Pod Insights Michael Covel's Trend Following Ep. 1383: War Trading with Michael Covel on Trend Following Radio About this episode Please enjoy my monologue War Trading with Michael Covel on Trend Following Radio. This episode may also include great outside guests from my archive.
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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.
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Transcript 0:00 Speaker 00 You know Kurt Cobain once sang the lyric, and I might be messing it up a little. But here we are now. Entertain us. War. Oil. Volatility. Trump. It's an exciting time to be alive. Because you know what? There is no damn prediction. That works. You can't know. Unless you know. So for example, if you're on the inside of the White House, and you have some inside information. Well, perhaps that can help you. But without that, what are your choices? What are your choices?
0:46 Speaker 00 You can buy and hold, or you can be a trend following trader. That's it. Everything else is a lie and mental masturbation. Now, look, if you want to be a buy and hold trader, or a buy and hold investor, in a period like now, it could turn out all right. Maybe equities rebound to brand new all time highs. Bitcoin rebounds. Everything goes to an all time high. Gold back, silver back, everything's up. That could happen. I could easily imagine that happening. But the funny part for buy and hold people, they don't seem to ever imagine the other direction.
1:32 Speaker 00 And they don't imagine, or at least they don't look back at history, and ponder that if you are going to choose a buy and hold strategy, it could go down a lot, and it could take decades to come back. I'm using words like could because I have no idea how things might shake out. But that's what buy and hold gets you. Now, trend following, on the other hand, there's no perfection. But trend following accepts what is right now. Where are we right now? Where is the market, whatever that market might be? Where is it right now? Let's make a decision right now. Let's don't try to imagine what's going to happen tomorrow.
2:15 Speaker 00 Let's don't try to read Trump's mind. Let's make a decision with the price and where it is right fucking now. Now, from a risk management standpoint, that makes a lot of sense. It doesn't mean you will not have losses in the future. Trendless periods, volatile periods. You can get chopped up with a trend following strategy. You can get many small losses. Those many small losses can show a drawdown. And I implore everyone, and perhaps it's good for a timeout right now. Check out Paul Mulvaney's performance. A performance track record that I love to talk about because it is so illustrative of trend following.
3:00 Speaker 00 Go to trendfollowing.com/performance. No sign up, no login. Just study that 20-plus year track record. In fact, reverse engineer it. Take it apart. Figure out how it came to be. There's a lot of upside, there's some downside. But it's an amazing way to think, especially when you consider where we are right now. Now, for someone old enough to remember, right now could have been in the 70s. It could have been 1987. It could have been 1995. It could have been 2002 or 2008.
3:43 Speaker 00 And trend following's had a hell of a run for the last five years. But there's these periods that come along where the shit hits the fan. And you might be a boomer, or a Gen X, or a millennial, or a Gen Z just starting out. And you've got this wide-eyed optimism, everything's going your way. The charts are going your way, the markets are going your way. And that kind of gives that feedback loop, right? Oh, my God, I'm making the right decisions. And then all of a sudden, you get punched in the balls. And then you question everything. Now, you should have questioned everything before you started. But that's not how human nature works for pretty much any of us. We get in, we take our licks, and then we get curious, if we are curious.
4:29 Speaker 00 Some people are not curious. I've always found that interesting. There are literally people who are not curious. People will go through life and not give a damn about how things really work. They will trust the man behind the curtain, the Wizard of Oz, all day long. That is how they roll. They don't care. But you know what? Those people make up a market. They make up the price that trend following traders trade. They make up the price that buy and hold traders trade. The price is all of us, regardless of motivations. That's what's so brilliant about trend following. Trend following just says, "Look, here we are right now with this price. Let me trade it. I don't know what's gonna happen, but I have my plan.
5:14 Speaker 00 And if I follow along over enough time and I play it out, I'm gonna do okay." Let me bring up the obvious elephant in the room: war and the unpredictable part of war. If you're sitting back right now and you are reading every X post you can, watching every YouTube video you can, and thinking that this will give you a leg up on your wartime investing, you're fucked. Now, that doesn't mean you won't get lucky. If you get lucky now, if you don't consider that you got lucky now with your wartime analysis, it might come back to bite you a decade from now because you'll think, "Oh, I'm such a great analyst.
5:57 Speaker 00 It worked so well during the war with Iran." And then five, 10 years later from now, when your ass gets handed to you, you realize it was luck. There is no damn way additional information that you can glean from watching hours and hours of shit content is going to help you to make money in a wartime situation. Not happening, kids. Back to the top. You have a choice. You can be that buy and hold investor, or you can be the trend following trader. Now, look, big picture, I don't like the idea of war. I mean, the current president got elected saying, "No new wars."
