Episode 14: Inside the Loop — Uncertainty in War and the Markets (Part One)

This one breaks our usual format on purpose. A little while back, Rich, Jerry and Mike were invited onto the No Way Out podcast with Mark McGrath and Brian Rivera, and we went in expecting to explain our world to theirs. What we found instead was that we were almost speaking the same language. The way they think about acting under fire, and the way we think about following a trend, kept landing in the same place. So we repaid the favour and brought Mark “Moose” McGrath and Ben Ford onto Turtle Talk to keep the conversation going.

Two worlds, one room. Eight strategic ideas drawn from the old military thinkers, walked one at a time, with a single question asked at each: does the answer hold on both sides of the door, for modern warfare and for trend following alike? And running underneath all of it, the one idea the whole special turns on. In war, the Marine has to predict, because nothing tells him where the enemy will be. The trend follower never has to predict, because the price already gives him the crowd’s answer in one live number. Prediction on one side, following on the other.

This is Part One. We walk the first four ideas here. Part Two arrives next month.

⚔️ Meet the room

Two camps, six voices. On the war side, two Marines. Moose McGrath, of AGLX and the No Way Out podcast, a US Marine and one of the deepest readers of John Boyd you will find. And Ben Ford, a Royal Marines commando turned software builder, formerly of AHL and an Aspect subsidiary, who has taken these military ideas and built them into working code. On the trend following side, Rich Brennan hosting, Jerry Parker, the Lord of classic trend following with four decades and world-class returns behind him, co-host Adam Havryliv bringing the behavioural and cognitive angle, and Mike Melissinos, the punk rocker of trend following, who joined a little later after a proper battle with New York traffic on a Pride March weekend. A nice illustration of the theme before we had even started: the plan meets the world, and the world does not care about the plan.

🔧 Friction: when the plan meets the world

Every plan is perfect until it meets reality. Jerry opened with a story from 1992, only a few years into his trading life, when the British general election went the other way to expectations and the Tories under John Major were unexpectedly returned. He drove into the office at three in the morning to liquidate his positions in gilts, short sterling, the FTSE and the pound, and had a quiet word with himself in the dark about what the job actually demands of you.

Moose reached for the seminal Marine Corps text, Warfighting, freely available online, and made the point that you could just as easily retitle it as a trend following manual. Ben brought the practitioner’s view from inside the planning process, the part the military calls “actions on,” where after you have built your perfect plan and laid out your assault in the sandpit, the final and most important step is to rehearse what happens when it all goes wrong. Adam tied it back to the mind, and to the mental friction every trader knows: the energy breakout earlier this year that looked flawless on the chart, drew everyone in, and then reversed, and the work of reorienting when reality and expectation come apart.

Where the two camps agreed: the plan never survives first contact, so you build for the mess rather than the whiteboard. Where they split: a Marine’s friction is partly a thinking enemy choosing to resist him, while the trader’s friction is a market that does not even know he is there.

🌫️ The Fog: you can never see the whole picture

Rich read the old verse, For Want of a Nail, and then unpacked why it really captures uncertainty rather than just illustrating bad luck. The problem was never a lack of information. Everyone could see the nail was missing. The trouble is that no one standing at the blacksmith’s could have traced the line from one missing nail all the way to a fallen kingdom. Each step only makes sense looking backward. Forward, from where you actually stand, the chain is invisible. That, as Rich put it, is the fog. Not darkness, not missing facts, but a future that refuses to assemble into a picture no matter how long you stare.

Moose connected it to the interconnectedness and complexity that defines an atmosphere of uncertainty, the reason a Marine has to live in a constant state of reorientation, and noted that the fog is exactly why so many trend following books belong on a Marine’s reading list. Ben offered one of the images of the episode. Think of taking an action as casting a pebble into a pond. The only way to read the result is to watch the ripples, but everyone is throwing pebbles, at different speeds and distances, and all any of us ever receives is the overlapping pattern where those ripples meet. A whole crowd can come to agreement without ever exchanging a word, simply because they are all sitting on the same pond reading the same surface. In markets, that shared surface is the price.

Rich made it concrete with the hurricane. The only way to know exactly where it will be in six weeks is to wait six weeks and watch it arrive. There is no formula that skips ahead. The future is not hidden, as if someone knows it and is keeping it secret. It is simply not reachable yet. And Moose closed the segment with history, recounting how Boyd first reached the Marine Corps in the soul-searching after Vietnam, a war the United States should have won on every measurable metric, all the sensors and capital and firepower, and lost anyway, because the things that mattered most could not be measured.

🔄 The Loop: orientation, and acting before you decide

The OODA loop is not four boxes and a stopwatch, and this segment took it apart. Rich asked Jerry to take us back to the moment cocoa exploded upward, and not to describe what he thought, but what he physically did. Jerry’s answer was perfect: essentially nothing. Cocoa had not made money in fifteen years, it was just another breakout, another small position among many, and the system did what it was built to do. The discipline was in having no special feeling about it at all.

