The Cycles of Success

Published on
February 13th, 2019
Topic
Hedge fund, FX, Trading
Duration
47 minutes
Asset class
Currencies

The Cycles of Success

Skin In The Game ·
Featuring Dave Floyd & John Taylor

Published on: February 13th, 2019 • Duration: 47 minutes • Asset Class: Currencies • Topic: Hedge fund, FX, Trading

Dave Floyd of Aspen Trading talks to legendary FX trader John Taylor of Taylor Global Vision about using cycles to profit from trends. John recounts his first experiences in the 1970’s and how he’s had to adapt to the changing environment, allowing him to catch some of the biggest FX moves of recent years. Contains strong language from the outset. Recorded on February 6, 2019 in New York.

Comments

  • CS
    Chris S.
    20 February 2019 @ 17:30
    I was disappointed there were not more details on the cycles. Is he referring to economic cycles or market cycles? What time frame is he looking at? Is he looking at multiple overlapping cycles or one major turning point? Is he taking a quantitative or qualitative approach? Guess I was expecting more technical insights. But at least it was entertaining.
  • SN
    Sam N.
    20 February 2019 @ 15:53
    Amazing interview on cycles! Revalidates the fact that all the info is out there but nobody tells you where to look at. This Brilliant Piece does. Thanks @Dave and RV on bringing John as a guest. Hope he comes back with more learnings. However there was just one thing I couldn't fully grasp: The video didn't fully discuss about his USDJPY position and what he learnt from his re-analysis. I reckon the interview was edited at that part (~10:30 mins to finish)??
  • CH
    Connor H.
    19 February 2019 @ 04:37
    This discussion of cycles was much more accessible, entertaining, and informative than that featuring Howard Marks. John Taylor puts it all out there, not afraid to use the F bomb to make a point. Mr. Marks seemed in contrast reserved, and careful not to express any strong opinion. His measured, cautious demeanor did not make for a compelling RealVision video.
  • AH
    Ahmed H.
    18 February 2019 @ 10:29
    This was amazing! i'm afraid i disagree with anyone who found this boring - there aren't many people talking about cycles - he's one of the very few - guy ran a $14b fund - deserves to be taken seriously and heard! open ur mind people - great guest, Grant, Raoul & team .. brilliant interview dave
    • GO
      Greg O.
      18 February 2019 @ 18:00
      I don’t know whether the guest is a hoax or he’s rumbling because of his age or something. He mentiones a few names of the cycles at the very end and that’s it. Not even elaborating on them. The rest (majority) of what he said sounded fishy to say the least, but then again, it could be age related issues so I don’t want to be too hard on the old man. Dave was trying it’s best to pull it off but he must have been stunned with what he heard. At least that’s my impression of it, maybe I missed the point. I find cycles to be very intersting subject but almost impossible to base your trading on them. I know of one guy who used to be in bank research/analitics department that used to present different market predictions based on cycles and mixed in with market-history-repeating itself like approach. Fun stuff and good food for thought but hard to even remotly think of it as a basis for trading.
  • NR
    Nicholas R.
    17 February 2019 @ 15:44
    This is a very convoluted BS conversation in my view.
  • RD
    Rahul D.
    17 February 2019 @ 12:07
    Didn’t learn anything from this interview
  • GO
    Greg O.
    17 February 2019 @ 11:06
    Dave’s face expression about 4mins before the end says it all. Like some really bad trade, with this guest you have hit not only StopLoss but some serious slippage on top of that too. No worries Dave, this must have been the worst guest you could get, so it should be much easier and interesting next time. Looking forward to it.
    • DF
      Dave F. | Contributor
      18 February 2019 @ 15:09
      Appreciate your constructive comments Greg O
  • MC
    Minum C.