6:41 Speaker 00 Now we're in a war. That hasn't been explained to me. It hasn't been explained to you. Now, maybe there is something behind the scenes. That showed him some evidence or some information that we are not privy to. That's possible. But it's also possible that it was the same kind of information that was shown to the president back during the weapons of mass destruction time period. Meaning bullshit. We can't know. And look, big picture. If Americans really love the idea of war and going to war. Here's the surefire way to test it. Tell Gen Z men, we're cranking up the draft.
7:25 Speaker 00 Twenty something men in America, we're cranking up the draft. You will quickly find out that support for war in America is non-existent. Now, the funny thing is, is I said something like that on Facebook. And some guy just broke down, you know, the kind of guy that you realize is sitting there and reading all of this content to try to analyze it. And he started screaming something about, well, you've got an opinion. What did your money from your book advance run out? And you say to yourself, what kind of nut job? But this is the beauty of trend following. All of the nut jobs, all of the head cases, all of the people that are whacked in the head.
8:10 Speaker 00 They are embedded in the price too. Everybody is embedded in the price. So if you just trade the price, you've got such a leg up. You're not forced to give an analysis. I mean, look, yes, it's my personal opinion that I don't want to see war. It's my personal opinion that the case for war was not made. It's my personal opinion that the president of America looks contradictory. At least until he gives a better explanation for why what has happened, has happened. I mean, that's a side tangent to my larger point today. I mean, it's a scary time.
8:56 Speaker 00 And for most people, it's scary, not necessarily for life or death. Yes, there are people in harms way. But most people on the planet. Are sitting back, dealing with the overflow, so to speak. The unintended consequences, so to speak. I mean, you can see in Southeast Asia, for example, prices of fuel, they have gone up. People's lives are being changed. Now, their lives are not being changed because they are at threat of war. But the economics of this conflict have spread. So everyone is sitting there, waiting, watching.
9:39 Speaker 00 And it's a great time to really sit back if you can. Now, it can be hard when you are looking at your money and saying, what's going to happen to my money? Because no one wants to see their money go from price level 100 to price level 50. No one wants to see a 50% drop. But this is one of those times where the entire world, in a way, is brought to the point of considering, what am I doing? What is my strategy? If I can't control what these motherfuckers might do that control the war strings? If I can't control that, what can I do with my life?
10:22 Speaker 00 I mean, if some one conflict between a handful of countries can cause the entire world to bend to their knees, doesn't that cause the entire world to think about their strategy? And especially their strategy when it comes to money? Of course it does. This is what I was first seeing myself when I first came into the trend following world back in the 1990s. I was like, wow, this is so damn brilliant. These men have figured out that if we can't know the motivations of the Fed, if we can't know the motivations of the presidents of certain countries,
11:03 Speaker 00 if we can't predict what they're going to do, and we still have to live, we still have to make money, we still want to get ahead. How can we bypass all of that uncertainty? How can we hack it? How can we get around it? Now, does anyone think this is the only time that a small number of countries have caused a problem where the entire world feels it? Of course not. History is littered with these situations. That's always been the brilliance of trend following. You can go back over time, and certain firms have done this, going back hundreds of years, up to 800 years ago.
11:44 Speaker 00 Because yes, 800 years ago, there were financial instruments people were trading. And people are people. So if you take a population at any point in history, there's going to be different motivations in that population. Some people are going to be wealthy at the top with lots of information. Other people are going to be batshit crazy. Other people are going to have not much. But when you mix it all in, across human history, human beings act the same. They can be very steady for a long time, and then all of a sudden, it's lights-out crazy time. And human beings are the price. Human beings and their motivations are the freaking price.
12:28 Speaker 00 I know plenty of people that look at something like Bitcoin, and they've got every freaking fundamental view you could ever imagine. And they say it with authority. Now, look, I've said it many times in this podcast, I am the first to give a big round of applause to the early adopters of some of the crypto who just made a fortune. Round of applause. But it's really interesting to watch, over time, some of the early adopters who just happened to get in, they made the right call, but 10 years later, 15 years later? Come on, there is no fundamental analysis anymore.
13:12 Speaker 00 It's back to what I said at the top. You're either a trend-following trader, or you're a buy-and-holder, and that's it. And let's say you are a buy-and-holder of Bitcoin, for example. There's been a tremendous amount of upside, but you have to be able to imagine downside. If you can't imagine downside on any market, I don't understand that. If you can't imagine downside on a market, doesn't that say you've not done your homework? Doesn't that say you don't know what the fuck you're doing? Because you've not studied history? You've not studied human nature? So if the shit hits the fan again and things get cut in 50%, is that the plan? Just to sit back and say, "Well, you know what?
