Pod Insights Michael Covel's Trend Following Ep. 1323: Negative Error Culture with Michael Covel on Trend Following Radio About this episode Please enjoy my monologue Negative Error Culture with Michael Covel on Trend Following Radio. This episode may also include great outside guests from my archive. --- 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/ You can watch a free video here: https://www.trendfollowing.com/video/ Can’t get enough of this episode? You can choose from my thousand plus episodes here: https://www.trendfollowing.com/podcast My social media platforms: Twitter: @covel Facebook: @trendfollowing LinkedIn: @covel Instagram: @mikecovel Hope you enjoy my never-ending podcast conversation!
Transcript 0:00 Speaker 00 One negative to spending a lot of time in Asia is that if I go back to America for holidays like Thanksgiving, Christmas, which I did this year, then you're back in Asia, then it's Lunar New Year. This kind of a lifestyle feels like non-stop holidays. But it is cool to see different cultures and how they celebrate the end of their year, regardless, America, Asia, whatever the country. It's always exciting and makes me smile when everyone's so happy and everyone wants to just have fun. So I'm in a pretty
0:41 Speaker 00 good mood today, but I want to share some thoughts, some ideas, some concepts. First, from the podcast host, Patrick Bet-David, "Just a simple motivational, inspirational thought. If you work hard when no one is watching, if you treat people fairly when no one is watching, if you constantly find ways to improve, if you've gotten beat up multiple times, but you stand up and get back in the ring, if you have faith in God, your time will come. Your time will come." That might be a theme of where I will go
1:19 Speaker 00 today. Because you have to have a certain optimism to live. If you're always pessimistic, if you always think the worst is going to happen, not the best way to go. Now, from a trading perspective, yes, be prepared for your black swans, but you're not living in a bunker. You're living a life and you're ready. You're prepared. You're optimistic. And if some bad shit happens, you're prepared for that. If some good shit happens, you're prepared for that. Now I want to share a couple other thoughts that relate to life and trend following trading.
2:04 Speaker 00 First, the surfer mentality. Now, if you've not listened to it, go listen to my podcast episode with the trader Bill Dreis. Been on in the last few years, a trend following legend, track record going back decades, a surfer. So with that thought in mind, with Bill in mind, let me read just a little note from the surfer mentality. "When a surfer gets up on a wave, they enjoy the present moment, even though they know that the wave will eventually end. They fully enjoy this wave with the wisdom and awareness that there are always more waves coming." They're always coming. The waves are always coming.
2:48 Speaker 00 Now, I said it the other day on X, "The main reason trend following works is because people die." That's right. We all know that, right? People die, which means there's a constant replenishing of people, of spirit, of education, of learning. And some people know, and some people don't know. And some people, they stay greedy, some people are not. But the waves are always coming. And if the waves are always coming, and you can't predict what damn wave is coming, how do you make decisions?
3:30 Speaker 00 If you don't know which wave is coming, if you don't know when the next wave is coming, how can you make a decision to ride the wave? Well, you have to try. Now, this is counterintuitive, because in our world, we are taught to keep studying the information, look for more information, look for more fundamentals.
3:56 Speaker 00 I've been at this game for a very long time. And the messaging from a channel like CNBC, not only the messaging, the people. The people are exactly the same. But the messaging doesn't change. Every day, a bunch of suits are put on TV in a studio in New Jersey. I've been to the studio. It looks like The Truman Show. It's all fake. Any studio looks like that. But you don't see that. What you see is what they want you to see. You see the screen. You see the people on the screen. You hear what they want you to hear.
4:39 Speaker 00 It's a messaging program. It's designed to keep you watching. If you keep watching, they make money. Now, even the smartest people in the world, watch. They watch, and they watch, and they watch. If you watch the news, whether that's the financial news or the political news, the cultural news. I mean, the cultural news is fairly predictable, right? This year, next year, 10 years from now, there will be a scandal. Somebody won't have clothes on. Somebody will sleep with somebody. Who gives a shit? On the flip side, if you've got the CNBC on,
5:24 Speaker 00 there will be a guest. The guest will tell you which way the market is going to go. You should supposedly invest right now based on what that person is saying. How the hell did we all become so stupid to think that this is wise? And back to the surfer mentality. Instead of immersing yourself in all of this noise, why not just wait for the wave and get on? But Mike, how do I know it's going to be a big wave? You don't know it's going to be a big wave. You still try.
