Pod Insights Michael Covel's Trend Following Ep. 1357: Don't Bet the Deli to Win a Pickle with Michael Covel on Trend Following Radio About this episode Please enjoy my monologue Don't Bet the Deli to Win a Pickle 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 19,130 words · 3 speakers
0:00 Speaker 00 When it comes to having guests on this show many, many times, three guys have appeared the most: Tom Bosso, Jerry Parker, Larry Height. Three trend-following legends. It doesn't look like it will happen again, because as we all know, life happens. I don't think Larry will be able to appear on my show again. That sucks. Right? That sucks. One of the funniest, brightest guys I've ever met. But since time is an interesting thing, let's go back in time today. Let's do a little bit of a Larry repeat, a Larry reminder, a reminder
0:45 Speaker 00 at how interesting of a guy Larry Height is. I hope you enjoy.
1:06 Speaker 00 Let me make an observation on that, since you lead with getting older. I just watched Mr. Munger and Mr. Buffett on YouTube, and I watched a good portion of their annual shareholders meeting from the last few days. And compared to them, you're a teenager.
1:21 Speaker 01 That's true. But there's so much missing in me. Well, you take what you get.
1:29 Speaker 01 What does the world think of America now?
1:33 Speaker 00 What does the world think of America?
1:35 Speaker 01 Yeah, you're sitting in Asia, right? These people have had experience with America, really shitty experience, but okay. When I was there years ago, they said, "Well, we are Buddhists, so we don't hate, but we don't forget." So now the world is flipping around, and I just wonder if they still have that.
2:01 Speaker 00 I had a conversation with a guy that works for a fund that raises assets across Asia to let people in all Asian countries essentially buy their green card to America. And it's a minimum $800,000 investment. So I don't think there's any lack of demand for that. And I think even the average Vietnamese, probably other Asian countries, they still want their kids to go there for school and all that kind of stuff. And they still think that America is the ideal that they might've heard about in their youth. And I think, in my opinion, many people in Asia have not experienced on the ground,
2:43 Speaker 00 because of COVID, in many cases, they've not experienced on the ground since 2019. And America is a completely different place after COVID. They still have a certain optimism, but the direction America is going on all kinds of fronts, especially culturally, I think eventually people are going to understand what that is and they're not going to like it.
3:03 Speaker 01 I live here and I don't like it.
3:10 Speaker 00 It's not nice. I'll share something with you too, since it's an interesting way for you to start our conversation. Look, sometimes you and I joke around about pretty girls in this podcast, but I must say one thing that I really love where I'm at right now, and whether it's a relationship or a friend, the sensibilities of the women in Vietnam, for example, they remind me of the sensibilities of our mothers or our grandmothers. So they might be a younger attractive lady, or an older attractive lady, or whatever, but they still, even in their twenties and thirties, there's a sensibility to where it's, oh wow, there's a certain caring there, there's a certain feminine feeling there, that hard workers and all that stuff.
3:52 Speaker 00 But it's not this strident chasm that's developing between men and women in America. Probably not news to you, right?
4:01 Speaker 01 First thing we've become, and I am certainly one person who fits the bill, very impatient. Amazon is a great example. Today, A, no one has to not have anything anymore. Pretty close. And not only do they get it, but they get it fast. That is probably true in the adult too. But I just say my apartment, I don't want anything I want. It'll be the end of the day.
4:36 Speaker 00 Is that good or bad? I no longer think it's good.
4:39 Speaker 01 I think what we have in that mode is we have, when you go to Miami, I do a lot of physical fit things, or try to anyway, and everybody, when you talk to the doctors and say, people want to come in and get the thing that's going to do it. Boom. And everybody's impatient. We have an impatient country. We have an impatient world for all I know. So nobody has to wait for anything. That does not mean anything. Now, look, I'm not an economist, you know, I'm a trader.
5:21 Speaker 01 They want to make this coin, a trillion dollar coin. I could not believe it. So what are they going to do? They're going to print more money.
5:30 Speaker 00 Well, they can't, they're kind of locked in right now. I mean, with the inflation, it's going to be interesting to see what they do. If they go old school Volcker and they really kill inflation. But look, back to trend following 101. You and I can't predict tomorrow. We're smart people. We can make observations. We can look around, but we sure as hell don't know what's going to happen next. We have to prepare for whatever happens, right?
5:53 Speaker 01 I came into one of your old, you were in a rant, and you read about how the world's changing.
6:02 Speaker 00 I was ranting?
6:04 Speaker 01 Oh, yeah. You started out with a fake country and so many people were this way, so many people that way and changed. I thought it was an extremely interesting way to look. Here's your deal. You could deal with this like Tom Bassell. Have a great time. Or, and you mentioned my name, Larry, he really deals with it. He puts in a stop and that's it. And I actually believe that having a stop is an enormously sensible thing to do.
6:43 Speaker 01 And I can't imagine people without a stop in futures. I can understand that in the stock market.
6:55 Speaker 00 Larry, they can still go to zero. Look at all these banks out there in San Francisco going under right now. I get your point on futures, but right now we're in the age of bank stocks going to zero.
7:06 Speaker 01 I don't know about zero, but yes. I was thinking the other day, anybody who doesn't have a way of getting out, I believe, I was in Korea and it's sort of somebody committing suicide.
7:22 Speaker 00 It's back to Ed Cottot's famous line about everybody gets what they want. So if somebody doesn't have a stop and they're sitting there and they're taking the pain, it's kind of like some sadomasochistic thing. They enjoy it. They enjoy the losing. They enjoy going down with the ship.
7:36 Speaker 01 You know that guy from Texas?
7:39 Speaker 00 Salem Abraham.
7:41 Speaker 01 Yeah. Why did he stop trading?
7:44 Speaker 00 Oh, I don't know. I mean, he had a long career. I didn't know that he stopped.
7:47 Speaker 01 Somebody told me that.
7:49 Speaker 00 I don't have any news there, but I will say this. Like I said, I think if I'm going by memory, I believe his first fund started in 88. Very young man. He might've had a 25 to 30 year track record. I'm not really sure what the status is at this moment.
8:07 Speaker 01 Oh, yeah. He had that. And see, my view is there's nothing to do with that. It's a machine. You turn it on, it makes you money.
8:19 Speaker 00 One of the things that we did see in the trend following managed money space over the, let's say, decade between 2010 until 2020.
8:32 Speaker 00 We did see some large names in trend following see their assets under management go down. Not necessarily from drastically reduced performance, but because everyone looks over there and says, hey, let me go stock, stock, stocks, that kind of thing. And then all of a sudden, of course, it's 2020 until today, trend following has been a wonderful investment. I think some people saw their assets shrink during that period. That could be one issue. We're speculating about any one individual we're speculating or one company. I don't know.
9:03 Speaker 01 I look at it, it's a machine. It's a really simple business. First thing, you gotta be like Dixon Watts, as you point out, you gotta train at where you can sleep. But if you do that, and that's built in to the system, you don't need to do much to just say, look, take it down, but any bunch of averages, I don't care. They'll tell you the trend. You have a choice to figure out to say how much you're willing to lose. And you can keep a score. It's like baseball.
9:43 Speaker 01 You actually know if somebody is good or bad, or having a bad run. But I have not seen people, but if you keep your bets, there's a lot on the lower side, but a lot of bets. You do very well.
10:02 Speaker 00 In my observation of this, Larry, it really does. I will go back to the, the interesting thing about trend following. For me has always been you could find these audited track records on file with the government. But then these are often managed money companies. Those companies, while they are producing trend following performance, they have the burden to deal with investors who might not know their ass in a hole in the ground and are pulling money in, pulling money out, and all this other kind of stuff. You know, that can affect the size and scope of a potential company, even if the strategy is great.
10:32 Speaker 01 Great is a big deal. Very few people are great. But I read the Mark and Wizards book, sort of Mark Medley, How I Have Become Friendly. But if you look at these track records over a period of time, they have one thing that I always find, it's not that I don't have losing periods.
10:57 Speaker 01 I'm mentoring a guy because he had done some shit in the middle of the day. I was interested in, so I would, he would tell me how he got through that rough trading. But we became friends. He had some trading methods and they were all right. I dug through his stuff and his systems actually worked until he's going away and he doesn't do something.
11:25 Speaker 00 He stops following the system?
11:26 Speaker 01 What he hated was when he made a profit and he lost it and then he lost. Closing up, I can't stand this. I was ahead and now I'm down. And I said, Claude, so see you. You hit a boxing ring. If you hit a boxing ring, it'd be no surprise to you if you get smacked in the face. That's the other person's job to smack you in the face. If you're in a boxing ring, you can't have a big, oh my God, somebody just punched me in the face. You went into the boxing ring.
12:04 Speaker 00 That attitude though is kind of strange because it's almost like if you personalize it that much, an individual like that doesn't seem to imagine that there's other players in the game besides him. He thinks it's just him against the market, whereas there's so many players out there.
12:20 Speaker 01 I remember there was a guy used to show up at that to get sugar prices. I remember that this guy would show up and walk out. I think I might have had this in a book, but it was a true story. I don't remember the guy's name, but let's call him Henry. We committed, he said, look, I made seven million dollars in sugar. And then I lost it. Sugar owes me that money back.
12:52 Speaker 01 You said now the sugar markets goes on a real move with a big move. I have a bumper and then she said, well, you must be happy. Now, why sugar goes up? I missed it. We missed it. I don't know. I had a cold and when it started, you know, I'm going to pay more. So this guy showed up. I don't know. Maybe he tried to fuck some girl in the office. I have no idea. But here's a guy shows up, gets a sugar pipe and then he does it. Do the drive.
13:31 Speaker 01 What you just talked about is a personality concept.
13:38 Speaker 00 They're smarter than the market. They're smarter than everyone else. They're going to outsmart it all.
13:43 Speaker 01 Yeah, there are people like Cognor and uh, who go along, makes a good living. A very good living. Cognor worth about $5 billion.
13:54 Speaker 00 Let me read something to you. This is a quote from Buffett from his shareholder meeting the other day, and I think you'll like this one. And they were kind of just asking him about people doing stupid things. And Buffett said, what gives you opportunities is other people doing dumb things. In the 58 years we've been running Berkshire, I would say there's been a great increase in the number of people doing dumb things. And they do big dumb things. I think there's a lot of commonalities between his thinking. I don't want to call him a trend following trader because that's not what he does, but in many ways it is. He bakes his money from concentrated bets that have big trends. Now, how he gets there is different than a trend following trader, perhaps. Another line, let me find this. At this same meeting, he was talking about diversification and Munger was calling it. Now, he's 99 years old.
14:40 Speaker 00 He's calling it diversification. And he said, quote, "One of the inane things that's taught in modern university education is that a vast diversification is absolutely mandatory in investing in common stocks. That's an insane idea. People don't understand that about trend following. Yeah, you might monitor a lot of markets, but you might make your big money in any given year off just a handful of markets, which is exactly what Buffett and Munger are doing as well. They're making their money off a handful of markets.
15:07 Speaker 01 That's true, but man, they made a fortune by spreading their bets.
