to a well-defined approach. Successful traders and firms are characterized by their commitment to disciplined practices rather than seeking to cater to everyone’s demands. The idea is reinforced that having realistic expectations and a relentless focus on doing one thing well leads to long-term success. This disciplined approach ensures that traders remain grounded even amidst market fluctuations.
Understanding Risk Management
The conversation delves into the paradox of managing risks while resisting the urge to constantly tinker with an investment strategy. An essential principle is recognizing that not making frequent changes to a successful system is often more beneficial. This highlights the challenge of balancing the need for continuous improvement with the importance of sticking to proven strategies. Effective risk management ultimately allows traders to navigate market volatilities without compromising their established methodologies.
Lessons from Failure
A critical insight shared in the conversation revolves around the notion that learning from failures can be more valuable than examining successes. The speaker emphasizes that studying failures can reveal hidden gems of knowledge that are often overlooked. This perspective empowers individuals to analyze mistakes, leading to a deeper understanding of market dynamics. By examining failures, traders can refine their strategies and make more informed decisions in the future.
The Impact of Volatility
Volatility and its management play a significant role in trading strategies, as highlighted in the discussion. The focus is on the impact volatility has on investment decisions and how it can be viewed either as risk or as a crucial component of market behavior. The conversation encourages traders to adopt an active approach to understanding and responding to volatility while staying true to their core strategies. This nuanced understanding can help traders effectively navigate unpredictable market environments.
Contrarian Approaches
Trend following is framed as a contrarian approach that goes against the natural tendencies of most traders, who often buy high and sell low due to emotional impulses. This strategy involves buying strength and selling weakness, which many find psychologically difficult. By adhering to trend-following principles, traders are encouraged to resist the common pitfalls associated with emotional trading decisions. Emphasizing discipline, trend following is presented as a rational and effective strategy for enduring market fluctuations.
Future of Trend Following
The outlook for trend following remains cautiously optimistic, as it continues to attract interest despite being relatively fringe. While there is ongoing growth in accessibility and awareness, the speaker cautions that the concept still faces resistance from traditional investors. The importance of having a systematic, rules-based approach to trading is reiterated as crucial for success in volatile markets. Ultimately, trend following's adaptability ensures that traders can navigate both prosperous and challenging times.
Cultural Shift and Generational Perspectives
A significant cultural shift is discussed, reflecting how younger generations perceive their prospects in today's society. The dialogue examines feelings of disenfranchisement and skepticism that many young people experience due to economic pressures and stagnant wages. Noting the consequences of these sentiments, the speaker draws attention to the importance of resilience and proactive decision-making for the younger generation. This generational divide underscores the need for shared understanding between age groups to foster better opportunities.
Please enjoy my monologue Thinking for a Living with Michael Covel on Trend Following Radio. This episode may also include great outside guests from my archive.
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I’m MICHAEL COVEL, the host of TREND FOLLOWING RADIO, and I’m proud to have delivered 10+ million podcast listens since 2012. Investments, economics, psychology, politics, decision-making, human behavior, entrepreneurship and trend following are all passionately explored and debated on my show.
To start? I’d like to give you a great piece of advice you can use in your life and trading journey… cut your losses! You will find much more about that philosophy here: https://www.trendfollowing.com/trend/