5:59 Speaker 00 What if I try and I lose? What are you, a loser? You've got to try. You have to fail. I was a baseball player. If you've got three hits out of 10, you're a rock star. Three hits out of 10, ladies and gentlemen, and you're a rock star. And you're afraid to try? What are you going to do? Just sit there? And wait for someone to give you permission? Is that your lifestyle? Is that your thinking? The surfer mentality is how the best operate. Now, of course, you have to put yourself in a position with rules and a perspective. And then you have to stick to those rules.
6:44 Speaker 00 You have to follow those rules. You can't break those rules. You need discipline. You can't be a putz. If you go that way, you've got a chance. You've got a chance at something big, whatever that big might be. Economically, politically, socially, culturally, you've got a chance. But if you don't try, if you wait for the perfect time, and please text me or email me what the exact perfect time is. How does that work? Oh, you turn on CNBC again? Oh, you turn on CNN again? Oh, you turn on Fox again? And those people on the screen at the studio will tell you when the perfect time is for you to act?
7:29 Speaker 00 Is that how you actually operate your life? Really? Why do you do that? Who trained you? How did you get so many bad habits? What the hell is wrong with you? Now, there's another guy I've had on this podcast who I've really enjoyed, and I should ask him back. Assuming he's still kicking, I'm not sure. When you do a podcast for a long time, you know, some people pass on. That's the way it works. Gerd Giganrenzer, psychologist. He's got a great line that someone posted on X the other day. I probably read this a very long time ago from his book Risk Savvy, a book that I do recommend. The quote goes like this.
8:14 Speaker 00 Many a committee meeting ends with, "We need more data." Everybody nods, breathing a sigh of relief, happy that the decision has been deferred. A week or so later, when the data are in, the group is no further ahead. Everyone's time is wasted on another meeting, on waiting for even more data. The culprit is a negative error culture, in which everyone lacks the courage to make a decision for which they may be punished, in quote. You've got to decide early on in life, are you going to be in this negative error culture?
8:52 Speaker 00 Well, if you are that little kid in 3rd grade, who thinks you're so smart because you got the best grades in the class, and you get rewarded for it, 5th grade, 6th grade, into college, you always get straight As. You get these straight As, you get these best marks, because you think there's going to be somebody out there that's going to see your marks and take care of your ass. That's right. At a very young age, kids decide, "Ooh, this is the system they gave me. If I can only memorize everything, the promise is, somebody will take care of me. Somebody will give me a job, a pot of gold job."
9:39 Speaker 00 That's how we've trained people. That's where the negative error culture comes from. Because when you are a risk-taking kid, when you're a kid who understands intuitively, sitting there, in 3rd grade, in 5th grade, or 6th grade, or 7th grade, was I one of these kids? Of course I was one of these kids! But if you understand instinctively, intuitively, that memorization is not life. Memorization doesn't help you win. "Oh, of course, you need to know what's going on, you need the basics, and that will include some memorization." However, if you don't have the ability to think, if you cannot assess risk, if you will not take a chance, if you're afraid to raise your fucking hand.
10:22 Speaker 00 How do you plan to make decisions in life? You're not planning to make decisions in life. What you're planning for is to be in that committee room that Gerd is talking about in that negative error culture. Where everyone sits there in a suit and they're more worried about looking like that guy. What's his name? Patrick Bateman or whatever. I forget his name from the serial killer crazy movie where they're talking about their business cards and whether the card is ivory or not. And what does the ink look like and whether it's cursive or not? And then you get into one of these jerk off sessions, right? Now, of course, I've witnessed this stuff. I've seen this stuff, but I refused to participate. I couldn't do it.
11:07 Speaker 00 I chose differently. I figured out a path. Does that make me great? Does that make me wonderful? Am I somewhat humble? I guess I'm somewhat humble. Am I somewhat great? Maybe, maybe not. But I knew early on, if you did not have the ability to make a decision, if you were afraid to make a decision, you were going to be at the mercy of somebody else. Somebody else who's got their finger on the back of your neck, pushing down, reminding you every day that they control your ass. Now, how fun is that? I am a little hyped up today. I gotta say, there's no script here.
11:50 Speaker 00 This is just me with a few notes. But back to Gerd Gegenrenzer, back to that negative error culture, back to sitting in that committee room, back to needing more data. Let me connect it to trend following for a second. So trend following traders decide to enter a trade. What are they looking for? The price of a market makes a higher high. They enter. That's the only data they have.
