Pod Insights Michael Covel's Trend Following Ep. 1337: The Only Way Is Through with Michael Covel on Trend Following Radio About this episode Please enjoy my monologue The Only Way Is Through 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 You may not be aware, but I made a trend following documentary a while back. A very interesting experience, timeless in my heart of hearts. But as we all know, time marches on, or does it? Let me share something about how this film came to be
0:24 Speaker 00 and see how it applies to today. The film that I made went into pre-production, I think in 06. It was officially released in 09. In fact, the last edit for the film was March of 09, and that was for the Great Recession, the equity market bottoms.
0:47 Speaker 00 And what I did across the film was, and some of you may know this, was to interview some of the great trend following traders, from Larry Height to David Harding, other people like Nobel winners, Vernon Smith, Harry Markowitz. I also had Mark Mobius in the film, Bill Miller, who was at Legg Mason, and a ton of Man in the Street type interviews. I traveled from Europe to America to Asia. It was a hell of an experience. I had a big budget, multimillion, but I didn't really have a lot of experience. So how did it start? It started by me hiring a crew. And if you have a budget and you have an idea, and you're the producer, which is what I was,
1:32 Speaker 00 the first thing you need is a director. I found a director. But we really didn't have a great idea for where we wanted to go at this point in time, the 06, 07 time period. So we decided to do a dot com retrospective, to reach back and do a story about what happened during the dot com time period. Now, this was before we all had an in-depth understanding of the Great Recession. So essentially, a couple of years before everyone understood the big short film.
2:07 Speaker 00 So this director had an idea. We would find somebody who started at zero, made a billion dollars in the dot com bubble, and then lost it all.
2:17 Speaker 00 I didn't have a person like this. And I told that to the director. And the director said, oh, I have somebody like this. And I said, who? The director gives me this name. I do some due diligence. It's an heir to the Nestle Candy family fortune, who had this dot com company that went boom and bust.
2:41 Speaker 00 And I looked at the director and I said, that's not going to work. That's bullshit. And the director looked at me, and here is my introduction to filmmaking. And this was actually a prominent director in the documentary space.
2:57 Speaker 00 The director looked at me and said, Michael, the audience will believe anything we tell them to believe. I fired the director on the spot, right then and there. So now, without a director, I need a director. I still don't have a lot of experience. And we're into the 07 time period, where it's clear the Great Recession is happening. So I made the decision to shift, to bring trend following into that time period to talk about it all.
3:30 Speaker 00 Giving up on the dot com retrospective.
3:34 Speaker 00 I hired another director. That director stayed with my project until we got to post-production.
3:42 Speaker 00 But this director wasn't doing much, except letting me essentially run the show, do interviews, etc. The second director was very hands-off. I mean, look, I'm a strong personality. We got to post-production and this second director started talking about using green screens. I fired that director right then and there, too. I then looked at the editor, and asked the editor if he wanted to be the director. And he declined. So then I became the director.
4:12 Speaker 00 With a lot of footage, not a real good narration laid down yet. And now I had to make something. Essentially, what we seem to be replaying today. Too much leverage in the system. Governments fucking around with interest rates. Governments creating bubbles. People moving in herds. People moving like sheep. Yeah, I actually went to a sheep farm in my film. But I'm sitting here all these years later. And I'm thinking to myself, it's the same shit. It's the same shit. But what they so cleverly did. Because like I said, my last edit was March of 09.
4:58 Speaker 00 The equity market bottoms. What they so cleverly did. Was change some accounting rules in March of 09. And then essentially went to. Zero interest rate policy for over a decade. Until the COVID time period. And that time period has become like a black hole. We pretend during the Obama administration. That it was this wonderful situation. It wasn't. It was zero interest rates creating another damn bubble. Which, by the way. We are now living in.
5:39 Speaker 00 So for those keeping score. Long-term capital management, if you've not read the book, When Genius Failed. Long-term capital management almost takes down the markets in the summer of 98. But they do a bailout. A great story. Some of that story is actually featured in my trend following book, explaining how trend following traders were on the other side.
6:02 Speaker 00 Then we get the dot com bubble burst. With the NASDAQ being down 77% in the fall of 02. Then we get the Great Recession. Then we get this negative interest rate period, or this zero interest rate period. For over a decade. And that brings us into the 2020 COVID time period. Where we then create inflation on purpose. And here we are in 2025. And me. As a director of a film that was released in 09. Is sitting back thinking, my God.