15:13 Speaker 00 Okay, but if the market's not moving, man can spread their bets, but if the market's not moving, what the hell are they doing? They're not trend following. You can't trade 140 markets at one time. They're not all moving at one time. Different strategies.
15:24 Speaker 01 I could trade anything if I can get in and out. That's it. It'll come. I will have those moves. Yes, if I bet four times or 20 times my net worth and I have no stops, I'm going to die. People do not want to recognize losses. My mother was a very intelligent woman and she was a very good card player. She used to say, well, Larry, you don't really have a loss if you don't take it. I said, no, no, you have a loss.
16:00 Speaker 01 And let me tell you, my mother would count the numbers.
16:04 Speaker 00 Larry, after all your success, obviously your mother was alive to see you have success. So I'm sure at various points before she died, did she ever come to your side and go, oh, my gosh, my son figured out this game and I had it all wrong? Or did she go to her grave thinking, oh, my gosh, I know a better way than my son?
16:23 Speaker 01 This is a true story. I had a very big house in Southern New Jersey and that house came with a library, dark pine. I took that as my office. It was my Don Correone office.
16:38 Speaker 00 You had a cat you were petting as well, too?
16:42 Speaker 01 Well, so anyway, my mother comes down, my father dies and I take her up north for the funeral and she comes into my office. She's like 75 or something. She said, Larry, we're all proud of what you've done, but don't you think you should be in a real business? I turned to her and I said, well, I most things I did, I didn't do too well as a kid. I am probably the most successful person in the family. And if I went into the dress business, why would I leave this business where I where I'm making
17:27 Speaker 01 more money than either ever made. Now I have a younger daughter. Now, parents, kids go to the grandparents or something like that. So my kids, my older one is like my mother. My younger one is not like my mother. She relates to my wife's mother for some reason. So the kid comes, she's like 12 years old. She sits right in the chair that my mother sat. She looks at me and says, Dad, don't you think you want to get into like a regular business?
18:04 Speaker 00 The whole generation of hype family members on the female side are giving you hell.
18:08 Speaker 01 Well, not hell, but they don't know what to do. I came up with the whole concept of asymmetrical leverage because we had done something with the guaranteed fund and we made an enormous amount of money. And I was sitting with these guys in England. So we said, and these guys went to Cambridge, Oxford, and they have quizzed the West Point. And I said, you know, I've just made probably 10 times more than my father made in a lifetime. I said, I've been thinking about this. I'm not 10 times smarter than my father.
18:44 Speaker 00 You might have had 10 times better technique than your father, though.
18:48 Speaker 01 Yeah. And then all of a sudden, I came to the conclusion, I made money doing this because I put myself consciously in places that I could get a reasonable bet with a large upside. And everything used to be called options.
19:11 Speaker 01 When David Ricardo, he said, don't ever refuse an option. It confused me for years. So I called a friend of mine in England.
19:21 Speaker 00 It was a hidden leverage note, wasn't it?
19:23 Speaker 01 Yes, it was.
19:25 Speaker 00 And the asymmetric part?
19:26 Speaker 01 It didn't matter what he was trading because when he says someone offers you, and I saw this in Turkey, the people used to sit in a circle and you got up and you walked over to somebody else and said, I will give you this. And in the words that Ricardo uses, if someone offers you an option, take it. If it goes against you, leave quickly. If it goes for you, stay there. What's that about 400 years ago?
20:01 Speaker 00 I want to keep it something at your mom for a second, not really on the trading part, but more of a you looking back part, because everyone has to deal with family members that doubt them. I mean, I've dealt with it. How do you feel at that moment when here you've had this life success that should mean something to family and they don't see it? Now, there could be many reasons why they don't see it. It could just be literally horse blinders. There could be some latent jealousy or envy, perhaps?
20:35 Speaker 01 Both of that happened, which is amazing. Mothers have an instinct. Every time I meet somebody that gives like a, one of my best friends, his son, was it a wizard school, but he was a handy kid. So he sort of got into technology and building and stuff. But one of the things he did is he bought Tesla and this family who, my friend's a lawyer. He was a great fighter as a kid. The first thing my friend's wife said to her son, get it, get out. Because mothers are born afraid and you could see it.
21:19 Speaker 01 When you raise a kid, the first part of the kid's life, you really want to stop the kid from killing himself. Cause they don't know, don't touch the stove until they get a little burn. They just do it. I had to walk this child when he was young. And we were walking across a little bridge in, in Upper New York State, but it was like a ten foot drop onto rocks. They tried to squeeze between the two and I kept pulling them away. I was just very, very restricted by the kid, but I don't want the kid to be four of those rocks. He's gonna be mush. Power game for women become the first part
22:04 Speaker 01 of his role and they're afraid. Those little people hate change.
22:09 Speaker 00 Larry, does this fear thing leave women? I mean, right now, after this COVID thing that happened, it really does look like to me, my observation, and I really don't care what anyone thinks of me when I say this, but it looks like the COVID operation has scared the bejesus out of women permanently. Many women are just permanently afraid of this damn thing. And I think society did this unfairly.
22:34 Speaker 01 Yeah, but they have a bias. Every once in a while I meet a woman who's like an eagle, but the majority of women will fall back to motherhood. I don't know why. Yeah, there are women, there are some pretty brave women. I'm not saying, but in general, and people, everybody should fear for their job because machines will do a lot of things. There's a lot of work that a machine could do, but your surfer guy, did you run in the book?
23:08 Speaker 00 Bill Dreis.
23:09 Speaker 01 Yeah. I wonder how many times he tinkered with his system or if he ever did. He's got it on a machine. So the orders go in automatically and they just stay there with, like Bill Gunn. Bill Gunn basically has done the same stuff. Long-term averages, he rides them down and rides them up.
23:34 Speaker 00 This is the cool thing about trend following is all you guys and the guys that came before you and the guys that came before them just said to themselves, okay, hold on. The concept of the madness of crowds is a thing. Long before Daniel Kahneman got a Nobel Prize for it. The concept of madness of crowds is a thing. This is demonstrated in price action. If we know this is going to happen at unpredictable times, how can we put ourselves in a position to ride this madness of crowds? When the next one happens? And that seems to be the commonality here, which is if you believe in the madness of crowds, you have an approach to take advantage of that. And you back to your rule, the Larry Height rule.
24:18 Speaker 00 You're going to believe in the madness of crowds, but you can't predict it. You're going to be wrong a lot of the times when you bet on the madness of crowds. You better have a stop. There you go. That's trend following in many ways.
24:26 Speaker 01 Yeah, no, when you said it in your rant, you're like, well, yeah, they put in a stop. But I have bought bottoms and sold tops a couple of times. And I came to the conclusion that every time I've done that, it's luck. I'm being like, if I could do that regularly, I'd be a lot richer.
24:48 Speaker 00 Larry, 99% of the population out there, the global population thinks because of the propaganda in education, they think they are supposed to buy the bottom and sell the top. 99.9% of people think that's what they're supposed to do.
25:03 Speaker 01 Yeah. And they don't even know what the bottom or the top is.
25:07 Speaker 00 Exactly, exactly.
25:09 Speaker 01 I've been thinking about people who lose their fortunes, which there was a guy named Terrence O'Neill started this. But he went to one of the big brokerage firms in California. He was doing a dissertation. They looked at 10,000 accounts and he found this strange thing. The people will sell their winnings.
25:34 Speaker 01 Take that profit to average down on their losers. And after that, many more papers came out. And of course, you mentioned it, there are a lot of people take the more of their relationship with the market as a personal one. I had Buffett's stock for a long time. I noticed that Buffett has never, ever sent me a Christmas card. Never. That did give me seven times on money, but never a Christmas card, nothing. So I figured out the market doesn't know me, but doesn't hate me either. It doesn't really give a shit.
26:16 Speaker 00 Don't care.
26:18 Speaker 01 That's it.
26:19 Speaker 00 Larry, as you say that, as you say that, though, it reminds me of that First Market Wizards book. So you're in there and Ed Secoda's in there, Rich Dennis is in there, Bruce Cogner's in there, I think Michael Marcus is in there, all these trend following traders. Every podcast you and I have, you essentially restate that book in different ways with different stories and different advantages. I just think that most people, for whatever reason, can't accept conceptually what it is that you're saying philosophically, because I think they think that you're just bullshitting them. They think, oh, Larry, he's a funny guy, he's just bullshitting me. They really don't get that you are telling them exactly how you think and exactly what you do.
27:03 Speaker 00 They don't get that part.
27:05 Speaker 01 By the way, you know Ed Secoda well.
27:08 Speaker 00 I don't know so well, I mean, okay.
27:11 Speaker 01 Pretty well, I mean, he did damn very good favor one time.
27:15 Speaker 00 He's a good guy.
27:16 Speaker 01 Yeah. Somebody told me that in the beginning, he was a long only trader, or he liked going long much more than he liked going short.
27:26 Speaker 00 I know something about that currently, but I'm going to refrain from saying it on air, but I think it's an interesting observation. So I think if somebody wanted to go down the path of looking at a trend following portfolio, let's say across commodity futures, and you wanted to examine the idea of doing it from a long only bias, skipping the short trades, that might be a worthy project to go investigate.
27:54 Speaker 01 Oh, I did that. And I'll tell you, you do pretty well. It's very interesting. You actually don't do well going short most of the time. But when you put the two together, you actually make more money than if you just go long. I don't know why.
28:10 Speaker 00 I wanted to take it back to something that you started this podcast with, because I mean, I've been thinking about it, the way you brought it up a while ago here in this conversation, which is the culture thing. And I wanted to share something with you. Sounds a little wacky. I really didn't expect to read this thread on Twitter, but I've read some stuff from this guy before. And look, I'm talking about this guy Ted Kaczynski, the Unabomber, clearly a psychopath and he killed people. But the interesting thing about him is 167 IQ, got into Harvard at age 15. And I was reading pieces on a Twitter thread today that someone put out there of his manifesto. It's amazing what that guy was seeing about modern culture and what technology is doing to us. He's obviously
28:54 Speaker 00 lost a screw. He's a killer, all that kind of stuff. So my disclaimers are out of the way. However, his views on technology are damn interesting and what it's doing to culture and civilization.
29:07 Speaker 01 There was a girl that I met who was crazy. I had this girlfriend in college and she was her friend. They grew up as kids in New York on the Lower East Side. What happened was this girl literally was nuts, but she was brilliant. And she couldn't control what she says. She would say things, blurt them out, and they're so spot on, absolutely right.
29:36 Speaker 01 But she would split out these things and they were right. The first time I met her, I was with this other girl. She watched it for a while and she nailed the relationship perfectly. But she was right.
29:54 Speaker 00 I think some of these people have minds like you and I, okay. Maybe people are going to say we're smart, not smart, whatever. I like to think I'm okay, smart, but I still want to have normal life experiences. I enjoy that too. But I think some of these folks that are on the spectrum, perhaps some of these folks that are pushing the IQ level at obscene scores. I think some of them don't necessarily care about their personal life. They don't care about other people's personal life. They're in some crazy search for the truth and only the truth motivates them or what they think is the truth. And sometimes it is the truth, but I think they block out everything else.