13:57 Speaker 00 I was in Bitcoin at 120,000. It went to 70,000. It dropped to 35,000. And I just held on to it for 15 years at 35,000 because that's what I do." I don't get that. Bitcoin now is another market. There's plenty of markets. Gold has made you a lot more money than Bitcoin in the last handful of years. So why do we give a shit whether it's Bitcoin or gold? We don't, and that's the trend following mindset. The trend following mindset is not wedding you to one particular market. Again, I have no clam or beef with Bitcoin. I've got plenty of friends that have made a bloody fortune in it.
14:42 Speaker 00 And I salute them. But we're talking about right now. We're talking about what to do right now. All markets. You're starting over. You're Gen Z. You're 23 years old. What the fuck do you do? Do you trust CNBC? Do you trust the hodlers of Bitcoin? Do you trust the news? Are you fucking serious? Are you fucking crazy? What's wrong with you? Are you serious? Do you listen to Trump news conferences? And that's how you make your investing decisions? Or is it gold line on some podcast show? And that's what you're doing? You've got to be kidding me. Everyone knows this is nuts.
15:24 Speaker 00 Or they don't want to admit that it's nuts. And it keeps always taking me back to trend following. If you know this shit is crazy, if you know the times are wild. What is your best strategy? Doesn't that really state it? What's your best strategy? Make a table. Lay out the pros and cons. What do you do when you don't know what to do? Well, if you don't know what to do, then you're just left trusting people whose motivations you have no idea. Better to not compete with everyone and just take care of yourself.
16:06 Speaker 00 Don't worry that there is some AI guy standing next to an AI Lamborghini telling you how he made a million bucks yesterday. I mean, that's a whole different problem. If you're sitting there watching that kind of crap, that's a whole different problem. Look, I get it. A lot of people maybe don't have a certain amount of practice or education or knowledge to know what is a scam and what is not a scam. The safe way to think about it is that everything is a scam. And if everything is a scam, but the price is real, then trade the price. If you can't know someone's motivations, if you can't know the CEO motivation, if you can't know the president of XYZ country's motivation,
16:48 Speaker 00 if you can't know whether or not a product is real or fake, what is real? What is real? Price is the only thing that's real. Now, look, I know plenty of people can listen to me today, and maybe they don't understand trend following, and they're still thinking, well, why is he so fixated on price? Don't we have to understand why price is moving? No, you don't have to understand why price is moving. Think about price like a video game. Price goes up or down, whatever. If price of whatever market goes from 100 to 1,000, do you give a shit why? Do you give a shit why some market goes from 100 to 1,000? Do you care what market it is?
17:31 Speaker 00 That's the trend following mindset. Hey, Mike, I gotta know, why did market A go from 100 to 1,000? I really need to understand that. No, you don't. Why do you need to understand that? If you bought market A and it went from 100 to 1,000, 100, 200, 300, 400, up to 1,000, why do you care what market it was? What if it was adult diapers? What if you bought adult diapers at price level 100 and it went to price level 1500? Do you care? Why do you care? That's the trend following mindset. The trend following mindset is, we don't know what's going to happen. We're going to ride our winners whenever they do happen and we're going to cut our losers
18:16 Speaker 00 short. And if we make money in this market, fine. If we make money in that market, fine. We don't care about all the other bullshit. Of course, we're human. If you're human, you generally don't want to see war. However, we do know there are humans who are probably very much in love with the idea of war right now. I'm not one of them. But my opinions on war are independent of the price truth. And the price truth says that if you want to survive crazy times, believe the price. Don't believe the guy behind the curtain. Don't believe the guy behind the tree. Don't believe the bullshitter AI fake whatever person that was programmed yesterday who's
18:59 Speaker 00 in your Instagram feed with some hot girl who's AI as well telling you to do whatever. Come on, be smart. And I can promise you this, if you are smart and if you find some strategy and if you can worry about yourself and not worry about your neighbor, you can do damn well in life. Guaranteed.
19:25 Speaker 00 I see a time when those awake will understand how to make money in up, down, and surprise markets. Whether new trader or experienced, college student or financial advisor, protecting against a crash or just trying to make a lot of money, trend following offers everyone an answer in uncertain times. To get started immediately, send me an email, [email protected] . I will send you the right trend following steps to take along with my free video. But if you want to buy and hold, trust the government and trust Wall Street, this is absolutely not for you.
Previous Ep. 1382: Joe Pine Interview with Michael Covel on Trend Following Radio Next Ep. 1384: Daniel Coyle Interview with Michael Covel on Trend Following Radio Page updated November 6, 2026 · transcript and summary are machine-generated
