Pod Insights Michael Covel's Trend Following Ep. 1338: Trust, Action and Distraction with Michael Covel on Trend Following Radio About this episode Please enjoy my monologue Trust, Action and Distraction 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 I've been thinking about AI a lot recently and my use of AI tools, my understanding of what AI can do right now, and they are amazing tools. There is no doubt, but the use of AI brings up many issues. Let me share. Last night I ended up at a steakhouse with three other men. We were all just talking all kinds of issues. I'm Gen X, the three men were all millennial, so a little bit younger than me. But all three, a very good understanding of AI. So we were all kind of going deep on what has happened and what will happen, or what we might guess will happen.
0:43 Speaker 00 But AI brings up very quickly the notion of information, and information is everywhere. Well, of course, this ultimately leads to their curiosity on some of my work and my process. And my process was all pre-AI. In many instances, much of the work, the insights that I assembled, was pre-internet because so much of it was 94, 95 and into 96. And there wasn't really anything on the internet about trend following in 1996, except me.
1:24 Speaker 00 I was the only one that was really putting trend following information out there. And the only reason you're probably listening right now is because I actually was the only person putting information out there in 1996. It was the start of a brand and I was trying to dig at that point in time. If you're trying to dig about a subject, pre-internet, pre-AI, pre-phones, there's pros and cons. And since this wasn't yesterday, it's not necessarily relevant because we're never going back there again. But maybe it is relevant. Because when I was digging, it was about old newspaper articles, old books,
2:10 Speaker 00 old magazine articles. Things that came before my time, 70s, 80s. And then getting the face-to-face time with legends. Because before, pre-internet, I mean today, someone like Tom Bosso is a star. But Tom was not a star in the sense that so many people around the world knew about him before he was a successful fund manager. But this was pretty low-profile stuff. So I think in a way,
2:44 Speaker 00 during that window when I was gathering information, 94 to 96,
2:51 Speaker 00 the low-profile nature of so many legends gave me accessibility, gave me the opportunity to get close and learn. And since so many of these great traders were under the radar, so to speak,
3:09 Speaker 00 they talked openly. I mean, some of the favorite things that I've saved over the years are cassette tapes of people like Bill Eckhart of The Turtles, who was giving a speech, I don't even know where, sometime in the late 80s, early 90s. And I have this cassette tape where he just goes through and explains everything.
3:36 Speaker 00 That stuff's invaluable. I mean, I've got the same thing with people like Bill Dunn, some things that I've never put out there. But this was my introduction to assembling information. Not so easy, but it was fun. It was like go down the rabbit hole, dig, dig, dig, find this, find that. Now, of course, once the internet started to take off, there's more information out there.
4:06 Speaker 00 But not so much if you really think about it. Because I released my first book in 2004. And then many more books over the next 20 years. Once the podcasting world took off. Then we have more and more people sharing information. Again, like Tom Bosso or Jerry Parker, etc. I should also mention the phone. The iPhone. How much was that a game changer? In that kind of 2010 to 2012 time period? It doesn't make a difference how old you are. The iPhone just happened. And when it happened, it changed everything. So we have this period of the internet launching.
4:49 Speaker 00 Marc Andreessen Netscape, the first browser going public in 1995. We have more and more content over the 90s. We get the dot com collapse. Social media as well. The sharing of information on social media. But against this backdrop. I always thought to myself. Well, this is interesting. I assembled all this information. These insights, this wisdom. From all these sources not on the internet. Including face to face. But back to my meeting last night. Three millennial men. Much of their information flow. Has not come from the same sources.
5:34 Speaker 00 Where my information flow came from. And how does this change us all? And one of the guys last night kept making the point that. Now, bring it forward to AI. We have all the information. You can go on to AI and it will regurgitate back to you. Some summary. Some insight. But here's the problem. The problem for you, the problem for me, the problem for everyone. What if AI gets it wrong?
6:08 Speaker 00 What if AI generalizes something? And you're left with, "Well, this sounds really great, but is it accurate?" Now, I've done some queries on AI, talking about trend following, comparing and contrasting to other disciplines. And from my perspective, the way I ask the question, the way I put forward the prompt, AI has given me some fantastic responses. Very interesting. But what if you show up to AI and you start saying to AI, "Tell me about trend following and candlesticks." Well, you have to know first that trend following and candlesticks is an oxymoron. It's bullshit. Because candlesticks are useless.
