Pod Insights Michael Covel's Trend Following Ep. 1333: Thoughts on Bill Dunn with Michael Covel on Trend Following Radio About this episode Please enjoy my monologue Thoughts on Bill Dunn 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 Some bad news to report today. Legendary trend following pioneer Bill Dunn passed away this week. About a month short of his 91st birthday.
0:14 Speaker 00 And my way of giving back is to share my experiences with Bill Dunn, which I've shared on this podcast before, but perhaps today I will think of details that I forgot prior.
0:28 Speaker 00 For me, understanding trend following, the years 1994, 95, and 96 were essential.
0:36 Speaker 00 I first met pioneers in the trading industry.
0:41 Speaker 00 Three in particular, Peter Borish, Jerry Parker, John W. Henry. I met them in this 94, 95 time period. And I was starting to wrap my arms around trend following. And I had a good feel for things. Obviously, if I had met Jerry Parker by then, I knew about the turtle story. I knew a lot about the turtle story. And with Peter Borish, I now knew about Paul Tudor Jones, as Peter was number two to Paul at his firm. Peter famously featured in the film Trader, which if you have not seen, please see.
1:21 Speaker 00 And a brief meeting with John W. Henry shortly after he was on the other side of the bearings bank trade.
1:29 Speaker 00 So I'm navigating this world. And my father hears me talking about many of these things at some particular time. And I'm living at that time in the Northern Virginia area, about 15 miles outside DC.
1:47 Speaker 00 My father says, well, you should talk to Marty Bergen. Remember, he was your baseball coach when you were 15 or 16. And I said, I don't understand. And he said, well, Marty is involved with a CPA firm. And they do work with this trader. Now, I had no idea who this trader was. But I was told it was Bill Dunn of Dunn Capital. And my father relayed to me that Marty said he was the best trader in the world.
2:19 Speaker 00 Now at this time, I'm in my mid 20s and like I said, I'm starting to wrap my arms around this trading stuff some specifically trend following. And then my father, who doesn't really know about this world, tells me this. And I'm thinking, this sounds really crazy, but look, I'm not silly. I called Marty and I said, hey, can I come chat with you? And his office for the CPA firm he was with was literally a couple of blocks from where I was living. So I went and I talked to Marty Bergen, who had coached me in baseball eight or nine years earlier, completely random turn of events that my father reintroduced us.
3:03 Speaker 00 And all I really remembered at that time was Marty was a huge fan of my style of playing. So we always had a connection. He was a gamer and he was the kind of guy you wanted on your side, just like a winner type. And I had that attitude too. So even though we had not seen each other for a long time, we always had that kind of connection. So I go and I sit down with Marty and Marty says, hey, you want to go meet Bill?
3:30 Speaker 00 And okay, now by this time, before the Marty meeting, I've seen the Stark report. So I now know something about assets under management and Bill Dunn's performance. And I pretty much know when I'm going to see Marty that yeah, this guy, Bill Dunn is a big deal. Marty makes an introduction. I called down to Stuart, Florida. And at some point in time, Bill called me back. And he said something very odd to me at that time, a little frightening in a way, but also just ballsy. And he was like, so you just want to come down here and press me? P R E S S. Press.
4:14 Speaker 00 No one had ever said that to me before. But I instantly knew where he was going, which was essentially, I'm not for sure about this, he was probably a billionaire at that time, and he knew I was a young guy. And so by saying, "Do you want to come down and impress me?", it's like saying, "Hey, you want to come down and make an impression? You want to come see what I think of you?" So sure as shit, I got on a plane and I went down and I saw Bill Dunn. And I remember it being a strange kind of setup. It was a multi-story building, maybe two or three stories tall, nothing fancy, in this
4:55 Speaker 00 kind of retirement beach community, Stuart, Florida. Now, this was not Wall Street. I had literally been to World Trade Center 7, Solomon Brothers offices, within the last year, and now I'm here. I could not have been any farther away from New York City. But I knew this guy, Bill Dunn, had crazy good returns. I knew he was managing over a billion dollars. So it didn't matter to me what the offices looked like. I mean, they were nice enough, but it wasn't the pretense that you would expect for somebody this successful.
5:39 Speaker 00 I go into the office, I sit down, there's a waiting room, but there's no one in there. I look down, there's a couple magazines, like Futures Magazine, and they're like years old. Finally, somebody sauntered out and got me. It was very casual, the whole environment at Dunn Capital at that moment in time, and I think this was early 1996. And I got introduced to Bill. Bill was wearing a colorful Hawaiian shirt. We shook hands, and it was steel grip.
6:09 Speaker 00 I mean, that's the thing I remember more about the meeting than anything. His handshake. He then introduced me to his number two. His number two introduced me to his number three. And it went all the way down the line to where at the very end, I was chatting with a recently hired intern. I met everyone in the office. There was like 10 people at that time. Don't kill me if I got the numbers wrong, but I recall about 10. Who cares? They were making crazy returns with a billion under management. This is a lightbulb moment when you're a young guy. You're like, wow. None of the bullshit matters. What matters is can you do it? Bill Dunn, trend following trader, systematic.