    17 February 2019 @ 03:03
    This was an awesome interview I had to watch it twice to pick up all the tidbits and even then I'm not sure I translated things properly. I don't understand why many of the comments below are getting worked up about the details with respect to gold. John Taylor hints a number of times during the interview that he is an empiricist. This means he doesn't give a crap about all the details. So if he got some of the details wrong, it doesn't really matter. I liken this to how someone like Nasim Taleb would see things. Interesting that Mr. Taylor's academic credentials came after his real life experience in currency markets. Some important takeaways. He has studied cycles and has positioned himself very successfully in the past. With about 25 minutes left, he says his knitting is "finding the turns". With 20 minutes left, Dave asks what's on the radar? He says sell France and buy Germany (10 year notes). Shorting euro is not as clean. Dave suggests gold has rallied a bit but is a range bound mess. Dave looks at price. Mr. Taylor appears to be more bullish than Dave when it comes to gold. Why? Because gold leads the bottom of the stock market all the time. Cycles are real fucking things says Mr. Taylor. We had a cycle bottom in February 2016 and the next cycle bottom is between July to September 2020. About 18 months from now give or take. Gold leads the bottom of the stock market all the time. By how long? Look at the past for a guide. That's what an empiricist would do.
    • DF
      Dave F. | Contributor
      18 February 2019 @ 15:13
      Nice summary Minum. Often times the comment section gets littered with comments from those looking for the gift-wrapped trade set-uup.....the lazy persons approach....typical in this day and age of endless FREE information....most of which is shit. Success comes from understanding and implementing 'the process'....whatever that may be for you. Learning aspects of others process are invaluable. Many times you will disregard it simply because it does not fit in with your style etc etc.
  • JH
    Jesse H.
    16 February 2019 @ 21:23
    This was interesting and laugh-out-loud funny in equal measure.
  • RA
    Robert A.
    16 February 2019 @ 04:10
    All kidding aside, this was a great interview and I thought Dave did a great job, love John Taylor!
  • RA
    Robert A.
    16 February 2019 @ 01:20
    Ok....USA has gold and Russia has gold and Canada has no gold, but Mines (except GG is gone and Newmont is in US and not Canada—sorry I digressed), but where I’m stuck is why no mention of CHINA having Gold (a little Birdie told me they been buying regularly for some time now)? So using some ******* John Taylor logic; Did John not mention it because a) China doesn’t have much, b) John doesn’t know China has Gold (now THAT I have to assign a low probability to) or c) John doesn’t want us to know that he knows China has Gold (now that’s pretty conspiratorial) or d) John just wants to see if we are paying attention? Did he fool Dave? Was Dave just being nice (he IS one of the nicest RV guests for sure and a guy I’d love to have a beer or Mountain bike ride with) by not interjecting something like “Gee John, I think China has a pretty good size Gold holding”) or.....does Dave not think China has Gold...or does Dave not know whether China has Gold (doesn’t sound like something Dave wouldn’t know about). Is this triple entendre? Is John having a bit of fun with us? Somebody please help me out here.
  • NR
    Nelson R.
    15 February 2019 @ 22:40
    "...and god dammit if China isn't doing the same thing..." John dropped nuggets of gold through the whole interview. Good job guys, keep 'em coming.
    • HM
      Harold M.
      16 February 2019 @ 02:54
      Areett
  • IC
    Ibrahim C.
    15 February 2019 @ 02:47
    With due respect to Taylor's extensive experience and knowledge mentioned in this interview, I have not seen anything related to the cycles of success in terms of tangible tools which we could make use of. At one part of the interview, Dave mentioned about the tools what Taylor has been utilizing like oscillators, Elliott Wave etc. (all commonly known and applied), but what makes him so distinguished, I could not decipher from this. If the point is made that he could easily read out the motions and actions of our key political & economic actors, and turn them into fantastic trades (like he commented on Trump-Xi dinner in Argentina), then this will remain as his exquisite and not to be used by normal traders like us!
  • KA
    Kelly A.
    14 February 2019 @ 23:26
    I love John Taylor... and as always Dave is great.
  • DR
    David R.