30:36 Speaker 00 I mean, look at this guy, Kaczynski, he lived in a cabin in a hole forever. They block out everything else and just stay focused. Look, I'll share with you one time. Years ago, when I did that documentary film and you appeared in that documentary film, I interviewed a Nobel Prize winner who was famous for having Asperger's, Vernon Smith. And I remember that we were setting up in his office at college campus in George Mason University in Arlington, Virginia. I was kind of new to this whole thing and he's kind of a famous guy, Nobel Prize winner. And I said, Hey, Dr. Smith, we're going to set some lights up in your office. Is it okay? Do you need to some space or would it bother you? And he looked at me straight in the eyes, no emotion. He goes, I won't know you're here.
31:16 Speaker 00 And that's the focus thing where I think literally some of these people have minds where they can block out all distractions.
31:23 Speaker 01 Well, do you think Michael Jordan is not a bit of that? Michael Jordan is into athletics in a really major way. To be that good, you have to have that kind of dedication. I could have been a very, very rich man. What would you say that meant? But.
31:49 Speaker 00 Newsflash, Larry, you're not broke.
31:52 Speaker 01 That's true. Anyway, I just, I had nerve to me, so I, you know, feel we'd get together. But I'm really thinking that people who don't, you stop. See, Buffett, I could tell you Buffett has a very simple system, really. Here's how this started. I'm watching television and there was a guy, he was a Jewish guy, but he went under the name Adam Smith. He has this interview with this guy. He had a hair, but it's just a move. He's kind of like a little not dressed quite correctly. He's that bizarre, but what he wears is obviously second to this guy.
32:37 Speaker 01 He's like me. I'm looking at the guy and so this guy is very famous. I don't know, but he's a gazillionaire. Now I was doing pretty well. I had rented the stock shelter and I'm making like five hundred thousand dollars a year in that game. I kind of think, hey, you know, I must be somewhat smart. I said, why don't I understand what this guy is saying? I understand that he's logical, but I don't understand. But he's talking Greek and I'm talking in English. So I got so interested, I went out and I said, all right, I'd like to get all his trades, but I can't do that.
33:22 Speaker 01 But what I'm going to do is I'm going to get all the trades that Brookshire made. I went over every trade. I went into a value line. Basically, I figured out when he bought the stocks he bought. So then I go get the value line thing and I began to understand Buffett's algorithm. And you can write it out. Yes, he knows a lot about industries and businesses. Okay, so he has what they call a Jewish circle. He thinks like a Jewish, but that kind of person would think. He looks at, first of all, as Graham taught him, he looks for the market to be irrational.
34:09 Speaker 01 That's his opportunities. And how does he figure out he wants to start? He'll take the cash flow yield and he'll put whatever that number is, draw a line, and then he puts the price that he's paying for the stock plus the debt. And he'll look at that and ask how many times he's getting better than a ten year stock. That formula more or less works. What Buffett is, he's a different kind of trend follower. He'll go in, and as long as the business is giving him that yield, he doesn't care about the market. The market gives him a currency he wants to buy something.
34:52 Speaker 01 When things go down, he likes to buy things that are going to give him a cash flow steady. If the price of the stock then varies to him, he likes that. In fact, when he can, he likes to buy his stock cheaper.
35:09 Speaker 00 But like anybody, though, he still needs that stock to go up. And I got a quote here also from his most recent shareholder meeting a couple of days ago. And this is quoting Buffett. "We've got a business at Apple," meaning he's got an investment at Apple. He goes, "I don't understand the phone at all, but I do understand consumer behavior." Now, isn't that a hell of a line? "I don't understand the phone at all, but I understand consumer behavior." Well, how the hell do you measure consumer behavior? Well, with the price.
35:37 Speaker 01 Yeah, obviously. But he uses a price to buy. And sometimes he gets into deals and he gets out of them. I don't know how he does it in his private deals. He's very much getting into lithium mining in California. He owns some big companies that do that. Lithium could be a very big deal. Coca-Cola is his favorite kind of stock. Think about it. I remember when Kennedy got shot and the stock market took a dive. Very hard dive. And I remember thinking to myself, it doesn't matter. I'm gonna buy a Coke this morning. It doesn't matter if the president was shot.
36:21 Speaker 00 Yeah, people are still gonna drink Coke.
36:23 Speaker 01 People are still gonna drink Coke.
36:25 Speaker 00 I want to shift it to something else that really quick while I've got you. I'm curious. I know you're home there in New York City. I've been there. And here I am. I'm in Asia right now. And I was back in the States, December, January, and I saw some things I didn't like. But how do the streets feel? I mean, you're in a nice section of New York City. And I know you like to walk. How do the streets feel in New York City these days after the pandemic? Do you feel like things are the same? Do you notice things that are different? What's your observation just on the streets? You're a big walker.
37:00 Speaker 01 I feel that I've outlived my time here. I do not understand. I live in a world that I have no grasp of. These things about sex change is the things of trying to get kids at fifth. You say it's much better if you're gonna be transgender to get the operation early. I look at what happened in the world and I feel I don't know this world.
37:29 Speaker 00 You should come get a place over here. Seriously. You'll all of a sudden be like, oh, my gosh, this is how I grew up. It's nice over here.
37:37 Speaker 01 Well, it's safer. Anti-Semitism has really gone up over the last couple of years. So my wife, really emotional about these things. Just, you know, she goes, I'm not going to a concentration camp. I says, there's no concentration. I said, you are really, really what the hell? Let's get an apartment in Israel. And I said, my wife, do you realize that bombs going off in stores and other places? This is not a safe place to be. I'm not saying that tone, but you're going to a war zone. Do you see what's happening in France?
38:21 Speaker 00 Yeah. Let me keep you at your New York City comment. Does that mean on the streets you feel things have changed? It's not the same experience you had on the streets years ago?
38:31 Speaker 01 Sure. I mean, I lived in a working, my English wife was dead and says it's a working class. Never. I didn't think of it as working class. I just, this is where I grew up. To me, the whole thing has changed. Now, I'm very self-involved person, an old child, but just generally, I think about the small sector of things that I like, then I don't think about the rest. But the world has changed. There was a crazy guy on the train.
39:08 Speaker 00 I saw that.
39:09 Speaker 01 Well, you know what? Turns out the guy actually who was crazy had fits of various cases. His family, he got the money, he was entertained in the subway, but he was a crazy guy.
39:25 Speaker 00 He had like forty arrests. He had punched a sixty-seven-year-old woman. He tried to kidnap a seven-year-old girl. Who knows what's gonna happen in the case? I'm not gonna try and prejudge it.
39:34 Speaker 01 I will tell you what'll happen. They're gonna go after this Marine. He's gonna go to jail.
39:40 Speaker 00 They'll build a statue for the dead guy.
39:42 Speaker 01 Yeah, it's insane. It's absolutely insane. And no, you won't know what I feel. I do not feel safe. And I'm used to feeling safe enough.
39:56 Speaker 00 I would think you're in an interesting position because that's a cool place you have there. And I'm sure you think about leaving it to family and stuff, but I'm imagining if I was in your shoes, I would have to look ahead and say, okay, if I leave this to family, would I really want my family living in this environment? That's a tricky thing.
40:13 Speaker 01 Yeah. It's also not as big as people think it is too, because what happens in journalism, you should know this, is all saying journalism, if it bleeds, it leads.
40:29 Speaker 00 There's a lot of bleeding in America these days.
40:33 Speaker 01 And a lot of strangeness.
40:35 Speaker 00 Yes, that's the part. That's why I love being here. There's not strange here.
40:40 Speaker 01 Yeah, I don't really understand. And everybody I know is not that happy about their situations. It's so wacky.
40:53 Speaker 00 What's really going on too, from my observation, is it's essentially a battle between, let's say, I'm Gen X. You're a little older than Baby Boomer, but then it's really these generations above age 50. The younger below 30 just seems to be scared. And look, I'm sure I have some clients below 30, probably great people and stuff. But overall, it seems to be a very strange mass thinking in the underage 30 where it's like, instead of being logical and pragmatic and being tough, it's more about, hey, let's have a group therapy session nonstop 24 and 7 all the time. And that just seems to lead nowhere.
41:36 Speaker 00 If all of us are being honest, we look at these great buildings that were built in New York City and Paris and around the world in the last several hundred years, or even going back farther to the Greeks and Romans. None of this stuff would have been achieved with the namby pamby attitude of some of the young people today. I mean, none of it would have been achieved. The people, our ancestors that built these buildings and built these civilizations. These were great people. I'm sorry, regardless of their errors and the problems they had, they were still great, tremendous, successful people.
42:09 Speaker 01 But as Jesse Livermore pointed out, it's always the people and people do the same thing. I live on this new boy, Jesse Livermore blew his brains out, but he did. But his way of doing this, one of the things is he always had a 10% stop. So how did he use all that money? He says, remember one thing is you go down, it's over. Jesse Livermore, why did Jesse Livermore not use that rule?
42:40 Speaker 00 I hear you on that, but at least during Jesse Livermore's generation, there were men building New York City and building towers, whereas a lot of young people today are simply crying that they need a sex change. So it's a very different world.
42:57 Speaker 01 But we're still doing things. Our technology has moved way forward. We live in a very immature society that you get whatever you want. If you have a credit card, you can live anywhere. You get anything you want. So we have these people who don't know. I came from a, I have a rich cousin and he had something that, I was fourteen or fifteen. And I asked my mother, why I can't have that thing? And my mother said, we can't afford it. There's no debate about it. We can't afford it.
43:37 Speaker 00 We don't have that anymore. That attitude's gone.
43:40 Speaker 01 That's gone. That is absolutely gone. That makes everybody a namby pamby. Don't forget, we are doing great things in science. We have done some tremendous work using the computers. We can make more drugs and see which works don't. AI has a very big future. We're building different kinds of buildings.
44:08 Speaker 00 Something has gone wrong, though. Something has gone wrong.
44:12 Speaker 01 I'm going to tell you right now, wrong. Feminism.
44:15 Speaker 00 I agree. One hundred percent.
44:17 Speaker 01 When women wanted the rights of men, they got them. And guess what? They got the illnesses of men, too. You can't say to a woman, hey, you're really sexy. You can maybe say that to your wife or girlfriend, but you just can't say something like that. So the bad side of this feminine thing was people would then expect. I'm considered rich by people I grew up with. They'll always say to me, what was your money? Why would you care? Well, what do you, why I care? Well, you're a daddy, man. Have a good time. I said, it's his idea.
45:01 Speaker 01 Of entitlement. Look what's happened in France. That's not even America. Just because they want to raise the time you get your social security, they're having riots in France. France is a very old country with a system of laws that they're like England. And yet they're in the street arguing because they don't have enough money. And we could see something now happening in America or America very will do a some sort of phony deal. So they can keep getting money. I mean, it's extraordinary.
45:41 Speaker 00 Let me offer a clarification, though, on the feminism part. Whether it's men or women listening or both, I'm sure most of my audience is primarily men, but I'm sure there's some women that listen. You and I are not attempting to have a sexist conversation at all. But let's be honest, people, there is a huge fight. Whether it's an unspoken fight or it's a spoken fight, there's a huge fight between American men and American women. And there is a chasm growing between the two. And you can see that across every aspect of life, especially in birth rates. And eventually, if men and women don't like each other, people say, oh, there's too many people on this planet.