12:17 Speaker 00 Do they know that the trend will continue? Do they know how far the trend will continue? No, they do not. But I want to know that, Mike. Then you're an idiot if you want to know that, because it's impossible to know that. You were the kid who thought, "If I just got great grades, they would take care of me." If you think you could predict the trend, if you think you know the trajectory of the trend, how far the trend will go, you're the kid that sat there refusing to put your hand up, but you really thought, you know what? "I can memorize everything here." And somebody told me, I don't know who it was, the teacher, my parents, whatever, they told me, "If I just memorize everything and I get great grades..." Well, then that is the dream.
13:00 Speaker 00 Whether the American dream, the Japanese dream, the Russian dream, the Saudi dream, it doesn't make a difference. That's the dream. Do as you're told, you lemming. Sit there and suck it up.
13:15 Speaker 00 Ladies and gentlemen, that is no way to lead a life. I guess I bring a little energy today into this fine start of 2025. Witnessing all of these fun things happening in America. Witnessing, I hope, the dismantling of DEI and a non-merit culture. Because clearly, I have been either suppressed or in the minority
13:49 Speaker 00 of being on the other side of everything I'm talking about today.
13:53 Speaker 00 Because America has been in a shit place. Can you imagine having a culture, a society, a country where people walk around and say, "I get a benefit because I'm green. I get a benefit because I'm red. I get a benefit because something happened to maybe my relatives 500 years ago." Can you imagine living in that culture? Well, you probably can if you're American. Because it's been happening for many, many years. Now here's the deal. We all know, deep down, whether you love my words today, or whether you hate my words today. For those haters, you know, deep down, everything I'm saying is true.
14:38 Speaker 00 You hate my words because you fucked up and you made the wrong decisions. You made the decision as a kid to memorize everything because you trusted somebody would take care of you. And now, when you know the truth later on in life, you're stuck because you lost all that time. You lost the time. And you can't get the time back. Nobody can get the time back. But you know what? If you were one of those people that bought the wrong message, it's better to change now. It's better to change whatever your age is.
15:18 Speaker 00 You're gonna be happier. Ultimately, isn't that the goal? Happiness? I mean, if you're stuck at the mercy of some SOB with their finger on your neck pushing down. I don't care whether you're 18, I don't care whether you're 38 or 88. Let go.
15:40 Speaker 00 Walk away. Embrace.
15:44 Speaker 00 And it does feel like, for the first time in my life, that maybe, America is embracing something new. Maybe, America is embracing merit. Maybe, America is embracing hard work. Maybe, corruption will die a little bit. It'll never go away completely.
16:08 Speaker 00 But after the last five or six years, actually going back longer, perhaps over the last 25 years, but especially since COVID, we all need a rejuvenation. We all need fresh blood. We all need fresh optimism. We all need a playing field that says to every last person, "If you want to make it, here, go." Not, "If you want to make it, what color are you? What supposed gender are you?"
16:44 Speaker 00 No, that stuff is over. That stuff was always over. That was a power play. That was a dishonest power play, simply to make money. That's all it was. It was never about anything other than that, to make money at the expense of me and other people who hated these crazy insane policies. But even though I might sound a little intense today, the positive message is here. I want everyone to keep in mind this thought from Gerd Gegenrenzer. There's always too much data. There's always too much noise. All you can do is make a decision. And if that decision doesn't work out,
17:29 Speaker 00 you make another damn decision. If that decision doesn't work out, you make another fucking decision. You keep making decisions. And you don't make excuses. Guess what? If you follow that simple plan, I guarantee you, you will be happy and you'll make a lot of money. See you next week.
17:54 Speaker 00 I see a time when those awake will understand how to make money in up, down, and surprise markets. Whether new trader or experienced, college student or financial advisor, protecting against a crash or just trying to make a lot of money, trend following offers everyone an answer in uncertain times. To get started immediately, send me an email, [email protected] . I will send you the right trend following steps to take, along with my free video. But if you want to buy and hold, trust the government and trust Wall Street, this is absolutely not for you.
Previous Ep. 1322: Kurt Gray Interview with Michael Covel on Trend Following Radio Next Ep. 1324: Strange Days with Michael Covel on Trend Following Radio Page updated November 7, 2026 · transcript and summary are machine-generated