6:53 Speaker 00 The cute thing is, the very last guy I talked to, the intern, the first thing he said to me, "Do you play Doom?" I did not know what Doom was at that time. The famous video game. And it was just such a casual, interesting wake-up call to how life really works. Like that young intern, he knew where he was working. He knew what his objectives were. But he still talked to me casually about something that was completely not business. And this is one of the big lessons. As we were sitting there, an alarm went off. And it almost looked like, from memory, like a red alarm that you might see like a fire alarm,
7:38 Speaker 00 something up on the wall near the ceiling. And in the corner of the room, there was a screen in the terminal. And that was the only screen on anyone's desk in the office. And somebody sauntered over to place to trade. Everything was automated. And we're talking a long time ago, decades ago. Talk about a life lesson. In that moment, you just learn how everything works.
8:08 Speaker 00 Now, I did not appreciate that when I went down for that meeting, thinking it was an informational interview. It was actually an interview. They were thinking about hiring me. Now, it never came to that. And obviously, as most people that know about me know that I went a certain direction. But I did have further contact with Bill in the years to come. I remember being back at his office. I'm not sure the exact context. But there was a couple of guys that were going to raise money for Bill. I think that's what the pitch was. So we're in Bill's office, his conference room. There's other Dunn Capital people in the room. And these other guys that I think I came with, I wasn't involved in their business, but I just don't recall the details.
8:54 Speaker 00 And they were putting their pitch out there for Bill. And their pitch involved the words CTA, commodity trading advisor, and managed futures. And they kept saying this stuff. And for some reason, I noticed that Bill was kind of irritated. Now, it wasn't really my place to say anything, and I think this was after my trend following book came out. So maybe I had a little room to maneuver. But they kept talking about CTAs and managed futures. And I finally just said something to Bill. I said, well, Bill, and I'm paraphrasing here. I don't recall the exact words. Bill, you're a trend following trader. What's all this CTA managed futures stuff? He kind of pounded the table.
9:40 Speaker 00 Again, I'm paraphrasing, but he's like, damn it, I am a trend following trader. And he kind of put to shame all these other terms.
9:48 Speaker 00 And it was just cool to see the billionaire trend following trader up close and personal saying, I don't want all these other labels. Not my cup of tea. Now, in the years to come, Marty Bergen joined Dunn Capital, rose the ranks. And eventually, when the succession plan happened, Marty was the guy. And he's the guy today. He's the owner CEO of Dunn Capital. So he is the one carrying on the legacy of Bill Dunn. Now, there are so many different paths that I went down to assemble what I assembled. And let's be perfectly clear, if I did not stumble into this trend following world,
10:32 Speaker 00 if I did not pull on a string, there is no way, no how, so many of the insights that I have put out in books would have ever been out in the public discourse. It would have all remained hidden. Nobody was going to talk about John W. Henry being on the other side of Barron's Bank. Nobody was going to tell the complete turtle trader story. Absolutely no one. It wasn't coming. I was the outsider. And as an outsider, if I was able to do good work, I would get respect. And that's what happened. Now, I'm sure there's some people that did not like me shining the light on trend following.
11:15 Speaker 00 Dunk Capital was not that operation. They've always been kind to me. Many from Dunk Capital have appeared on my podcast. I'm sure indirectly or directly, many people have bought my books via Dunk Capital's recommendation, via Bill's recommendation, via Marty's recommendation, via James' recommendation, all down at Dunk Capital. So I always will feel a certain debt to Marty, to Bill, and to all the people at Dunk Capital that shared an education with me. I mean, they did not sit down and show me their code, but they showed me everything else. And that was the important stuff.
11:59 Speaker 00 Because if you got a little moxie about yourself, you're going to figure out a trend following system. You're going to reverse engineer Dunk Capital, or Mulvaney Capital, or Winton Capital. If you really want to, you're going to reverse engineer it. But the thing that I got from those guys, led by Bill, was the confidence. This is how it's done. And only so many people ever saw that. Now, maybe today, you're in your twenties, or your thirties, or your forties, and these stories sound old to you.
12:35 Speaker 00 Now that would be your first mistake. Because I gotta tell you, and I've said it on this podcast. If you reverse engineer that 50-year track record from Dunn Capital, that is absolutely more valuable than anything you could ever take in a finance program, an MBA program, etc. It's timeless, ladies and gentlemen. If you don't get this, you don't want to get this. Okay, fine, whatever. But when the shit hits the fan, and in April 2025, maybe the shit is hitting the fan, but when the shit hits the fan, trend following is something you want to know.
13:17 Speaker 00 And if you go down the trend following path and you don't know about Bill Dunn and Dunn Capital and Marty Bergen, if you don't know about these people, and you call yourself serious in terms of, "I'm going to figure something out", well, you're not serious if you don't know. Now, don't send me some silly email and say, "Tell me, Mike. The information's out there." Hell, I've put most of it out there. It's up to you to read. It's up for you to digest. Now, let me be concrete, because I think Bill would appreciate this. Let me be concrete with a trend following lesson for my Mike Covel-Bill Dunn memorial.