6:51 Speaker 00 I've not done the query, but I'm sure if you ask AI to justify the use of candlesticks inside your trend following trading, it probably will. It's going to figure out a way to give you what you want. Quick side tangent on errors. I asked AI the other day, Grok specifically, "Tell me the 20 best American college football teams of the last 15 years." I didn't give it any requirements, just wanted to see what it would say. And it did, it gave me a list and it classified these teams by total championships, win totals, etc. I looked at the list, and I don't follow college football too closely, but since my
7:36 Speaker 00 nephew plays in the ACC, I do know something about it because I hear things. And so I saw this one team, and I think it was Clemson that AI had listed as the second best team over the last 15 years, whatever, it's not important. But it said that Clemson had won a championship in a year where it had not won a championship. So I said to Grok, "You know you're wrong. Clemson did not win the championship that year." Grok says, "Oh, you're right. Sorry about that." Now, of course, I've already asked Grok a data-intensive question. So my follow-up was, "What else is an error in your response to me?"
8:20 Speaker 00 Now extrapolate that out to something like trend following. If you don't know what you don't know, how the hell do you tell the AI that it's wrong? This is a problem. And this was a big part of our conversation last night. That where they could see the way that I had learned, and this is just lucky because I happen to have been born at a certain point in time, pre-internet, so I was forced to use the tools of gathering information that would exist before the internet. And they were contrasting to the way people use tools today. And to put another layer on top of all this, this conversation was taking place in Ho Chi Minh City, Vietnam.
9:04 Speaker 00 So at the table are three Americans and one Estonian guy, perfect English. All four of us from different walks of life, but all essentially with the adventuresome spirit of, "I will go anywhere. I will be anywhere. I will explore." And this also takes us back to 2012 again for another part of the conversation, which is the nomadic part of the conversation. Perhaps inspired by Tim Ferriss's Four Hour Work Week book, "That You Can Be Anywhere." Some people took that to heart. Now, I was a little bit older, so the Ferriss book did not influence me necessarily.
9:46 Speaker 00 I was already going down that path, kind of in parallel to what Tim was writing about. But for many millennial men, that book was like, "Hey, let's go. Let's go explore. Let's go find." And that opens up another path on the differences of gathering information, depending on your age or your generation. Because like I told them, I said, "Hey, I was living in London in 94. I first went to Asia in 2006, Hong Kong and Tokyo." When I first went to Asia, I understand this place, it's wide open. That wasn't how I felt.
10:27 Speaker 00 I felt that Hong Kong and Tokyo were massive, exciting, but I had no perspective on those places.
10:36 Speaker 00 You couldn't find YouTube videos of influencers showing you every nook and cranny of those cities. That wasn't what we had at that point in time. But now my friends, a little bit younger and growing up right at the time where in their twenties and with the release of the iPhone and with social media, all of a sudden it's like, hey, let's go travel. Let's go see, let's go explore. I don't want to just trust the sources. I want to see the sources. So I find this whole time period that we're living in, regardless of your
11:16 Speaker 00 age, because each age is going to have a different perspective based on where they came into the timeline. It doesn't necessarily make one more correct or not. So where does a conversation like this ultimately go? It ultimately goes to trust. Who do you trust? What do you trust? And since we are living in the age of AI, how do, let's say, Gen Z and millennial trust AI exclusively? I mean, they might not have any other choice. They might not know any better. But how can they trust those platforms exclusively? There's a real risk there. Now, again, in my
12:00 Speaker 00 trend following space, I'm fortunate enough to have had these interesting experiences pre-internet, pre-social media, pre-AI, that grounded me in a way where it didn't make a difference how many shiny objects would, in the future, appear to distract me because I didn't care. So today, not only do we have the trust issue, how do I trust this source? I don't even know how to give an answer to that. I would say, find the people in the niche of what you want to know about. Find those people that have given up their life, so to speak, to be a master
12:44 Speaker 00 in some particular craft or information. Yeah, I don't want to toot my own horn, but if you want to know about trend following, obviously, whether you're an individual or you're AI, you start with me.
12:58 Speaker 00 It's a terrible challenge today to trust, to trust sources, to know how to make a choice. That was another issue that we brought up last night. Now that you have all the information, AI can't make a decision for you. If AI tells you, this is a trend following trade and you must take it, you don't have to listen. So not only do you have the issue of trust, you have the issue of making a decision. And this also came up as another layer on this whole conversation last night, which is distraction. We've got a trust problem. We have to take action. That's another issue. But then we have the issue of distraction.
13:45 Speaker 00 And I was sharing with one guy, the Estonian guy, that during my time period, to build a trend following information network, I did not have the same distractions. Because I did not have a phone staring at me all the time with whatever, text messages, images. All I had was this passion to figure out trend following and share it with people. The distractions weren't there. Obsession was there. The Estonian guy last night, he heard that and you could see the gears turning. And he shared with me, and I don't know how he got to this perspective, but as he was mastering his understanding of AI
14:31 Speaker 00 and he was sharing stories of reading through the patents of Google, all the IP work that Google has submitted to the American Patent Office. He was sharing that as he was learning that type of information, he knew he had to avoid distraction. Because he's coming along at a different point in time than I did. He now has to deal with this phone. He's grown up with this phone. And he was giving some techniques about how he would avoid the phone. And when he got tired from this research that he was doing, not dissimilar to the research that I was doing, just a different topic, he would allow himself to sit in front of a white wall, almost in a meditative type of mind,
15:16 Speaker 00 to avoid the distraction. Now you might imagine with four men getting together, there were other topics involved too. And we all did go deep on the concept of relationships in the modern age. Men and women in the modern age. And how that plays out. Over the different countries right now in 2025. It's not necessarily a pretty picture. Now I'm going to save that part for another day. Quite interesting. And maybe I'll never share that part. Maybe that's too much. I mean, instinctively, we all know there's a problem. We can look at the divorce rates. We can look at the fertility rates. Hey, bring it back to distraction.