    14 February 2019 @ 21:56
    A fvckin great diversion for a loser fvck like me who was watching this shit instead of out for fvckin valentines.
    • DR
      David R.
      15 February 2019 @ 13:43
      ^ To clarify, this comment was a joke.... listen to the interview.
    • PC
      Peter C.
      16 February 2019 @ 15:30
      Lol right on
  • PC
    Peter C.
    14 February 2019 @ 17:48
    Maybe you need to know him to appreciate this? To me I totally don't understand why this is worth 40 minutes. The only thing I got out of this is, even professionals don't know what to do here.
  • GG
    Gary G.
    14 February 2019 @ 16:26
    Nothing to learn from this
    • CB
      C B.
      15 February 2019 @ 19:52
      The term nothing seems so.... absolute
  • RV
    R V.
    14 February 2019 @ 15:17
    About the gold remark. Around 5'50'' before the end. Can't get my mind around the fact that Taylor doesn't know that EU central banks have a lot of gold. And a lot more than the US. But the gesture. Making a zero with his fingers. I hope he does not have a suspicion - let alone more than a suspicion - that in 2008 EU central banks had to pledge their gold as a quid pro quo for re the more than 1 T in US dollars EU financial institutions got to straighten out their currency mismatches. Can't possibly keep that a secret for so long.
    • DR
      David R.
      14 February 2019 @ 21:43
      China has way more gold than everyone but they keep a low profile and never update their holdings info. Not only have they been buying all the gold for twenty years, they've also been mining more than the rest of the world. And it's illegal to take more than 100 grams of gold out of china - the penalty is confiscation and execution. According to the new book Beyond Blockchain by Macrovoices founder Eric Townsend, China will be launching its own gold-back crypto and use it along with blockchain to displace the USD and Swift. And if they can, it's game-over the End for the US reserve currency status and its economy (absolute total collapse). As it'd be the equivalent in economic war of what the atom bomb was to conventional war.
    • TD
      Thomas D.
      15 February 2019 @ 02:18
      To David R. How would you factor “credibility” into “China backed...anything” including how much gold actually backs their crypto?
    • DR
      David R.
      15 February 2019 @ 14:16
      Thomas, that's easy with an independent third party audit. Something the US hasn't had with its (alleged) holdings in three-quarters of a century. Trust no one. That said, the new gold-backed Chinese petro-yuan scheme, which is externally audited, is a smashing success beyond everyone's expectations, having already grabbed almost 30% of the global market share away from the petrodollar within just its first two years (after all, what would you rather get for selling your oil: 100% gold-backed exchange notes or debt-backed US treasuries issued by a technically insolvent nation printing dollars in order to "pay" up?) . Read the billionaire investor's new book above, the best ever on its subject.
  • SH
    Scott H.
    14 February 2019 @ 13:32
    George Herrdum & GFTA that John mentioned, were probably one of the biggest and earliest FX trend followers around in their day. Caught a lot of the big FX trends in the 70's and 80's.
  • PU
    Peter U.
    14 February 2019 @ 10:25
    not very useful . . . a bit scattered in his thoughts
  • LC
    Liliana C.
    14 February 2019 @ 07:58
    I love this man! I would just let him talk as there’s so much to get from the way he views and analyzes the world! More, more, more!!
  • PP
    Patrick P.
    14 February 2019 @ 04:00
    You would not want to watch this half drunk... it would put you on the lifetime wagon... for sure. His claim to fame are cycles. So forty six minutes of video and the only cycle he mentions the Kitchin Cycle.... with about 2 minutes left.
  • dw
    darcy w.
    14 February 2019 @ 03:30
    Welp, anyone who drops an F-bomb within 20 seconds of opening his mouth, is all right with me ha. A colorful character indeed. I'm glad RV introduced me to him. I found it entertaining and informative.
  • CW
    Connor W.
    14 February 2019 @ 02:34
    This interview is fucking legendary
  • RP
    Raoul P. | Founder
    14 February 2019 @ 02:29
    Dave needs to do more interviews. He is a natural. A gem of an interview...
