Ep. 1365: The Transformation III with Michael Covel on Trend Following Radio

Please enjoy my monologue The Transformation III 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 https://twitter.com/covel Facebook: @trendfollowing https://www.facebook.com/trendfollowing/ LinkedIn: @covel https://linkedin.com/in/covel/ Instagram: @mikecovel https://www.instagram.com/mikecovel/ Hope you enjoy my never-ending podcast conversation!

• 0:00Speaker 00

  As I build up to Black Friday, yeah, it's just another day. But for me, it's one of those transform days where I get the chance to help people transform, help people find the transformation. Now, this is tricky in a world that's built on illusion because there's an art to seeing clearly. Look, my worldview is kind of well-known if you've had a chance to listen to this podcast, but I can give a quick summary. It's about flow and adaptation. It's about process over prediction. It's about modeling the greats.

• 0:40Speaker 00

  It's about real risk versus fake safety, cutting through the noise, mindset transformation. Bayesian learning. Go listen to my Alison Gopnik on Bayesian babies if you've not heard. Price as truth, trend following 101, human nature as the enemy. Now, that's a little harsh because if you understand human nature, it's not the enemy if you can harvest it. And this all ties together. Breaking free from the illusion, learning to see clearly, learning to act systematically. This is where I want to go today. You know, when I talk about clarity, not this soft dreamy clarity you get from a motivational

• 1:23Speaker 00

  poster, but the kind you get when you strip away the illusion, the prediction, the ego, and the endless noise that our world throws at us. Given all the technologies that we have, the ability to find the truth, it's fascinating how much lying is going on at the upper reaches of media power. The lies are nonstop. And we have the ability to now, with social media, especially X,

• 1:53Speaker 00

  Define the truth. That wasn't always the case. Now, look, with trend following trading, you don't have to worry about any of that. You just trust the price. But we're all alive and we have to deal with the world. And most people don't see the markets clearly. They don't see themselves clearly. They don't stand a chance. Clarity, though, is a skill. It can be learned. And once you learn it, you never go back. Look, you know, if you've turned on CNBC or you've scrolled the financial social media, you've seen it all. I'm a walking redundant billboard. Predictions, forecasts, confidence, certainty.

• 2:35Speaker 00

  And people fall for it because each generation is new. Each generation doesn't know any better. So each generation gets hit with the bullshit propaganda machine. This isn't clarity, it's the illusion. I mean, people love prediction because prediction feels safe. The key word feels. It gives you the illusion of control in a world that is inherently uncontrollable. But all these major events that happen, and they're always a surprise, the black swans, you know, the 2008 time period, the pandemic sell-off, commodities explosions up like gold. People are always caught off guard. It's always that way.

• 3:19Speaker 00

  What does it tell you? Prediction is entertainment, illusion. It's a narcotic. You're mainlining heroin into your veins. You know where clarity begins? When you acknowledge something uncomfortable. You don't know the future. And neither does anyone else. That's not weakness. That's strength. If you can admit that, if you can believe that, that's strength. But if you can't predict, what can you do? Most people panic. No prediction. How do I act? How do I decide? How do I invest? Simple. You stop pretending the world is deterministic. You stop waiting for certainty.

• 4:02Speaker 00

  You adopt a process. A way of moving through uncertainty, a way of responding instead of forecasting. A way of aligning with reality instead of arguing with it. Process is certainty. Prediction is fucking fantasy. Prediction is jerk-off time. Prediction is mental masturbation. I mean, if the best in the world don't do it, why the hell are you sitting in your mom's basement, wearing your tighty-whities, playing video games, believing that you're going to predict a damn thing? Because the moment you can let go of that as an ideal, you're unstoppable.

• 4:45Speaker 00

  Model what works, not what entertains. I repeat, model what works, not what entertains. Every great performer, I don't care the field, begins by modeling someone better than themselves. You don't start with originality. You start with imitation, the right kind. You copy the process, not personality. You copy the behavior, not the bravado. You copy the rules, not the rhetoric. Remember with me? Hey, maybe someone doesn't like my tone. Maybe somebody doesn't like my cursing sometimes. Fair enough. But verify. Trust me, but verify. In fact, I will say this.