6:37 Speaker 00 It is all connected. It was never not connected. I mean, probably the zero interest rate policy bought more time than they expected it would. I'm sure they thought the bubble that created the zero interest rate situation would implode much sooner than it did. But here we are. And for me, when I reflect on making that film, which took three years of my life, a film that was not based on saying that, hey, there's one or two traders, like they did in The Big Short, who happened to have had one insight and thus made some money. Look, The Big Short is a fantastic film. Love it.
7:22 Speaker 00 But during that time, The Big Short time period, those weren't the only people to make money. Trend-following traders made a bloody fortune during that time period, and they were not reading reports on mortgages. They were not reading loan agreements. They were not betting at all on one fundamental perspective. Now, that's not taking anything away from Michael Burry and the other people in The Big Short film. Again, I love that film. I love the story. I love the fact that these people had the balls to make that particular bet. But betting at all on one fundamental perspective, how does that play out? How has it played out for Burry since then?
8:07 Speaker 00 I don't know. The last I heard about Burry, essentially, was The Big Short film. Look, maybe he's gone on to do the same kind of thing since then. I don't know. But time marches on. And that was the advantage that I thought that I had in making a film about that particular time period, because it really wasn't about that particular time period. I was making a film about trend-following, the psychology behind it, the philosophy behind it, why it works. And it just so happened that I had this landscape of the Great Recession to play with as an example.
8:49 Speaker 00 When I look back on that time period, I think one of the most interesting things too was the time that people gave me. The smart people out there knew that I was going down the right path. They knew that this trend following mindset, which is not based on predicting what's going to happen tomorrow. This trend following mindset that deals with uncertainty, that deals with volatility, that deals with ambiguity. The people that I chose to ask for interviews were on board. Now, of course, I had some people that were scared of interviews. I still recall a situation with Maria Bartiromo, who bailed out at the last moment. And I guess when I look back in hindsight, I was pretty intense.
9:34 Speaker 00 And I can see now why major media personalities would not want to be on the record about anything. I get it. They're talking heads. They're just reading a script. And if you have to defend a script that maybe you don't understand or you didn't write, well, that's no fun. Let me take a side tangent away from talking about my trend following film, which was, by the way, called Broke: The New American Dream. I called it that because at that time, and maybe we're right back there again, but at that time, it sure looked like it to me that the American dream was to be broke.
10:15 Speaker 00 Now, that might be a little convoluted and a little too much of a wordsmith type situation, but I actually feel good about it all these years later. When we look back over the last 25 years, has America really made decisions in its best interest? Has America really made decisions to not be broke? No. The American Dream, ultimately, it wants to be broke. So maybe that wasn't the best title in the world, but damn it, it still makes a lot of sense to me. Broke, the new American dream.
10:56 Speaker 00 But a quick side tangent, I want to talk about the funding of movies and venture capital and trend following. There's a guy out there named Jason Blum, he makes films. Typically, he's made these films for a small amount of money, a million bucks for a film, and let's say nine out of 10 fail.
11:21 Speaker 00 But number 10 makes 100 million bucks. What's the difference between that and venture capital?
11:28 Speaker 00 A venture capitalist like Marc Andreessen, he makes 20 bets, 19 of them fail, and one of them is Meta or Google or something. Now, I'm sure you can see where I'm going with this. If you know something about trend following, trend following is the same damn way. You make a bunch of bets with trend following, and some are gonna win a smaller percentage of your total bets. And then you're gonna have a bunch of small losses. So whether it's the financing of a film, whether it's venture capital, whether it's trend following.
12:02 Speaker 00 The idea is this, we don't know what's going to happen. We can't predict what's gonna happen. So we make bets, and many of these bets fail. But they don't fail enough to kill us. So we keep making bets, though. And then, one, or two, or three, or whatever, number of bets bring in the good luck, bring in the good fortune. And those pay for the small losses, and they give us our profits.
12:38 Speaker 00 It's the same mindset, financing a film, venture capital, trend following. Now, I posted something the other day on X about what trend following is not. Because so many people get caught up in the idea of patterns and squiggly lines on charts and all this other bullshit. Now, one poor dude could not help himself. He had to reply in a way where it looked like he was agreeing with me, but he started talking about cycles.