Moose then gave the room a genuine education on orientation, the part of Boyd most people skip. We are complex adaptive systems interacting with other complex adaptive systems, and each of us carries an orientation, the cultural inheritance, the genetics, the experience, that makes us who we are. Crucially, he explained, orientation is fractal. An individual has one, six people have a collective one that lets them make a podcast, the Marine Corps has one, the trend following community has one. It is the thing that houses our biases and shapes what we notice, how we decide, how we act, and how we learn. And if you keep it static while reality keeps moving, you guarantee a painful mismatch. The strategist’s real work is rewriting that cognitive software before it traps him.

Ben grounded it in something physical. The first time he took a motorbike onto a track, obsessed like every rider with getting his knee down, he read a book on bike dynamics first, and that was the knowledge. But the moment it clicked on the track, there was no bike and no deliberation, just him and the action he wanted, the trained hand moving below conscious thought. He layered Boyd’s nested loops over the top: the fast, fluent loop where you simply act, the slower one where you pause to take in more information, and the rare, deep one where you realise your whole orientation is wrong and has to be rebuilt. Rich brought it home to the trader with the shadow: following a trend is the trained move run against price, lagging it like a shadow lags a body, never out in front guessing.

And the segment landed the knot at the heart of the whole show. We are all, underneath, prediction machines. So how can a trend follower be told never to forecast? Because there are two different things hiding in that one word. Forecasting where the market will go is one. Staying matched to where it already is, is another. As the room put it, trend followers ride only a third or so of their trades, so to claim they predict would be absurd. They buy every breakout, have no idea which one will run, and simply let the winners go until the exit is hit. Anticipatory, perhaps, but never prescriptive.

🥁 Tempo: rhythm, not raw speed

The “speed kills” reading of Boyd falls apart here, and the room dismantled it. Mike, now settled in, told the story of a bond short that was three years too early, rolling the futures quarter after quarter while doing nothing at all. His investors are rarely chatty, because they know they will get the same answer, but he remembers that one well: still short, fellas, gotta go, talk to you later. Doing nothing was the entire trade, and it was, in the end, a very easy way to make money.

Moose made the point that speed means nothing if your direction is wrong. You can be fast and efficient and still be racing in precisely the wrong direction, and he reached for Blockbuster and Kodak, two companies that were fast and efficient right off a cliff. Tempo is rhythm and timing, not raw pace. Adam brought the psychology, the fight-or-flight pull that has traders taking breakouts too early in a kind of fight response, or freezing up in a flight response, the bad kind of stillness rather than the disciplined Mike Melissinos kind. Position sizing, the room agreed, is where tempo is really won or lost.

🐢 Coming next month: Part Two

We had so much in the tank that the first four ideas filled the whole episode, which means the craft will have to wait. Part Two takes on the orthodox and the unorthodox, the culminating point, defence in depth, and the strategist’s mind, the four ideas about what you actually do with everything Part One laid out. Make sure you are subscribed so you do not miss the conclusion of the special.

📚 The Books

Want the theoretical foundation for why markets adapt? Complex Adaptive Markets: How Living Systems Shape Finance explores the full architecture of feedback, emergence, and adaptive behaviour in financial markets, and what it means for how we trade, invest, and understand risk. 👉 https://www.amazon.com/dp/B0FKZP8FQJ

Want the theoretical foundation for why trend following works? The Fractals of Finance: Determinism, Adaptation and the Geometry of Markets bridges complexity science with practical trading implementation, with a foreword by Jerry Parker, original Turtle Trader. 👉 https://www.amazon.com/dp/B0GHTH1WNK

Want a practical field manual for trading trends and capturing outliers? The Aussie Turtles Trend Following Guide: A Field Manual for Hunting Outliers adapts the timeless principles of the original Turtle traders into a systematic, rules-based approach for modern markets, co-authored with Adam Havryliv. 👉 https://www.amazon.com/dp/B0FT1NCXP4

All three are available now on Amazon in paperback, hardcover, and Kindle. If you have read any of them, a short review goes a long way in helping more traders discover them.

🌐 Episode Resources

Connect with our war camp guests at the No Way Out podcast (Mark “Moose” McGrath and Brian “Ponch” Rivera), and with Ben Ford at Commando Development.

📩 Shell Mail

Send your Shell Mail questions for future episodes: https://www.aussieturtles.com/contact

Closing Thought

What made this episode is how little translation the two worlds actually needed. A Marine reorienting in the fog of war and a trend follower riding a breakout he cannot explain turned out to be doing the same thing in different clothes: refusing to predict a future that cannot be seen, and building instead to respond to whatever arrives. The verse said it before any of us did. For want of a nail the kingdom was lost, and nobody could have seen the chain coming. You cannot fast forward the world. You can only stay oriented, stay patient, and be there with your positions on when the trend finally shows itself. That is the condition both camps share. Next month, we get to the craft.

Stay systematic. Stay patient. And may the trend be with you.