46:26 Speaker 00 It only takes a few regressions to look at a reduced birth rate and realize what can happen to the global population. But we got this structure set up where men and women are physically and mentally equal and everybody's the same. And now we're just going to fight, fight, fight, fight, fight. And we're going to throw away every experience that we've had in human history that's got us to this point. And we're going to reduce the birth rate. This is not productive for civilization, in my opinion.
46:56 Speaker 01 Well, you're right. It's come to everybody's entitlement.
47:01 Speaker 01 Uh, you the example, everybody thinks they're entitled. I used to see that in England a lot. The big thing was where your family was, you were entitled. And you're not working class, you don't work. Now, everybody wants it. There's a guy wrote a book, I don't know if it was a guy either, called Brit Think, US Think. The guy says, nobody walking down the street in England sees a young guy in a new Rolls Royce convertible, sitting with a blonde, great looking girl, great looking guy. In England, they say, he should not have that car. He shouldn't have that. I should have that car.
47:46 Speaker 01 He must have stolen, stole something from someone. Behind every fortune, there's a crime. Where in America, the America I grew up and the America you grew up.
47:59 Speaker 00 We admire that.
48:01 Speaker 01 We admire that. The crazy girl, when they were out, she had come from the Lower East Side, very poor, poor neighborhood in New York. She looked at me like, you wish you were born on the Lower East Side. And she's right, because in America, the dream that I grew up with, you come from nothing and you make it. My children don't have my hunger.
48:31 Speaker 00 Hunger creates imagination.
48:34 Speaker 01 Yeah. Let's say the biggest commercial thing you ever done is, is podcasts. You didn't invent podcasts, but you made a whole industry. But in a lot of ways, podcasts reminds me of radio. But on the radio, we had stories.
48:55 Speaker 00 When you come on my show, that's what you do, you share stories.
48:58 Speaker 01 Yeah. That's what it's about. And the stories are the way people teach.
49:03 Speaker 00 To go to your story, though, in London with the guy and the Rolls Royce and the blonde, the jealousy and the envy. When I look at American political fights now, every American political fight, regardless of what they say they're fighting about, it's all jealousy, it's all envy, and it's all it is. People have learned how to use the political system to get money. The Tocqueville book, Democracy in America, it's two wolves, two wolves and a lamb going out for dinner and asking, what's for dinner? Well, guess what? It's the lamb. And so, look, there's a problem. And I don't see a way out because people have lost that thing that you described you had as a young man, where you could see the rich guy, you could see the
49:47 Speaker 00 successful guy, maybe he got it because he was a con, maybe he didn't, you don't know, you don't care. You're a young man, and you say, I'm going to strive to try to get there myself. And that part is missing. Some people still have it. Now, I'm not going to say all young people don't have that, but a switch is flipped.
50:04 Speaker 01 Yeah, and it's a world that I don't understand.
50:08 Speaker 00 Where do you want to live now? Go to Singapore, man. Seriously, you went to Singapore, it's hot, you might not like that, but you could go to Singapore, literally, it's going to require no effort to move in, you just have to find a place, whatever, but you could do that immediately. It's like, safe? You could just go to Singapore, or Tokyo, either one.
50:27 Speaker 01 I am living my last year, and I'm very big for my convenience. Arlene's worked for me for 25 years. I have a friend whose son just graduated economics, and would you have a talk with him? I get on the phone, I'm saying, how am I going to talk to this kid? And I start with a question. I said, where do you want to be in 10 years? What would your life look like? I mean, I'm a great believer, if you don't name it, you can't claim it. You gotta do something. I believe in goals. I think goals work very
51:11 Speaker 01 well. Even though you wanted to be a great athlete, you were a pretty good catcher, but you never went on to become Yogi Berra, or whatever.
51:22 Speaker 01 But the fact is, you have to have a goal. You have to have action after the goal. You just can't say, I want it. And then you come out of there. So I'm trying to figure out, I'm thinking about, all right, I'm going to ask this question. And then I said, hold on, I'm going to ask myself, where do you want to be? Well, I kind of know, I actually don't want anything. There's nothing in the world that I want desperately. I just don't, I don't care about much. I don't want anything.
52:00 Speaker 00 I think you like sharing, though. I think you like sharing experiences.
52:03 Speaker 01 I like that. I like teaching. I really do. Because you also learn a lot from people you're teaching. I always used to say, if I like Kennedy, I was born in Kennedy, I got that wealth. If it were me, I would change my name to Riley. And see what I would do. I wouldn't give the money back. But I would want to see what I did if I was in a Kennedy. I am, and I'm sure you are this way, I'm very proud of what I've accomplished. And I would not have been happy if someone gave me 20 million dollars. You're the same way. I would bet you, you do not have to work, especially where you live.
52:47 Speaker 00 I don't have to work, and I don't even call it work. If I get on to do a podcast with interesting people, I talked to a lady recently on the podcast. She was 102 years old, and she was still sharp as a tack. I had a guy on the podcast recently, who was the performance coach for Phil Jackson and the Chicago Bulls and Michael Jordan. It was a really interesting conversation. His roommate during college was Dr. J, Julius Irving. I just love these kinds of experiences that I get to chat with all these people. And look, this is not hugely profitable for me, like Joe Rogan, but maybe one day it will be, who knows? But I love the fact that whatever I've built has engendered trust. People trust that they come on and they talk with me. I'll give it a fair shake. I'll be curious. I'll ask good questions. I'll stay focused.
53:32 Speaker 00 That's just enabled me to keep having these conversations while I live 8,000 miles away from you, Mr. Height. It's awesome.
53:38 Speaker 01 Yeah. But you have to work for that communication. Yeah, in reality, you do. But we're so used to getting things so easy. You and I, and a large portion of people, maybe don't do it. You get on a plane and go somewhere. I went to do a deal in Australia. I added a couple of names and I wound up doing this deal in Australia. I was a friend of mine married in Australia and her sister was there. She said, you're just going to Australia because to them it was a big deal.
54:21 Speaker 01 But I said, no, there's a lead here. And I just went and then I made the deal. But the point is, I can get on a plane and go anywhere I want. Well, maybe I'm not that unique. A lot of people can do it. They don't have to fly to Concord, but you get there. And I think things are so easy for people that they fight over nary pambi things. You can't say a lot of things.
54:55 Speaker 00 I have to self censor myself on this podcast quite a bit. And sometimes I have to actually censor you because you might say something too interesting. I'll share something with you. You might get a kick out of this. So a young person that I know, I thought would be a perfect candidate to introduce to Jerry Parker. Jerry Parker, who is the most successful of the turtle traders trained by Richard Dennis. There's a lot of reasons why I thought this could be a good introduction. I explained to this young person a little bit and I got a response like a day later. And I told them, I said, hey, one of the things you need to do is read my book on the turtles. You needed to do that. I've sent people your way. I've sent some other people assorted ways, but I don't really do this a lot.
55:39 Speaker 00 I don't really try to play matchmaker. This young person writes me back and says, how long is the book?
55:47 Speaker 00 Like, I mean, I'm lifting a finger. I'm not contacted Jerry or anything like that yet. Here I am, I'm trying to
55:55 Speaker 01 Be a good guy.
55:57 Speaker 00 And it's like, how long is the book? That's the younger generation where it's like, they are missing something. They're missing something. If I was told at age 20 or 25 or whatever, somebody said, hey, here's an article. And it was an article about Jerry Parker or it was an article about Larry Hyde or Ed Secota. And I read that one page article and I realized who these people were. And I said, oh gosh, they're really interesting people. I want to meet them, even if it's for an informational interview. And then somebody said, well, hey, I can make an introduction, but I really think you need to be prepped. Why don't you read this Market Wizards book first? So you know a little bit more about this hype guy. I can't imagine uttering from my mouth, the phrase, how long is the book? I can't imagine that.
56:42 Speaker 01 Maybe you want to ask people, maybe young people can explain this. If I want something, first of all, the person doesn't know much about reading.
56:56 Speaker 00 Fair enough. As a young person in high school and college, I'm not going to say I was a voracious reader either. So, fair enough.
57:03 Speaker 01 No, but they don't know how to read a book. You are reading a book. I don't read that much fiction. I read to learn something.
57:13 Speaker 00 Exactly.
57:14 Speaker 01 And there is a way to actually do that. I know what I'm looking to find out. And then I say, how am I going to get this information? So what I did with the Buffett thing, I took three or four guys, I formed a group, a study group. Now I went back and I got Buffett's Berkshire trades. I have a colleague, I see his data about his trading and I finally made him use stocks. So he's made himself some money. I said, you don't understand, you don't check these records. And I understand what the odds are. And he didn't get it.
57:58 Speaker 01 A book keeps these records, but he doesn't ask the fucking what the numbers are saying.
58:06 Speaker 00 Do you know why I think I got trend following? I think I got trend following because I was aged 24, 25 when I was first exposed to it. And I can't remember exactly what it was. It might've been the Market Wizards book, but it was because I had been through an MBA program. I was not a great student. I was bored out of my mind. I thought to myself, I'm never going to be an investor. That's going down the Warren Buffett path of trying to study the balance sheets and stuff. And so the moment that I read that there was something else that didn't have anything to do with balance sheets.
58:45 Speaker 00 And there was this underground army of these trend following traders, all unrelated and unconnected. And they didn't study balance sheets. Instant light bulb went off. That's me. And we didn't know what it was exactly at that moment. I was like, that's me. I'm going that direction. Because if they can do it, I can figure it out.
59:06 Speaker 01 If you bet like Tom bets, you're never gonna lose.
59:11 Speaker 00 Tom was not a high leverage trend following trader. He was more shooting for 10 to 15% I think.
59:18 Speaker 01 There's a beautiful chart in one of your books, Bill Dunn. Bill Dunn goes down 40%, but he always comes back. You know the chart I'm talking about?
59:29 Speaker 00 He actually went down more than that. I think he went down over 60% on one.
59:33 Speaker 01 Yeah, at one time, but he always came back.
59:37 Speaker 00 People don't realize when they see that 40% down in trend following traders, a lot of people say to themselves, oh my gosh, why did you let that trade go down 40%? They don't understand that it was a trendless period of small losses adding up to the drawdown. And that's the light bulb moment when you realize that you're shrinking the position size, you're taking small losses, you're preserving capital, it's a trendless period. And then when the trends come, you got capital and you make it back up.
1:00:05 Speaker 01 Yeah, because it's doling in. You get rid of the losers. In many ways, I live my life that way. And you do. You've had a hundred girlfriends since I know you.
1:00:19 Speaker 00 A hundred? Hold on, hold on. Hundred, a hundred?
1:00:23 Speaker 01 Maybe more.
1:00:24 Speaker 00 That sounds like a high number. You're making me sound like some kind of Asian Casanova.
1:00:29 Speaker 01 I'm giving you the benefit of the doubt here. But the point is, you go through and if something doesn't work, you cut your off. And I'm not kidding. I told this story thousand times. I learned that.
1:00:44 Speaker 00 Your hairy story is famous on this podcast.
1:00:48 Speaker 01 You could do that. But I think that the Darwinian principle is a major principle of life. You either adjust or die or founder. But eventually though, if all you did is buy fifty two week hots to get right out of Jesse Livermore and you go into the hot industry and you buy three stocks that are hot in there. So you have movement, right? And you have stocks. You'll find out very wealthy. You just will. The price tells you the whole story. Because the rest of the balance sheets.
1:01:33 Speaker 01 I was once trying to take a company public and the guy said to me, look Larry, I can make this earnings yield ninety five cents or a dollar ten, but I can't make it in the middle. But he's telling me he could jack it up by the accounting. That tells you a lot about balance sheets.
1:01:57 Speaker 00 Can you get permission from your wife to come travel to Asia? Are you allowed to come back to Asia and visit?
1:02:02 Speaker 01 My wife loves traveling. She loves it. I used to say I traveled for money and that's why I went places. But it wasn't bad, but it's not as glamorous. When you're on the road and you've got to move every three or four days to go to the next spot. It's not glamorous. I mean, no one, man, questioned what I spent on myself or they spent when we were making money. But no one said that I had a great truck. The most interesting thing about selling the product, and this is fascinating. It was, I know a lot about training.
1:02:46 Speaker 01 I don't know about many other things. I know what I do works. But when you speak to somebody in another language about it, it's fascinating how each culture is different.
1:03:01 Speaker 00 You bring up an interesting thing, like if you came to a place like Saigon, and I'll give a little pitch here about travel in a second. But you came to a place like Saigon here. I mean, I don't know in this current economic climate, how much people want to pay and all that kind of stuff. So it might not be a great business thing, but in terms of getting an audience of people that want to listen, you would find a remarkable audience. I'll say this about travel and I've thought about this a lot. I think travel for the sake of travel for very short trips doesn't resonate with me at all. I tell people, and I told this actually, the last time my parents came to Asia, right before the pandemic. I said, look, if you're going to come, you're staying for a month. You're not just coming and running around and all that kind of stuff. It's, it's too taxing.
1:03:43 Speaker 00 I tell people also that if you come to a place like where I'm at right now, you book a month. You book three months, you book six months, whatever. Because it's that, once you settle in and you start living, then it's a different experience. So many people have been trained, I'm not talking about you, but so many people have been trained to like, you know, a six day trip to Greece. A six day trip to Greece, to travel from Asia or America or whatever, sounds like the most awful experience I can imagine. To travel around the world for six fucking days. Are you kidding me? I can't imagine doing that. I want to go live somewhere. I want to live somewhere.
1:04:25 Speaker 01 I took a trip around the world on a jet. It cost us a hundred thousand dollars a piece to do this. It was done by Four Seasons and, well, I always loved the Four Seasons hotel chain very much, but...
1:04:43 Speaker 00 It's tiring.
1:04:45 Speaker 01 It was tiring. Yeah, I'd have a lot of money to pay for this. But we now are taking a boat and we're going to try some traveling in Europe. Instead of having changing hotels, the boat will go to the place and we'll get out and walk around and spend time there because you're right, you don't know much if you're in for two days.
1:05:09 Speaker 00 I want to live somewhere.
1:05:11 Speaker 01 Yeah, well, that's a very smart thing, but very few people have that time. You get paid to be a venture. That's how you get your content. The more bizarre is the interesting, the more people want to hear about it.
1:05:30 Speaker 00 I've kept you too long.
1:05:31 Speaker 01 Yeah, I've got to go to work, but I'll call you again. See you later.
1:05:50 Speaker 00 I thought I'd bring it up with you and see how you felt about this. I caught a passage from the film director, Jim Cameron, Terminator, Titanic, all the big movies, Avatar, all these things. He's made gazillions. Someone asked him about becoming a film director and they were essentially asking, how do you do it? Asking for permission, all that stuff. Cameron was very blunt. He's like, look, if you've got to ask that question, you're never going to do it. You're just never going to do it if you've got to ask the question because if you really want to do it, you're going to figure out a way to do it. I thought that was so simple and sweet.
1:06:26 Speaker 01 I think he's totally fucking correct.
1:06:29 Speaker 00 What's that?
1:06:31 Speaker 01 I think it's documented before that letter was. I've been on this for four minutes. I think it's fucking correct. My father used to say to me, do it. If somebody doesn't like it, they'll tell you. That's a very pragmatic way to go through life. Unless you get shot in somebody's house.
1:06:57 Speaker 00 But Larry, why did most people not do that? Most people just don't do that. I don't know how Cameron learned that. If it was family or friends or he just at the school of hard knocks, but this is not something that's typically passed down.
1:07:09 Speaker 01 I know guys that tell you the answer. Go look in the mirror. Here you are. You've invented this business through one of these guys. You never asked permission. You asked permission to get us on. But you got the concept and you ran with it. I invite them. Uh, there were people who didn't want you to write your books.
1:07:36 Speaker 00 Oh yeah, for sure. I had lawsuits and threats of lawsuits over content that I've dispersed, which has always just been essentially educational.
1:07:46 Speaker 01 Yeah. But they, Richard Dennis did not want you to write about what he was doing. He might have in some ways, but mostly not.
1:07:56 Speaker 00 In his defense, he never specifically said that, but other people definitely said that in legal documents for sure. There was definitely people that played that game. But on the other side, people like you, for example, Bill Dunn, Ed Cota, other people were like, oh, this guy's got some energy. He seems to be saying the right things. He seems to understand this, so we'll share with him and then we can help extend the message. There was other people that saw it the other way.
1:08:25 Speaker 01 I have this so I could do things that I want because I can do them. And and then I wouldn't do it. So I was thinking of this. I was thinking of the program where I'm going to tell you the events are going to happen in the next few years. Anybody who follows this program will make a lot of money.
1:08:48 Speaker 00 It's a program you want to do?
1:08:49 Speaker 01 Yeah, it's a program. And it was, I am old enough. I know now the events that will make a lot of money coming. I could see it. I could see exactly how to do it. And I thought, well, maybe what I would do is I go, my, tell them what events will happen. And how anybody who just follows the events. I used to have a feeling when I trained the markets that the markets will tell me what to do by the trend. I think that A, I was not going to tell the market.
1:09:30 Speaker 01 I never had the, the, the idea that he could beat the Japanese country, Japan. He's sitting in a room in New York and he took on the yen.
1:09:46 Speaker 01 He went looking for a fight and then he blew out. But you, you know, other entrepreneurs, go ahead. Because what that guy said is the absolute truth. If you have to ask for permission, you are not ready. If you sit with your mother and father and your uncles who decided you should go into that business.
1:10:15 Speaker 00 No, there were a couple guy friends that I knew that liked the idea back in the day of going online and dispersing information, but those kinds of people couldn't hang with it, meaning ultimately they could only invest a week or two weeks of time before, oh my God, I need a job with a man because I need consistency. Even at the age of 25, I saw guys that could not possibly deal with the concept of uncertainty or risk or speculation. It was like, oh shit, I gotta get a job. Oh shit, I gotta be like everybody else.
1:10:49 Speaker 01 Yeah, a bunch of people like me with some handicaps, one of the ass.
1:10:56 Speaker 00 You're calling yourself a handicap?
1:10:57 Speaker 01 The things that handicapped me turned out in my bit to be the best things that ever happened to me.
1:11:09 Speaker 00 Blessing in disguise.
1:11:11 Speaker 01 Blessing in disguise. Yeah, because I knew I had to have something new and interesting. Going from where I came from because of those breathing problems and other things like that, it made me think and question. When you were playing baseball, I was on the bench. I was sitting there, what can I do? I can't do this because I can't do that. And then if you look what I've accomplished, it's amazing. But the one thing you know when you're coming
1:11:53 Speaker 01 from that place is nobody's going to give you permission.
1:11:57 Speaker 00 Mm hmm. I gotta keep it as something you just said for a second when you've talked about baseball. Maybe you've heard me say this before, but I don't think we've talked about it. You remember the trader Julian Robertson and he had this group of young kids they called the Tiger Cubs that became quite famous, a lot of them running billions and big funds and whatnot. Anyway, back in the day when I played baseball before the age of 12, there was a guy on my team that was really terrible. He literally struck out every at bat the entire season. And then I thought, my gosh, is this the same guy? All these years later, seeing him on Facebook. And then I realized he was one of Robertson's Tiger Cubs. So I reached out to him and I said,
1:12:37 Speaker 00 "Hey, we played baseball together, didn't we?" And I said, "You struck out every time, didn't you?" He started laughing. He's like, "Yeah." And the implication being I might have struck out every time at baseball at age 11 or 12, but he became one of Julian Robertson's Tiger Cubs and has made a fortune.
1:12:55 Speaker 01 Hey, Bobby, could have lost the fortune.
1:12:58 Speaker 00 I love that kind of stuff, though.
1:13:00 Speaker 01 Oh, Julian, where he no longer lives, but he lives about five, no, he lives on the top floor. He did. He lives in my building. That's just who he lived in my building. But he gave a lot of charity. Must have been a $4 billion charity, Julian.
1:13:23 Speaker 00 He had a pretty up and down career, but I mean, ultimately, he found the bag. He did it.
1:13:28 Speaker 01 Gave away $4 billion.
1:13:31 Speaker 00 Wow.
1:13:32 Speaker 01 So that means they did some shit right. I had to be like, I fucked up with him so badly. It was terrible.
1:13:44 Speaker 00 I got a question for you because we're in the same headspace. Hustle. What I'm going to say, maybe people out there are going to disagree, but I don't think I'm wrong. What's happened to hustle? Where's hustle gone, Larry?
1:13:55 Speaker 01 One word. I'm telling you one word, I'm going to nail it. Entitlement. Entitlement has robbed people of hustle. They think it should come to them. They believe not in equal opportunity, but what they believe in is everybody should have the same thing. Even though you can't play basketball, you expect you should be as good on the court as Jordan.
1:14:32 Speaker 00 It's a crazy fantasy that we've fallen into, isn't it?
1:14:35 Speaker 01 Yeah, because Michael Jordan came with tremendous talent. Did he? The tremendous effort. Michael Jordan worked very hard as a vention. He really spent a lot of mental time on what he's doing.
1:14:59 Speaker 01 The idea of you're entitled to what he has is insane. Why should you have with this guy who had talent, who had good parents that guided him the right way too? These people earned all this shit. My kids grew up and they wake up, they got a $3 million trust fund. They're in the shape of, they're lovely, nice people, but they didn't do anything. And your father had a couple of ideas that weren't right. Counting said, why don't you give it to them? That way you got the taxes. I said, no, I'd give half. And he just wound up with $3 million.
1:15:44 Speaker 01 They didn't do anything. And one of them's got a PAC, the other one's a shrink. But they didn't do anything to get that $3 million.
1:15:55 Speaker 00 Let me keep it at that entitlement for a second. That's a really prescient insight from you. It's right on the money. Let's pull it apart a little bit more because a lot of people don't really understand that if they go the Larry Hyde direction, maybe if they go the Mike Covel direction, if they go this direction of taking some risk, overcoming hurdles, getting around uncertainty, figuring out problems, that the joy that you feel for that is a million times more wonderful than getting free money from somebody.
1:16:38 Speaker 00 The free money from somebody doesn't make you feel good. What makes you feel good is if I read Larry Hyde's story and I see Larry Hyde overcame this and he overcame that, but I'm not even in your shoes. And you can never fully explain how great it feels to overcome all of these hurdles. But it feels awesome when people get into the mindset of overcoming something and getting the reward versus someone just saying, hey, here's a bunch of money.
1:17:07 Speaker 01 Always, I once said to a friend of mine, if I hadn't been...
1:17:14 Speaker 01 If I was born a Kennedy, what I would have done is I would have changed my name to Riley. I keep all the money. Do not think that I would give up a penny. I put it somewhere. I would give myself ten or twenty years to see what I could do without my name. That would be the adventure to me. Just like I did this and you did what you did. Part of it was the adventure. Yeah, I just do it something that never did before. Didn't have to invent all this shit, make it up as he going along.
1:17:57 Speaker 01 But it's so much fun that I gave the kids who were born a Kennedy. Oh, really? You slotted into shit. And if you don't have balls enough to walk out, one of the things you got to give God a Kennedy. He did not have to go into the Navy. His father was well connected. He could have got that medal for sitting in an office. The Kennedys were bought Chicago for him. That's a fact. But still in all, he tried it. Yeah, his father was very happy for him, but he had, he did it.
1:18:41 Speaker 01 And he was Catholic. He never had a Catholic president before. Broke backgrounds. There's a lot of people who miss out.
1:18:54 Speaker 01 I mean, think of the fun that Jackie Robinson had. And the way he used to play baseball. He may trying to steal, he was always trying to steal bases. He brought a different kind of baseball. And the indigent, think about how he would feel having done all that new shit.
1:19:22 Speaker 01 No amount of money. If I gave you a billion dollars.
1:19:26 Speaker 00 Here's my theory about why people have not gone this path in the past and why perhaps even more don't go this path now. Everybody is watching everybody. Everybody is comparing to everybody, especially on these social media and these apps and all this stuff. So instead of sitting back and struggling with something where you have no support system and you've got to figure out this puzzle. I love how Ed Secoda talks about that. He went into markets to figure out the puzzle, but essentially to be an entrepreneur or trader or whatnot, you're figuring out puzzles. If you're not comfortable to sit there in the silence, to sit there with the uncertainty and try to figure out the puzzle without all of your friends trying to help you because your friends really don't give a shit about you. And let's be honest, I mean, they can't help you solve the
1:20:11 Speaker 00 puzzle. You have to solve the puzzle. And so I think what's happening today is that too many people, instead of thinking about the puzzle of what they really want to do, they're too worried about what everyone might think of them. And that is terrible. That's what's going on so much where people are losing the ability to have a dream because they're so afraid of what some anonymous person or some friend they knew 30 years ago might say on social media. It's crazy.
1:20:43 Speaker 01 But you saw the advantage I had because I couldn't do that shit because I was not going to play ball. I was not going to do this. That made the winning sweeter. I have people come up to me. I don't know why the book company doesn't seem to care, but um, tell me about the book. I had somebody from NASTA calling me.
1:21:15 Speaker 01 Because I met her husband and she said, I want to meet Larry Height. She was at Stanford. I did my P T C on Larry Height's book. And there I was trading two weeks ago in Colorado, called from NASA to me. And then we were torn. Now, that's gotta be, that is fun. And what makes the book work is people, just what the world needs. Yeah, I had a handicap. That actually said, just like the death that's coming. I could use that in a bad way and cry about who I'm now going to see again.
1:22:00 Speaker 01 Or I could say, no, I can invert this. I'm having some good times. I've changed. I've decided I'm changing the world. And that's what happened to you. And he was right. If you have to ask somebody for permission, they're never gonna get permission. My father used to say to me, do it. If somebody doesn't want it, don't let you know.
1:22:30 Speaker 00 What do you also think about the idea of this constant communication? I think it hurts. Well, let me give you an example. So in the early to mid nineties, I wanted to meet people like you, but I didn't meet you till 2005. But I was meeting a lot of your peers, maybe starting in like, let's say, 94. There was really no internet at that moment in time. There was internet really in 95, 96. But 94 was an interesting break. And I was able to go to so many events where you'd have all these interesting people. Again, most of your peers, and you could listen to them. You could hear from them. But if you weren't at those events, you couldn't hear from them.
1:23:13 Speaker 00 So I understood at those moments, I was hearing something very valuable. If I was in a room with 100 people and the speaker was John W. Henry, and it was 1995, and Barrings Bank had just happened, and he was giving a presentation. He was talking about, didn't say he was the winner of Barrings, even though he was. When he was talking about his trading technique and how he viewed the world. I remember sitting in rapt attention in that Marriott right there at the World Trade Towers. But I remember sitting there just thinking, I am receiving information that only 100 people in this room were receiving. I mean, maybe there was some reporter there and maybe they would have put a few nuggets of his speech in the paper or something.
1:23:58 Speaker 00 But you just knew that this was something valuable. I remember that feeling was very energizing. Whereas today, I don't think people are able to recognize, because information is ubiquitous, it's everywhere. They don't know how to recognize what's the valuable shit and what's just the shit.
1:24:14 Speaker 01 That gets to me with my next career idea. I know I can lay out in front of you what's going to happen. I can identify, and the reason I wanted to do this exercise with you, because you know, all the information to become a billionaire is out, it's in public domain. I was gonna sit with you and tell you what's gonna happen and how I'm gonna make money out of it. Oh, you will make money. I wanted to talk with you about, first of all, I wanted to just do it.
1:24:57 Speaker 01 Although it's a stupid thing to do because other people will come, but I just wanted to do it because using trend following. This is not trying to, I'm taking a great bet. I don't have the protection across the board trading. But I think I know the next big thing and the next big collapse. And I was going to sit with you and say, look, given this date, here's what you want to do and here's how you find the information. It's all public that you can do this.
1:25:42 Speaker 00 Why do you, at your youthful teenage years, why are you constantly trying to figure out, look, okay, I know you've got part of your net worth in trend following type stuff. I know you've got other strategies, you've got other bets you want to make. You're telling me about another bet you want to make right now. You are the consummate speculator. You just want to go. So you start this conversation off by telling me you've only got seven years statistically left. But here you are telling me a few minutes later, fuck it. Mike, let's go speculate. Let's go make a billion bucks. Can you explain this Larry Height mindset?
1:26:20 Speaker 01 Sure. And you know the answer. It's a lot of fucking.
1:26:26 Speaker 00 It's a lot of fun.
1:26:27 Speaker 01 I have always found that it's interesting with women to tease them. They love it. So you have this little banter is what makes the relationship work. Teasing each other among other things. Doing something is fun. I'm telling you.
1:26:48 Speaker 00 Let me keep you at that for a second. Larry, do you think people have forgot how to have fun? People think fun is going to the next NFL game to have the next beer, the next thing that you've been doing your whole life. That's not fun. Fun is the adventure. Fun is the shit that you don't know what's going to happen next. That's what's fun.
1:27:08 Speaker 01 Well, one of my debates with my wife. Well, my wife is a consumer.
1:27:18 Speaker 01 She reads about seven books a week. Okay. She's a good looking girl, but she goes to the opera. She goes to plays. And I keep telling her, you're not making anything. You're consuming. Now, consuming can be fun, but it's not half as fun as making something. It just is. If I told you now, you could trade your whole stuff.
1:27:51 Speaker 01 Better be Xed out of your memory thing. Or but to give you a billion dollars. It would be so boring when you come home with the big, what are you gonna do? It's no challenge. One of the reasons you tease your mate is you wanna get her up. You wanna have serial conflict because you need that challenge. Think about the Kennedy, no matter what they do. People will say, yeah, well, if it wasn't their father, father, they would have, they missed the whole thing. The whole thing is the uncertainty of it.
1:28:36 Speaker 01 The meanest time in sex is before you don't know if, where the two of you are going to go. Where is it really gonna happen? And it's that uncertainty that makes the sex better.
1:28:53 Speaker 00 I can add, let me just share a bit here with you. As an interesting character, I like to think of myself as an interesting character. And I like to think that I've had some interesting travels over the years and I've been to some interesting countries and I've had some interesting experiences. But let me just tell you right now, I can't talk about those on these podcasts because I might get judged or I might get canceled or I might get banned. But I gotta tell you, it's been fun, Larry. It's been a lot of fun.
1:29:18 Speaker 01 Yeah, and then you go home that you, and your sisters were not, didn't wanna meet her. And your response was very interesting. But there is people, they have a chance to meet someone from another country, another world, and they're not interested. Or the threat or whatever.
1:29:39 Speaker 00 You were talking about something a second ago too, and you know me, you know, I've been working on essentially a film project for many years now. And I'm actually getting to the point where it is go time. It's go time to say, Mike, put the budget together. But I have to tell you that process of doing it, going from having no understanding of how a script should be constituted. No understanding of how to take all of these experiences that I've had and to put them into words that professional people involved in the film world can then help to make this movie. That process, just creating it, has been wonderful. I mean, it's just been. Almost every day for five years, that chance to almost like carving something,
1:30:24 Speaker 00 carving a statue or sculpting a statue, I should say, that feeling of perfection, that feeling of chasing perfection, that feeling of creating is great.
1:30:35 Speaker 01 It's you're chasing a feeling you're never going to get to perfection. That's not the game. Literally, if I stopped tomorrow, I don't need any money. And I'm not particularly interested in living long. I was very interested. I'm moving some memory stuff, but even that I look at as a game. Because fun is in uncertainty. I will tell you, I made a good deal of money.
1:31:13 Speaker 01 It's very simple. It all came down to training. My whole life was like that. You don't get the thrill unless you have the uncertainty.
1:31:28 Speaker 00 I brought the Jim Cameron thing earlier. Another one that I saw, and you might have heard me talk about this in the podcast, it was Matt Damon, the actor. And he was talking about, Matt Damon grew up with Ben Affleck. They were friends. Both of their parents told both of the boys, do not do this. Do not be an actor. Because they were asking Matt Damon about his kids being actors. And so he gave this long story and he's like, look, Ben Affleck's mother was like, do not do this, Matt. Do not do this. Do not do this. And so basically it was the same thing Cameron said. If you're going to do it, you're going to do it. And if someone's telling you not to do it, it doesn't make a difference whether it is your mother or your father. If you're really born to do it, you're going to do it.
1:32:05 Speaker 01 Yeah. Sharon's father met this man, her mother. And so married and loved her. But their father wouldn't let her mother, wouldn't let him marry this girl he wanted to marry until his oldest sister got married. But I cannot, and you cannot.
1:32:35 Speaker 00 You can't follow rules like that, Larry. They don't make any sense because the thing is, is people like me, people like you, other people listening, we weren't meant to be part of that. We were meant to be part of something else.
1:32:48 Speaker 01 Oh, yeah. It's the craziest thing. I would never, I didn't care. I really don't care who wants it. The idea is, could I get it? What do I gotta do to do it? But part of it is the danger. And I don't know if this is more of a boy thing than a girl thing, but I remember from 14 to maybe 20 something, I did really stupid dangerous shit, personally, given my handicaps. And by we not think of that, it's part of what you like in the game.
1:33:33 Speaker 00 Share something also too, as you bring these stories up of, not necessarily ladies, but I was thinking recently, I had a female family member give me all the reasons why she could not travel to Vietnam, has never traveled to Asia. But all the reasons, and these reasons were just nonsensical reasons, but it was all just that emotional, I'm afraid, but I'm at a point in my life to where I can pretend that I'm not afraid and I can just make up all these excuses not to go. And then I contrast that with, why do I enjoy, my business partner, for example, is a Vietnamese lady, but why do I enjoy a place like Vietnam?
1:34:14 Speaker 00 And if you go back and people can do this right now, you do a few quick Google searches. During the war, it was not uncommon to have Vietnamese women handling machine guns and using them.
1:34:29 Speaker 00 This attitude, I'm convinced permeates this country still. And it's intoxicating. It's intoxicating where you have essentially these risk-taking. Look, I'm a guy. I like ladies, okay? But you have these risk-taking women that have essentially this gusto, also with the femininity. But to have that gusto is just a wonderful trait. Contrasted to what we saw during COVID, for example, where in America, we just scared the bejesus out of women. We scared them that they must take a million shots. They must wear masks all the time and all this stuff.
1:35:14 Speaker 00 And I just think as men, we generally like femininity. But we also like a little toughness. My great-grandmother lived to 101. Her husband died in a drowning accident, I think in her early twenties. And she raised three kids and stayed a widower for the next essentially 75 years. But she was tough. She lived in a small apartment in Portsmouth, Virginia. It was not exactly a nice neighborhood, but she handled it. I think that's something in this modern age, we've lost a little bit of it. If you're out there listening, you're saying, hey, why does Mike Covel like to be where he's at? Well, I'm telling you, it's not a secret.
1:35:56 Speaker 01 Because they really don't like, you gotta like the game. I'm doing something, a whole new business. But no, it's the same business by me as either buying and selling legal stuff. So that I, this is a great leverage, which I'll go into it the way it's done. And you can make a lot of money. So I'm, you know, I will tell you, my wealth, such as it is.
1:36:26 Speaker 01 I will come to one major, major thing. I showed up. I never want to do anything else as to what I, what I don't think is a big payoff. Either money or having a great time. If I think it's gonna be dull for me, I'm not gonna do it.
1:36:49 Speaker 00 You have a dramatic need, Larry. I have one, a dramatic need to get through life. Meaning you have this need to overcome obstacles. You have this need to overcome uncertainty. You have this need to march forward. A lot of people have a need to get drunk and watch freaking football or basketball or baseball or whatever. That's their need. That's a shitty need. I mean, I wish they could be inspired by your need, but some people can't be inspired. They're stuck.
1:37:14 Speaker 01 No, that's true. Here's what I think is gonna happen. You and I know that events and shit, we make too much of them. For instance, so my wife, with this artificial intelligence, a whole bunch of people, the jobs that'll be lost. And he said, history did not say that. History says every time that they invented shit, the other day, it's the whole jobs that didn't exist. My wife takes it the whole wrong way. She's afraid there'll be more jobs out of this.
1:37:57 Speaker 00 But the word job alone, Larry, that word's such a crappy word. What are we, we're just burger flippers? Come on, that's part of the problem here is the word job. They want security, they want consistency, they want a fantasy. The entitlement world gives it to them.
1:38:11 Speaker 01 As you get older, you find you really don't do as many days as physical things as you did. But when you were from 12 to 20, I did such incredibly stupid things, but that's being a boy. Trying to make up for what you don't have, whatever it is. But that guy's answer was totally correct. And my father told me, don't ask, just do it.
1:38:39 Speaker 00 You brought up AI a second ago, and I got to tell you something I did with AI today. I was using Microsoft's browser and they've got this AI component. And I was curious about something. I was working on something and I just asked Mr. AI a simple question. I said, give me the top 10 investors from the 19th century. Seems like a simple enough request for the wonderful, amazing, so smart, so intelligent AI. It gave me three names. I think one was Jesse Livermore, but it was like, we can't give you anymore. There's no more information. If that's AI, I'm not terribly impressed. Right now, it doesn't feel like to me anything much more than a thesaurus.
1:39:23 Speaker 00 And basically another way to search Wikipedia. I mean, frankly, I'm not impressed at all. I'm sure there's people out there saying, oh no, I've seen it make this wonderful digital piece of art. Oh no, it wrote this piece of code for me. Yeah, yeah, yeah. I'm not buying it yet. Maybe it's all going to turn into something crazy, wonderful, but I'm not buying it.
1:39:41 Speaker 01 I, I don't really give a fuck.
1:39:43 Speaker 00 There you go.
1:39:46 Speaker 01 Seriously, look, what is gonna happen? It's gonna go way up. And it's gonna come crashing down. It's gonna fall short, come up with some great shit, but it is not gonna rule the world. People don't realize these machines are plugged into a wall. You see, no matter how mighty you think, if you pull the fucking plug, it sits there like a lump. Maybe someday, I'm told some machines develop their own languages, other machines.
1:40:26 Speaker 01 I'm, I am going forward with what I'm telling you like a true trend follower. And I'm saying, this is gonna be huge.
1:40:39 Speaker 00 Will the wife let you back to Asia?
1:40:41 Speaker 01 What? Well, yeah.
1:40:46 Speaker 01 She hasn't liked the app. My wife, having been born in a project in Brooklyn, was spoiled when she met me and her husband. She loves to travel. She just loves it.
1:41:02 Speaker 00 It's hard, though. I mean, let's face it, I am exactly on the other side of the planet from you, so it's not so easy. I know.
1:41:08 Speaker 01 But look at it. You were having a conversation almost verbally as you would have if we're in a bar in New York. Thousands of miles have been erased, and we're having this conversation.
1:41:26 Speaker 00 By the way, Larry, I have, and it was done on a really cheap recorder, I have our original conversations from 2005 recorded somewhere. I've not listened to them since then, but they are somewhere. I might have to pull them out. I don't think I ever released them. I think I used them for part of a book, but I don't think I've ever released them. I'm sure we sound exactly the same. I suspect we do.
1:41:50 Speaker 01 Oh, yeah. And one of the reasons why I want to do this thing is because I could tell you the events to look for, and they will happen. I wanted to make a challenge to some sort. All you gotta do is look for these events, and they're in the newspaper.
1:42:15 Speaker 00 Let me stop you a second. So not to get into specifics too much, but you've got a speculative idea in your mind about where we are at this moment in terms of the markets and what you, based on a lot of experience, can imagine unfolding. I got to share with you, I don't have the same level of experience, but I know when rates start to move up as high as they are moving right now, as fast as they have moved, there is some pressure building that will be released at some point in time. How it's going to be released, I have no earthly idea exactly. You might have that figured out already, but there's definitely going to be a pressure released from these rates rising.
1:42:57 Speaker 01 We have seen what's gonna happen is what happened to Tesla. People are gonna think it's gonna be great, then they're gonna think it's terrible. They're gonna hate him, they're gonna love him, there'll be competition. But here is the truth. David Dodd of Graham and Dodd, we wrote the book. It says, well, the markets are basically two things. A counting thing, a weighing thing, and a voting thing.
1:43:35 Speaker 01 Well, my experience with the markets, the markets are basically totally a voting game. That's it. You buy the stock or commodity because the price is going up. That's where I buy. We sell if it's going down.
1:43:56 Speaker 00 You and I talk so much. I've written a bunch of books. You've written a book. You've been in a zillion books. What you just said, you say it so nonchalantly, so simple. Markets go up, I'm long. Markets go down, I'm short. Essentially what you just said. So many people cannot accept that. They can't get into the mindset because what they think, even when they hear you say that, they think you have for sure a fundamental reason for why you know it will go up. Now, you might in this example, but I know generally you don't. And generally, you're talking about being a free rider on a trend. But that concept, for whatever reason, a lot of people, I've watched them in real time. They hear someone like you say that. They hear someone like me say it.
1:44:40 Speaker 00 They can't get the idea of riding a trend without knowing where it's gonna go and why it's going.
1:44:47 Speaker 01 But that's the truth.
1:44:49 Speaker 00 They don't get it. Here's the part that I don't get about people. If I try to explain the Larry Height mindset, and then they look at me with that blank stare, "I don't know what the fuck you're talking about, Mike," then I would think, because this is what I did, you would at least be curious enough to know, "Well, how did he get the money? How did his peers get the money?" Maybe somebody doesn't want to understand what I say about trend following, or what you say, but Jesus, where's the curiosity to at least, if they don't get it, they don't understand, you know what it is though, Larry? It's freaking ego. It's freaking ego, because they can't accept what you're saying, they don't understand what you're saying, and they got such a big damn ego, they won't try to figure it out. That's my theory.
1:45:30 Speaker 01 That's exactly the truth. I have a friend of mine, and it's all about envy. Envy. It's like when I was in England, there was a book called American Think and Brit Think. And the point is out, this guy, I saw this, I was walking down the street with a friend of mine, and a guy comes by, a young guy, maybe thirty-five, maybe thirty-two, in a Rolls-Royce convertible, very good-looking blonde.
1:46:08 Speaker 00 You just got canceled. I don't think you're allowed to say that phrase anymore, "very good-looking blonde." That's probably not even legal anymore, except on my podcast. Perfectly legal here.
1:46:16 Speaker 01 What they say is, "Why does he have that I don't and I should have that?" Well, you and I are very good examples of it. We don't say, "Take it from that guy." You and I say, "I'm gonna get that."
1:46:33 Speaker 00 Here's what's crazy, though. I brought up that ego is the reason why they won't want to learn from you. You brought up envy. They're all in the same headspace. But if I go down the envy route for a second, what's so interesting is that you, Larry Height, could come into a room full of doctors and attorneys that don't have the foggiest idea of what trend following is. You could explain it to them. You could want them to learn. You could be sitting there, willing to be patient with them. And instead of lifting a finger to try to understand what the hell you're saying, they do literally get envious. They don't even realize that you're standing in front of them, telling them how to freaking do it. You're willing to explain to them how to do it,
1:47:15 Speaker 00 but in their mind, they think there's some secret that you're not telling them. So then they're envious. It's crazy.
1:47:22 Speaker 01 Or a friend of mine's father, who was a working class guy, and said, well, how did Larry get to that? His father probably helped him.
1:47:31 Speaker 00 Ridiculous. We could always do that. I remember seeing John W. Henry's first disclosure document. For those people that are listening, this would be a commodity trading advisor, disclosure document on file with the United States government. I probably did a freedom of information request back in the day. Now, John Henry is worth four billion bucks today. Okay, yeah, not everybody's gonna be worth four billion bucks. I get it. However, when you see John Henry's disclosure document, and you see the first month, that he had $16,000 in the account, literally on file with the US government, he quickly raised more money,
1:48:09 Speaker 00 he had profits, but the guy put down $16,000 in the audited disclosure document as the money that he started to trade as a professional trend following trader. Now, damn it, if that's not motivating, I don't know what the hell is.