  • SM
    S M.
    14 February 2019 @ 02:01
    I like that when he said China will fall apart and bankrupt like USSR style. It really does seem that way.
  • CB
    C B.
    14 February 2019 @ 01:51
    This was pure madness. I’m still analyzing what I’ve heard. However, I enjoyed it and I’m grateful for the experience
  • HJ
    Harry J.
    14 February 2019 @ 01:23
    I hold physical gold. Where the hell is it going and when???
    • CB
      C B.
      14 February 2019 @ 01:47
      Higher! Expressed in something!
    • RE
      Renato E.
      14 February 2019 @ 18:12
      Don't worry about the price of your physical gold. It is an insurance against the madness currently taking place in the financial sector. If you need your gold, it will be there and not disappoint you. If you worry about the price, you probably own too much.
  • MA
    Muhammad A.
    14 February 2019 @ 00:52
    What cycles did he refer to at the end? Kitchener? Never heard of that. Anyone have any idea on this?
    • DC
      Dave C.
      14 February 2019 @ 04:04
      Kitchin cycle http://cyclesresearchinstitute.org/cycles-research/economy/kitchin/
  • DG
    Dan G.
    13 February 2019 @ 23:42
    Awesome stuff, Mr. Taylor is brash, has an opinion and a wealth of experience. I’d love to see Keith McCullough (hedgeye) and John nerd out on sine curves, compare and contrast their methodologies, cycle work, etc. One observation I have is the first 15 minutes I can’t figure out which he dislikes more the uncontrollable DJT or the 100% in control central banks. You would think he would appreciate the dislocations and alpha opportunity of DJTs “stupidity” over the central banks putting a band aid on every paper cut, destroying price discovery as you explained David. But he seems to dislike both, with a passion....Overall a fantastic listen, great job RV!
  • TE
    Tito E.
    13 February 2019 @ 22:29
    Really like John and his outspoken style. Would love to learn more about his cycles work. Dave great job keeping the conversation on the rails.
  • DC
    Dave C.
    13 February 2019 @ 21:32
    What a gift of an interview revealing a fantastic character - great interview by Dave - covering two topics of major interest to me, cycles and gold. I would have dearly liked to hear further details of the cycles in Gold that John has analysed, and those which he sees as being dominant at the moment - perhaps Dave could follow this up with John in a future talk? FWIW this is my gold cycle model - the 84 week cycle is still showing major strength in my analysis. https://twitter.com/Ukdavec01/status/1054541812117856256
    • DF
      Dave F. | Contributor
      13 February 2019 @ 22:10
      A follow-up with a deeper dive into cycles may be a great idea. I do want to interview a couple of other industry heavyweights in the future as well....hopefully really get some color and insights.
    • SN
      Sam N.
      14 February 2019 @ 09:19
      Wonderfull. Thanks a lot to both. Go Dave Floyd!
    • DR
      David R.
      15 February 2019 @ 14:23
      Agreed. Good stuff. You have moved to the next level in TA as too few do, from price to time.
  • JR
    Jay R.
    13 February 2019 @ 18:01
    Great interview Dave, you are becoming a natural. I really appreciate getting John's macro perspective approach to currencies and how the Trump factor has created a new dynamic in the inputs into the macro process. My thoughts is that as long the the S&P remains above 2700s range, Trump becomes more belligerent in policy and rhetoric whether its China trade or the Wall. The only fly in the ointment is the collaborative effort of the BOJ, ECB, and Fed to try and offset his chaos. In my from point of view, the Fed will continue to raise rates and tighten balance sheet as long the S&P continues to rise because what they are concerned is more about the asset bubble rather than the oft manipulated "inflation" numbers. They need more quivers in their arsenal when the next downturn shows up. All this equates to a flight to safety in the US$ and likewise in the equities; hence, was the pause in interest rates and tapering of the balance sheet simply a means to weak it to prevent excessive inflow? I would love to hear some counterpoints.