16:00 Speaker 00 Do I think that divorce rates and fertility rates are completely related to the damn phone? Of course. The phone and social media. So what I wanted to share today was just this perspective to get you thinking. About the issues that are coming down on you. Yes, many people come to me and they want to understand and learn trend following. And I'm very good at giving them the brutal truth. Focus here. Don't be distracted by this. Stay on target here. That's my biggest value. Now that we are in the AI world, the sea of AI information. Who will tell you?
16:44 Speaker 00 Of the AI information? What is what? What is right? Who will be that person to give you the confidence? Not unlike the many legends that gave me the confidence to know in 2025. That I am correct about this particular topic. So the foundation was laid decades ago. To give me the confidence that I know today in the face of the phone. The social media. The AI. But that's also a function of luck of being my particular generation and coming along when the internet started.
17:25 Speaker 00 At the end of the day, we're all the same, but we have to be cognizant of the time period that we've come along in and the technology that's come down on us that has affected our ability to know what is right or wrong, who can we trust and to not be distracted. One of the things that I pride myself on my podcast these days, because let's face it, yes, I'm consistent, but my podcast changes, my interests change. I have less interest in interviews these days because I feel like I've talked to so many people, the topics become not so interesting. If you want to go down the rabbit hole, it's going to take you like, what, a couple of
18:09 Speaker 00 months to listen to my podcast 24 and 7? And these days I'm pitched guests that are abysmal, professor hacks with bullshit topics, DEI, all kinds of nonsense. Who the hell cares? I don't care. You can just see that all they're trying to do is sell some bullshit book to have a resume point. No one cares. They're not passionate about their subject. I was always passionate about trend following because it was an amazing, below the radar topic, hidden, secretive, and that drove me. But so many topics today. When's the last time you saw a book that really made you go, wow?
18:53 Speaker 00 A brand new book, not a classic. Hey, the classics are always going to be there. I also try in this podcast to not be topical, topical in the sense of, hey, Trump said this today, or the opposition said that. If you create content, if you want to share with people and all you're doing is reading the news each day, yes, I guess there's value in that. You can get eyeballs, you can get ears to listen, but I want there to be a deeper connection between myself and my audience on topics that matter. And we all know that trust, making decisions and distraction.
19:35 Speaker 00 Those issues are coming down on us like a ton of bricks. We've only got one life, and if you've only got one life, you've got to figure out a way to manage this. So yes, today I share some insights from my perspective and from some other guys' perspectives that happen to be a little bit younger. And how the timeline is the timeline regardless of our particular age. But there's no doubt that that timeline affects different parts of the population in their understanding. So as I go out today, I want to leave you with the big thought because it ultimately reduces to this.
20:13 Speaker 00 You go to Grok or ChatGPT or DeepSeek or Google's Gemini and you ask a question. Now, if it gives you the sources to some white papers, great. But if it doesn't, how do you trust it? And if you're spending all your time gathering more and more and more information, how do you know what is enough? Part of our conversation last night involved using price to make a decision versus having all of this other fundamental data. Now, of course, three guys, millennials, part of their thinking might be, wow, we've got all this AI fundamental information.
20:53 Speaker 00 This will ultimately help us to develop hundreds, if not thousands of trading strategies where we use all of this fundamental data to make decisions.
21:04 Speaker 00 My reply would be, hey, do you really ever think that's going to beat just relying on the price?
21:12 Speaker 00 And this is what we face. Ultimately, do you trust the price? Do you trust this reality? Or do you trust more and more and more fundamental information, which is what AI is giving us? Again, this is not an AI criticism. It is a fantastic tool. But there's no doubt if you don't figure out the issues that I'm talking about today, you're going to get passed by. So as they say, if you're not running, you better start running. Because if you're on the savanna and you're a lion, you wake up each day, you better start running or you're going to starve.
21:54 Speaker 00 And if you're on the savanna and you're a gazelle, you better start running or that lion's going to eat you. So it doesn't matter, lion or gazelle, when you wake up, you better start running.
22:08 Speaker 00 See you again next week.
22:14 Speaker 00 I see a time when those awake will understand how to make money in up, down, and surprise markets. Whether a 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.
22:39 Speaker 00 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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