1:48:28 Speaker 01 And this is why I was trying, this is the number, why I called you. But I don't, I don't know, go on and do it, but I was going to tell you on the air, the key to you,
1:48:47 Speaker 01 what events you will see in the newspaper that you would trade along. And my bet is, how many people, and I'm gonna tell them the events, and they're very easy to do, all you have to do is, I don't know anything about it, right? I don't have the depth in it, but I could see how people are gonna react. And all the movement at that price is done because people react. It's not just by God, it's people, the price moves the people.
1:49:24 Speaker 01 That's how it goes. Without the people, the price doesn't move. You go to the Cuban sugar trade, there's nothing there. It's fixed. Here, these prices move because the people. That is the main ingredient of all markets. We are all going to die. Prices don't move without someone personally doing something. It's the person be using a computer, be using. John Daly and I probably started out looking at newspaper places
1:50:06 Speaker 01 and making charts, spreadsheets or something in the clumsiest ways. But we started, we didn't know where we'd go and certainly don't know that what we did. They didn't know we were going to make four billion dollars.
1:50:25 Speaker 00 Hold on, you said clumsiest of ways. That's only looking back in hindsight. At the time you were doing it, didn't it feel clumsy? It felt like, oh, my God, I've got the tiger by the tail here and I'm going with this baby. And so what if you had to do some manual photocopying or some manual spreadsheets or some Lotus 123? It didn't matter. Why did that matter? Because the amount of money you could make was so astronomical. Who cared about a little paperwork?
1:50:49 Speaker 01 I'm walking down the street with a young lady. So she says, so what is your plan? And I think at this, she was a bureaucrat, she had PhDs, very interesting human being. And I said, well, the money is there, I'm here. I close the gap, I get the money and I have to build the machine to operate it. And she said to me, that's your plan? That's the whole plan? I said, no, as you go along, we're just, I don't know what it's going to be. I know I don't know the next 20 days, 20 minutes.
1:51:31 Speaker 01 I've been in buildings that if I would have been there, I would have been dead. Blew up. Who would have known? I missed all the World Trade Center things because I overslept a lot of things. Didn't matter. I don't know. I don't even know I don't know. And I don't really give a fuck because all I really have to know is my stop and it's upping me.
1:51:58 Speaker 00 Let me interject there really quick is a PSA, a public service announcement. Based on what Larry just said, my podcast listening friends, go check out his book, The Rule. It goes into a lot more depth about what he just said.
1:52:11 Speaker 01 Well, thank you. But that's why I thought I would do this public thing with you because I'm telling you that you don't need that much. What will happen, AI stuff will start to break into new highs. Then the next, this is Jesse Ruben more than I want. And then that's going to break into new highs and then industries will evolve like we saw. And competition comes and there'll be ups and there'll be downs. And we know the cause of the ups and downs are people.
1:52:51 Speaker 01 People, they're either elated, dull, or depressed. That's basically our whole suite. Anything else about the inner stuff, cause this works. The story you just told me, that you called, the data was so thin, that they came up with three of the investors. That machine is not really working. A human being, you've come up with 20, right? You're just a human being.
1:53:25 Speaker 00 But what you just said, Larry, about AI, I guess every generation has their version of AI, so to speak.
1:53:32 Speaker 01 Yeah.
1:53:32 Speaker 00 That product or service where the masses start voting, irrationally voting perhaps at some point in time, but that's the deal. And if you're a trend follower, who cares if it's irrational? It's still real money.
1:53:46 Speaker 01 It's actually life. You heard Mario's go. You got some good times with her. Do you regret not having those good times?
1:53:58 Speaker 00 My relationships are a whole different conversation.
1:54:02 Speaker 01 Okay, but you don't regret it?
1:54:04 Speaker 00 No, and I've not officially got married yet. I've had some close calls with some very nice ladies, but things happen. That's life. You line up and you move forward and sometimes you take one step backward. On the flip side, everyone listening knows what the divorce rate is. None of us have got this thing figured out. I would say this, though, but my parents and my grandparents, both couples got to over 50 years. So that's pretty amazing, at least in my family.
1:54:34 Speaker 01 Although, how many cousins you have?
1:54:37 Speaker 00 How many cousins do I have? It's an interesting question. Hold on, because I've got some remarriages and some kids that happened outside of, it's under 10.
1:54:48 Speaker 01 Okay, how many of your cousins have been divorced?
1:54:54 Speaker 00 At least one. Some of them are still fairly young, actually, that have just not gotten married yet, so.
1:55:01 Speaker 01 Okay, I'm just saying, because basically, half your cousins, or my cousins have been divorced.
1:55:08 Speaker 00 Half of them.
1:55:10 Speaker 01 Half of them, which is what this is just exciting. It amazes me that here is one of the major decisions of your life. I'm walking down the street, I'm gonna go into Central Park and run. Run, very loud, and she's running, and what is she screaming about? She's just got divorced. She married this guy in California. He took half her money. And she's fucking pissed. But she does very well, because she's taking all her girlfriends, and they're going out having a great time. So I was joking with them.
1:55:51 Speaker 01 And she told me, this guy took half her money, and not only did she lose half the money, or she had to pay the fucking lawyer $270,000 for the divorce.
1:56:07 Speaker 00 The other side of that equation. Again, I've not figured out anything perfectly yet, but I will say this.
1:56:15 Speaker 00 I truly enjoy being in a traditional culture. There are parts of America, and you're outlining some of them, where I'm a hopeless romantic when it comes down to it. I mean, ultimately, I mean, I get the trend following stuff. Ultimately, I like the romance. I like the seduction and I like the tradition. I don't like many of the things that America has become. That's not our foundation. That what we see today in modern America, divorce everywhere and 15 million genders and all this other nonsense and violence everywhere. This is not what America once was. I enjoy being outside of that system. I hope one day that system in America resets itself, but so far there's no evidence of that.
1:57:00 Speaker 01 I tell you something, I feel, and many of my friends my age, very alienated. I mean, it used to be, I knew the difference between a guy and a girl or somebody gay. I personally was not against any gay people doing whatever they want to do. It's not my fucking business. I really don't care. But I don't really want to have to just one of the granddaughters, she's a they, not she.
1:57:34 Speaker 00 We should not have naked gay men parades in our big cities. We've jumped the shark on a lot of this stuff.
1:57:41 Speaker 01 Yeah. Anyway, so my idea.
1:57:44 Speaker 00 Take Mike and Larry and put them on a podcast. We cover a lot of territory in an hour. We just went from trend following and AI to this wasn't you, this was me, but the gay naked guys at parades. I mean, we cover a lot of territory here on this podcast. This is serious stuff, man. This is not half-baked.
1:58:02 Speaker 01 I grew up, crime, organized crime was very much part of where I grew up. It was just what some family did.
1:58:13 Speaker 00 It was not really a risk to you, though, was it?
1:58:16 Speaker 01 Well, it could be. What happened is my father, a factory.
1:58:23 Speaker 00 Okay, there you go. That changes the dynamic.
1:58:25 Speaker 01 And they go, George, there'll be a strike.
1:58:31 Speaker 01 I know it's a busy season. Fucking they absolutely knew that as well as my father. She said, maybe, maybe George, because I know this guy, maybe for 10 grand, that's frightened away for a while. That's the world. And that was not even considered a crime. Because my father painted on the concept of that's the cost of doing business.
1:59:01 Speaker 00 There you go. Now, the cost of doing business, though, is if you walk down those streets near your house in New York City, you've got to worry about risks that you never had to worry about over the decades now. Some lunatic homeless person jumping out and assaulting you or whatnot. I mean, there's a lot of crazy stuff these days.
1:59:17 Speaker 01 Oh, I will tell you. And here's where they really fuck up. They don't punish. I just tell you, you give me a month in New York City, and let me chop off the hand of anybody using a gun. You would see guns go very down. Because they would be dead. They'd be walking around without a hand.
1:59:46 Speaker 00 Can I clarify, though? I think you're talking specifically about people that have a gun in their hand that are performing a bad behavior. Correct? Yeah.
1:59:56 Speaker 01 Yeah, you do that. You punish them, and you don't put them in jail. You cut their hand, they're all off and safe.
2:00:05 Speaker 00 Stealing for the same thing? All this stealing, all this going on across America? Can we just also go back to Middle East principles and cut the hand off?
2:00:13 Speaker 01 Correct. It would work. There'd be a lot of anger, but in reality.
2:00:21 Speaker 00 What we're talking about right now, though, I'm going to call this the revenge of the men. I think too many men. Me, you, other rational, normal men, maybe we've got some differing political opinions, maybe we don't, but too many men have sat on the sidelines for the last couple of decades, and now we're paying the price because too many lunatics are running the governments. They're running specifically the local governments. All you have to do is look at a couple of reports about what's going on in poor San Francisco, but the idea that our cities have become 10 cities filled with drug abusers and people shitting on the street and all this other nonsense, and that we can't do anything about it, that's not something that men allowed to happen.
2:01:06 Speaker 00 I don't know who's allowed it to happen exactly, but I think it's time for the men to show up and put their foot down. I'd be banned for saying that, huh?
2:01:14 Speaker 01 Yes, sure.
2:01:16 Speaker 01 It's the truth. It actually comes, a thousand reasons why I wouldn't, but I would think about it. My point is, I'm gonna tell these people exactly the events to look for, and you make money. Because I know about AI, nothing, but now the dog's got the bone in his mouth. It's going, prices are gonna move up and down.
2:01:48 Speaker 00 Instead of putting it on the podcast, why don't we put together a document that we can share with people? It could be brief. We could attach it to the podcast notes or whatnot, but just share with people some of these big picture ideas that you have. I think that might be more effective than putting it on the podcast.
2:02:04 Speaker 01 Okay, I just wanted you, I didn't care if we did it on the podcast. What I cared was the one person who knows the field, actually knows the field. Now, there are business reasons why you are not a big public investor, because you've got a bunch of people, it's different.
2:02:26 Speaker 00 We can go forever. I always love talking to you. We're gonna pick this up again. I gotta put a pin in it. Larry, we could talk at any time.
2:02:37 Speaker 01 Just let's think about it, because I actually don't want to be, what I want to do is create a document, giving these people these things. I'm gonna do it myself, and somehow make it bigger.
2:02:55 Speaker 01 There's the fact that here's this guy, he knows nothing about the science that they're talking about, really. And yet, if you follow these events in your newspaper, you can make money.
2:03:09 Speaker 00 Trend following 101.
2:03:11 Speaker 01 But it is. But you and I, John Henry, a lot of people that we know, we live trend following lives. John Henry has a new wife who is the age of his, oh, his daughter.
2:03:28 Speaker 00 Round of applause, please.
2:03:30 Speaker 01 So, the people that we have the privilege of knowing and talk with are the people that get it done because they do it.
2:03:44 Speaker 00 Larry, we will catch up again soon, always.
2:03:49 Speaker 02 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.
2:04:31 Speaker 02 But if you want to buy and hold, trust the government and trust Wall Street, this is absolutely not for you.
Previous Ep. 1355: Richard Thaler and Alex Imas with Michael Covel on Trend Following Radio Next Ep. 1358: Scott D. Anthony with Michael Covel on Trend Following Radio Page updated November 6, 2026 · transcript and summary are machine-generated