14:00 Speaker 00 And I want to share two quick stories about two stocks, Nike and Moderna. Now, I'm not saying some one trend following trader was trading these two stocks alone as a trend following trader and caught the up and down action. That's not the point. The point is this. First, Nike. Nike, if you go look at the chart, a slow gradual ramp up from the mid 90s until around 2021, up to 177 per share. This was the juggernaut, the unstoppable force for footwear and clothing.
14:48 Speaker 00 I wore Nike shoes from like age 11 or 10 into my 50s. Forty years of loyalty to Nike. But somewhere along the line, in the last three or four years, their shoes became shit. And somebody introduced me to this Swiss brand, ON, or ON, I'm not sure how it's pronounced. And now that's what I wear for all different forms of casual wear to exercise. Their shoes are fabulous. Roll forward to 2025, Nike is now at 55. From the low teens to 177 to 55.
15:32 Speaker 00 177 per share in 2021 and 55 in 2025. Right in the middle of boomer retirement. This stock was probably in every damn boomer portfolio. Now I'm laying out, I guess, a fundamental analysis. How useless is that? But you know what's not useless? Back to Bill Dunn, go look at the chart.
16:03 Speaker 00 Bill Dunn, Dunn Capital, could have traded that Nike chart, alter in following traders frankly, could have traded that Nike chart as easily as the last couple of years as 50 years ago.
16:17 Speaker 00 The chart is the same. Way up, big boom, crash down. As a trend following trader, you always have rules to handle a chart like that. Price action like that.
16:32 Speaker 00 So I can sit here and I can map out to you this scenario about me personally using Nike, about me switching to another brand. And that's the typical bullshit that you hear from CNBC and Bloomberg and the talking heads and the fundamental people.
16:52 Speaker 00 But none of that is relevant. Because if you want to be a trend following trader, if you want to learn from a guy like Bill Dunn, go look at the Nike price action, erase the name Nike, and tell me how to trade it. You did not have to know the name of the company to trade that stock at all. Not relevant. That is just a damn cool insight. It will always be a cool insight. And for someone like me, I go back to meeting Bill Dunn decades ago. That was where it started. So again, if you're in your twenties, or your thirties, or your forties today, and you're
17:33 Speaker 00 thinking this story sounds old, it doesn't sound relevant to me, well, you'd be a dumbass if you think that. You'd be a really cocky arrogant fool if you think that. Let me give one more example. In the trend following headspace, in the Mike Bill Dunn memorial headspace. Moderna. Covid vax pioneer. They were in the low teens back in what, 2020 or something? Then the Covid vax comes out, 21, 22? They ramp up to over $400 a share. A complete trend following move.
18:18 Speaker 00 You did not have to know why that price was going up. All you had to do was go with it. You didn't have to know anything about Covid. You didn't have to know anything about vaccines. But that chart was going straight up. Then something funny happened. That chart that got over $400 a share, Moderna, the vax pioneer, dropped down into the twenties. 27 the other day. From over 400 to 27. Now, I made a note on X about that.
18:57 Speaker 00 I said, quote, "A chart that demonstrates the scam of the COVID era and the benefits of trend following," end quote. Somebody called me an anti-vaxxer. But seriously, if this Moderna vax was so good, it would not have gone over 400 a share down into the 20s. That's called implosion, folks. And I think it's fair, objectively, to say, gee, was this a scam? But here's the funny thing. Don't get preoccupied with thinking whether it was a scam or not. I mean, I think the COVID vaccine stuff was a scam. Generally speaking, yes. But what does my opinion matter? It doesn't matter.
19:41 Speaker 00 It doesn't matter at all. Go look at the Moderna chart and tell me a trend-following technique that would not have traded the Moderna chart. So yes, I can have my opinions about Nike. I can have my opinions about Moderna. But if you look at those two charts, trend-following is the best way to trade them. And what percentage of the population understand that today? Not many. And I'll give one third example, the tariff situation right now under Trump. I have no idea what's going to happen. I know all the people that are pissed off about tariffs are all the same people that got everything else wrong politically and culturally for the last five years.
20:25 Speaker 00 So if all the people that got everything else wrong politically and culturally for the last five years are pissed about tariffs, maybe I'm not pissed about tariffs. But again, what does it matter? What does it matter about my damn opinion or your opinion? The only way you're going to trade your way out of where we are now is with a trend-following system, because a trend-following system is not going to predict what's going to happen. It doesn't know what's going to happen. There's too much uncertainty. All you can do is follow the price, which is something that Bill Dunn taught me. So everyone, please, give a round of applause to Bill Dunn, trend-following pioneer, a legend.
21:10 Speaker 00 I wish everyone had a chance to meet him. A very inspirational guy.
21:17 Speaker 00 And especially if you're young. I promise you, if you go down the Bill Dunn path to truly understand what he did to make his money, a billion plus, you will absolutely send me a thank you note. That much I guarantee. See you again next week. 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
21:58 Speaker 00 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.
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