• 5:28Speaker 00

  Tom Bosso is a friend, someone who I've done a book with. He's been on this podcast a ton and needs to come on again. I need to ask him. And he's a great guy, and I'm sure he doesn't like when I swear. But he probably also thinks, you know, Michael is channeling something different. That's the way he has to go. So it's not whether you're a low talker or a high talker. It's just about being systematic, like the trend followers. The ones who don't chase the story of the day, the ones who rely on the only truth the market gives you, which is price. There's a reason price is at the center of trend following. Price doesn't lie. It doesn't spin a narrative. It doesn't care about your politics, your analyst, your sentiment, or your opinion. Price is the pulse of human behavior.

• 6:13Speaker 00

  Fear, greed, uncertainty, distilled into one damn number. People ask me all the time, Mike, how do you know when to get in? When to get out? When to size up? The answer never changes. Price tells you, your job is to listen. Everything else is noise. Look, this could sound too philosophical to some people if they're not indoctrinated, if they don't yet get it. But if you accept that the big picture of what I'm saying today has some truth possibly, then don't run away until you understand. But here's the deal. Risk is the real freedom. Most people get that backwards, though. They think safety comes from avoiding risk. But avoiding risk? We all know this.

• 6:58Speaker 00

  That's the riskiest strategy of all. Risk is not the enemy. Unmanaged risk is the enemy. When you approach the markets with a process, you know your downside. You keep losses small. You stay alive long enough to capture the big moves. Trend following is not gambling. It's disciplined risk-taking. And the freedom you want in life, time freedom, money freedom, agency, comes from structuring risk intelligently, not avoiding it. Survival plus opportunity equals freedom. That's what you want. That's what I help people with. Now, there's other people that can probably help you too. But this is what I do. But you gotta make a mindset shift. And most people don't. The real battle is not the market. It's you. I mean, the battle is with you.

• 7:43Speaker 00

  A fixed mindset, I already know, I don't want to feel wrong, I need to be right. Screw that guy, Covel. That mindset's fatal. The growth mindset, I'm here to learn. I adapt. I evolve. Losses are important, not judgment. Losses are information, not judgment. And the most powerful learners on the planet, they're babies. Babies. I already mentioned this, Alison Gopnik's podcast episode. Babies don't fear mistakes. They don't worry about falling down. They don't cling to ego. They test, they observe, they update instantly. That's Bayesian learning. That's trend following. That's clarity. Imagine approaching markets with that level of openness. That's the transformation most traders never make.

• 8:28Speaker 00

  So let's put it all together. The world is uncertain. Price is truth. Risk is unavoidable and your job is to have a system that aligns with the flow instead of resisting it. Clarity comes when you let go of the prediction, the ego and the outcome obsession. Just follow the damn process. Markets are going to keep flowing. The question is whether you will flow with them or cling to the illusions while the world changes around you. It's all very zen, right? It's like Buddhism. You can't control a damn thing. It's just a human wave of emotion spread out over who knows how many markets.

• 9:08Speaker 00

  And if you've got your process, when you enter, when you exit, how much you bet, which markets you're going to trade, you're set. Now, look, if you're new, or even if you're not new, perhaps you've been listening to me for a while. If these ideas resonate, if you're tired of the illusion, you want some clarity. Black Friday, I can help. I won't reveal the full details yet, but I will say this. It's about transformation. It's about the most complete transformation I have ever helped clients with. I sometimes feel like when I go into these rats and sometimes I'll catch people on X talking about these rats. I guess people love it. They want to hear emotion.

• 9:50Speaker 00

  I mean, even me, if I turn on a video, if I turn on anything and it sounds like somebody wants to talk about some bullshit, maybe listen to an introduction, I cut my introductions back for that. I got tired of them myself. I don't want to listen to any introductions. Get into the damn subject right now. That's my attitude. And I think that's what people love when I just turn on the mic and go like right now. Look, everything flows. Everything moves. The world doesn't wait for your certainty. The world doesn't give a shit about you. Clarity comes when you learn to move with it systematically, decisively, no ego. I'm a broken record.

• 10:34Speaker 00

  I know it, but that's why you're here. You want the broken record reminder and that is follow price, follow process, follow reality. Yes, my name is Michael Covel. And until next time, have a great damn week.

• 10:54Speaker 00

  I see a time when those awake will understand how to make money in up, down, and surprise markets. Whether a new trader or experienced, college student or financial advisor, protecting against a crash or just trying to make a lot of money, trend following offers everyone an answer in uncertain times. To get started immediately, send me an email, [email protected]. I will send you the right trend following steps to take along with my free video. But if you want to buy and hold, trust the government and trust Wall Street, this is absolutely not for you.