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Ep. 292: Christopher Cruden Interview with Michael Covel on Trend Following Radio

Michael Covel's Trend Following

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The Importance of Volatility Drag

If you lose a dollar, it's harder to make back that lost dollar than it is to make a new dollar because of volatility drag. For example, if I lose 25% in the stock market, I don't need to make 25% to get flat. I'm going to make 33 and a third percent toget flat. That volatility drag is really punitive. It is an additional price for being wrong. The price for the reward for being right is not as great as the reward, what the penalty for being wrong has been. We've seen this before, and if we live long enough, we'll see it again. A lot of people get it. We're all generation now

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