Trend Following and Fat Pitch Investing with Mike Melissinos

Written By Melissa Shoemaker

Our guest Mike Melissinos is a successful trend-following trader and fund manager. With years of experience under his belt, Mike shares his invaluable insights into the world of trend following and behavioral finance.

In our conversation, we dive deep into trend-following principles, discussing how to identify and capitalize on market trends while minimizing risks. Mike provides a unique perspective on how our behavioral biases can impact our investment decisions and how trend-following can help combat these tendencies.

RECORDED ON MAY 3, 2023

  • Fat Pitch Ep EP 7 (6) - AUDIO FINAL

    Wed, May 10, 2023 3:24PM • 32:15

    SUMMARY KEYWORDS

    trend, watching, markets, trading, trade, talking, year, stocks, bonds, great, commodities, started, moves, fund, long, money, bitcoin, xenos, people, futures

    SPEAKERS

    Clint Sorenson, Michael Melissinos, Paul Barausky

    Paul Barausky 00:03

    Well, hello, everyone, and welcome to the latest episode of the Fat Pitch Podcast. I'm your host, Paul Barausky, Chief Distribution Officer for Sealy Investment Securities. And as always, I'm joined by my co-host, Clint Sorenson, from WealthShield. Clint, today I'm really excited to learn a lot about trend following, and I'm not talking about the latest jeans or the newest Kardashian. We're talking about investing. So why don't you introduce the guest for this episode?

    Clint Sorenson 00:33

    Yeah, it's my pleasure. Thanks, Paul. And I'd like to thank Mike for joining us. So we've got Mike Melissinos, and I'm very excited to have him on the podcast. I got introduced to him a long time ago by a mutual friend. And I believe personally that he is the future of trend following, and so I can't wait to get his wisdom and his knowledge. So Mike, thanks for joining us. Well, let's start off and you give us a little bit of background. Where do you come from, what do you do? Tell us a little bit about yourself.

    Michael Melissinos 00:58

    Yeah, thank you for having me. Well, I cut my teeth on Wall Street in late 2007. I had the bright idea to go to Bear Stearns about six months before the top and six months before it all went down. I was a naive 23-year-old at the time and I thought I was just going to one day become a trader there and didn't really know. I was just kind of following the lead of whatever else was doing at the time. And then got introduced to this trend-following thing around that same time and just started following guys who were doing it, guys like Jerry Parker, Dave Drews, Bill Dunn. And then as I learned more about the markets and obviously as the events unfolded throughout the financial crisis, I was side by side living on the desk on Wall Street, watching it burn into flames. And then following these other guys who seemingly no one knew about, no one was talking about them. They were not on TV, they weren't getting any press, and they were just quietly doing their thing. And I'm just a natural person who cares about winning. And I'm like, "Alright, these guys are winning. Does anyone else care about this? How come no one wants to talk to these guys?" So eventually, Bear went down, I stayed on at JP Morgan, and then Lehman went down. It was just one "a-ha" after another to just watching the market events unfold, and then watching the trend followers' monthly performance and like, "Oh, now I understand. Now I understand what they're doing, how they're doing it. Okay. I gotta go do this." So yeah, it just took me some time to figure out what the hell to do. I didn't know how to code or design a trading strategy or anything like this. So I was just spending all my time in Barnes and Noble and Excel and taking notes and calling guys like Jerry and David Drews and just writing notes and notes and notes. And just figuring out how to do it and then getting the confidence to do it. When I finally mustered up the confidence to do it, I was 26. And that was 2011. I started in 2011, started my own firm. I started managing three $100,000 accounts just to keep costs low, admin low, you know, let's-see-how-this goes type of thing. And then when I found out throughout that year, I started talking to more people about what trend following is, trying to educate them on it and all that stuff. And then, once I thought I had enough people to start a fund, I did that. And I started that in 2012–and still doing it today.

    Clint Sorenson: 03:57

    Man, you’ve got great timing.

    Paul Barausky: 03:59

    For the guy who's self-admittedly clenched, talk to me about trend following for two years, but if you know plenty, he hasn't stopped to explain it to me yet. Right? