How Michael Covel ‘makes trends his friends’

From Stansberry Investor Hour:

Michael Covel, author of Trend Following: How to Make a Fortune in Bull, Bear, and Black Swan Markets, joins Porter and Buck to demystify trend investing and reveals why mastering this will change your entire concept of what bull and bear markets mean for you.

Buck and Porter talk risk management as well as the latest false starts with North Korea. And Porter reveals three “battleship businesses” that in his mind are so reliable, entrenched, and permanent, the typical rules of risk management just don’t apply.

Brandon from Dallas asks Porter how to distinguish from “good debt” and “bad debt” when it comes to determining which companies will go under in the coming corporate-debt meltdown.

Highlights:

02:31: Are we at war with North Korea yet – or are we finally best friends? It seems to Porter like this is an elementary school spat, where two tough guys can drop the act on a dime and become best friends. Buck explains why it will be months before we know.

09:34: Porter asks Michael how he, as an investor who thinks of buying shares as owning a part of a business, can connect that mentality with a trend-follower who doesn’t see value so much as numbers on a screen. Michael explains how trend-crunching quick hits and long-term value investing actually aren’t incompatible.

22:52: What’s the best market that Michael has followed as a trend trader? Porter asks if, looking over his 30 years of trend-following, there’s been any sector that’s especially lucrative or easy to get right. Michael explains why currency trades underlie his entire strategy.

36:25: Buck asks Porter a philosophical question about “buy and hold” vs. “buy and fold.” Let’s say you buy into something you expect could soar in 12-18 months on a catalyst – and it gets hammered in the meantime. Can you ignore your stop losses? Porter says you can, under two conditions.

46:10: Craig from the mailbag asks if there’s a way to check mutual funds for exposure to the coming corporate debt meltdown, or if these mutual funds should be avoided in general. Porter explains why most mutual funds won’t be at the epicenter of the corporate bond crisis –and reveals which funds you want to be wary of anyway.

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