    • DF
      Dave F. | Contributor
      13 February 2019 @ 20:06
      Thanks Jay!
  • RV
    R V.
    13 February 2019 @ 17:00
    What is this guy saying. About 4'18'' before the end ? ' I know because I was on the FED board...' And Dave Floyd looks at him like 'ahum'. Probably part of his special humor. And yes, Abishek is right. The EU or the major EU countries have more gold than the US. Even Trump himself said 'I love gold, but the other ones have all the stuff'
    • KK
      Kristian K.
      13 February 2019 @ 18:23
      He was on the FRBNY Foreign Exchange Comittee
  • AR
    Abishek R.
    13 February 2019 @ 15:50
    The EU has the 2nd highest gold reserves in the world after USA. So what is he talking about?
    • E
      Erik .
      13 February 2019 @ 17:08
      rj5
    • DR
      David R.
      14 February 2019 @ 22:24
      Lol..... is that from cnbc or the outdated & inaccurate official stats (US/West known to lie/exaggerate its holdings while China known to lay low and hide 99% of gold holdings it's accumulating). Anyone closely following this matter knows that China has multiples more of genuine physical gold than the US and EU. For example, it's public record that China has been taking gold delivery from the system and buying/siphoning off physical gold since the the BOE morons sold all theirs twenty years ago for $250/oz, and ever since. And China has long mined more gold than the rest of the world, some years mining more real gold than the US "claims" to possess in all of Fort Knox. Anyway, it's all out there about where the real gold really is, if you dig for it (pardon the pun) like some have, instead of lazily relying on cnbc or outdated dubious Western stats sheets. Does US or London even have any gold left? Maybe yes or maybe not; regardless even if they have all they claim it's a tiny of what China has accumulated over twenty years and squirreled away now. In prep for the coming economic war, which will be Gold vs Dollars, and gold-backed crypto over blockchain Vs unbacked dollars over insolvent banks' Swift... As a result, guess which should win the FX-reserve economic war? (Read the new book Beyond Blockchain: The Death Of The Dollar by Macrovoices' founder Eric Townsend for more details). OTOH, if gold goes toward zero because it's no better than a shiny rock, then the final result should be the opposite: Paper beats gold.
  • TJ
    Terry J.
    13 February 2019 @ 15:33
    I was most impressed by John Taylor's insights and extraordinary experience and knowledge until his final comments concerning gold. Unless he knows something I don't, his suggestion that Europe has no gold is nonsense! If anybody has no gold, it is probably the US, who have steadfastly refused to ever have the Fort Knox holding properly audited. Meanwhile anybody following gold developments of the past decade or so, also knows China is lying about its total gold and almost certainly has in excess of 10,000 tons and not the 1.700 odd it officially claims. Some commentators such as Alasdair Macleod suggest China's total is in excess of 20,000 tons. Otherwise, and excellent discussion, and Dave did a great job in getting some real gems of knowledge from John, especially concerning cycles.
    • DF
      Dave F. | Contributor
      13 February 2019 @ 15:44
      Thanks for the comments Terry J......appreciated.
    • EN
      Eric N.
      13 February 2019 @ 20:21
      On the topic of gold reserves I recommend the conversation Grant Williams had mid '17 with Rhona O'Connell (https://www.realvision.com/tv/shows/gold/videos/gold-inside-out), because there are a lot of conspiracy theories on the topic, and she seems to have access to proper data to be able to distinguish fact from fiction.
  • LS
    Leigh S.
    13 February 2019 @ 15:08
    I remember john in the 70;s at citi when I was trading with citi, a legend, as he said most traders did not have a university education and in those days there were no computers, lots of regulations between countries so lots of simple arb. He was a master at putting structure to a market approach, still is, great discussion.
    • DF
      Dave F. | Contributor
      13 February 2019 @ 15:45
      Yes indeed.....lots of knowledge and insights come with experience....at its essence, trading is still about experience and insight....not some one-dimensional process.

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