Michael Shannon - One of the original Turtle Traders

In this week’s podcast Michael Covel from Trend Following Radio interviews Michael Shannon. Mike is one of the original “Turtle Traders” and traded with Jerry Parker who was the subject of last week’s podcast review.  Michael Covel is the author of The Complete Turtle Trader and developed close relationships with many of the Turtle Traders during the writing of the book.  After interviewing dozens of Turtle Traders for his book Michael Covel found Mike to be the most interesting Turtle. This is a very entertaining interview that really illuminates the Turtle Trading experiment. Mike didn’t come from a trading background and is a good example that anyone who commits to putting in the time to learning to trade can become successful.  In the interview Mike tells the story of how he was chosen by Richard Dennis and William Eckhardt to be a Turtle.  Mike reveals some interesting details regarding the other Turtles he worked with including the fact that one of the Turtles was the original designers of the Dungeons and Dragons board game, another worked for the CIA and a couple were professionally gamblers. The interview takes an interesting tangent when Mike discusses his criminal background as a major drug dealer in Chicago and how he became an informant for the FBI. The interview includes an interesting discussion on how the 1983 film Trading Places with Eddie Murphy and Dan Aykroyd was likely the catalyst for the Turtle Traders experiment.  The interview does not take a lot about Mike’s actually trading strategy but is very entertaining and gives a great insight into what it was like to be one of the Turtles.  Unfortunately, Michael Shannon has since passed away.
In the second part of the podcast Michael interviews Jim Byers who was one of Michael Covel’s first 1:1 coaching client.  Jim discusses his journey from being fully invested in underperforming mutual funds to managing his own money as a trend-following trader in total control of his financial future. Jim now runs his own trend-following fund successfully managing other people’s money.


Lessons from the Podcast that will make you a better trader:

  • To be a successful trader you need to be comfortable with taking risks and you need to be able to pull the trigger during uncomfortable market conditions.
  • An interesting observation in the interview was that the Turtles who had no trading experience actually had better trading results than those who had a trading or financial background.
  • Mutual funds have brainwashed people to believe that buy and hold is the only way to be a successful investor and active trading is “evil”.
  • Breakouts above a certain level can be seen as a “green light” to enter a trade while a retrace below the breakout point is a “red light” to get out of the trade.
  • Trend following trading works for any asset class.
  • There are performance tables generally available (included in back of Michael Covel’s Trend Following book) that document the above average performance of trend-following trading over the long term.
  • These table show that trend-following outperforms buy and hold investing.
  • Trend-following capitalizes on the actions of institutional buying. (i.e. smart money)
  • Watching CNBC should be used as entertainment and not used to make investment decisions.
  • Trend-following does not try to predict the market it simply follows along with what the market wants to do.
  • Nobody can predict the future direction of the market.
  • With trend-following your trades are generally successful around 35% of the time yet will still outperform the market.
  • This statistic is very liberating as you don’t have to be right all the time to make money in the market.
  • Don’t believe the “gurus” who claim to have a 90% success rate.
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