13:10 Speaker 00 Now, if you're funding a film,
13:13 Speaker 00 or you're funding venture capital like I talked about,
13:17 Speaker 00 where does cycle play a role? How does cycle play a role in trend following? What the fuck is a cycle? I mean, we could think about parallels to the current situation today. I made one by talking about my film. That doesn't mean everything's gonna shake out exactly like it has in the past. We have no idea. That's the whole damn point. We don't know. You can't know. So if somebody says we're in the middle of XYZ's cycle, I wanna know exactly how they bet off that. Well, that's gonna require them to define the cycle in mathematical terms. How the fuck do they do that?
14:03 Speaker 00 Well, they don't. Because anyone who's talking about a cycle doesn't do that. They're just filling the airwaves with bullshit. There's no doubt that I have concrete views about society, economics, culture, race, civilization.
14:22 Speaker 00 You have to have these strong views today, or you won't survive. You can see those strong views if you go back and you watch my film from all those years ago. I'm gonna be the same guy. A little younger, a little crazier. But the messaging, the words, the insights, the philosophies, it's the same stuff. And that's what's cool about trend following. Because regardless of what's going on in the current world that you can analyze, quote, fundamentally, trend following supersedes that. It's above that. It doesn't have to know that. Yeah, it's always been interesting as a trend following guy to reach back and use all these great stories
15:04 Speaker 00 along with trend following performance to show how trend following works.
15:10 Speaker 00 But I gotta be clear here, I am not attempting to give any fundamental perspective about what's gonna happen. I mean, we all know if you keep interest rates at zero, that's a shit system.
15:24 Speaker 00 Mike Covel, personal view, that's just a shit system. Now, do I know what's gonna happen with markets? If I detect a shit system? No. I'm not making bets on my view of it being a shit system. I'm making bets based on, how is a market moving? That's it. So if you do happen to see my film, and you do happen to glean some trend following insight from it,
15:50 Speaker 00 don't get lost in that particular time period. It's just an example. The Great Recession was just an example. Trend following marches on regardless of any one example. It marches on throughout history.
16:09 Speaker 00 That's what's so damn cool about it. You have so many people making their bread and butter, attempting to tell you what's gonna happen tomorrow. And I stumbled into this world that doesn't do that. And I gotta tell you, it's a hell of a lot more peaceful. It's a hell of a lot more relaxing. I was pretty intense last week, and that hasn't changed. It's a shit system. And it doesn't look like it's doing very damn good right now. There are generations in America that have blood on their hands. There's no doubt. Blood on their hands from creating these foreign wars. Blood on their hands from making sure only one generation in America got lots of money. The boomers.
16:55 Speaker 00 So there's no guarantee about what's gonna happen next. I sure as hell can't make a prediction.
17:01 Speaker 00 But I just wanted to share a little bit today about the experience of using stories at various points in time to explain trend following.
17:11 Speaker 00 And I feel damn lucky to have had the chance to make a film like that. If you ever get the opportunity, and really the opportunity comes down to what do you want? But having to put down, on video, so to speak, a story and deliver it, it's an experience you will never forget. So if you get that opportunity, take it every time.
17:34 Speaker 00 And as I go out today, I want to read something from Nietzsche that adds to my episode last week. A brief quote. "There is a point in the history of society when it becomes so pathologically soft and tender that, among other things, it sides with even those who harm it, criminals, and does this quite seriously and honestly." You know, I felt that way making that film all those years ago. I feel that way right now, today. So there's always going to be two sides of all of us. The side that has to put ourselves in the position to make money, for example, using a trend following strategy.
18:16 Speaker 00 And the side of us that has to be a human in civilization, thinking and acting.
18:25 Speaker 00 Because again, as I said last week, if there's no civilization, there's no markets. We can be the great trend following trader as all we want, but if things go too far, it all falls apart. Until I see you again next week, have a good one.
18:47 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.
19:23 Speaker 00 But if you want to buy and hold, trust the government and trust Wall Street, this is absolutely not for you.
Previous Ep. 1336: Enough with Michael Covel on Trend Following Radio Next Ep. 1338: Trust, Action and Distraction with Michael Covel on Trend Following Radio Page updated November 7, 2026 · transcript and summary are machine-generated
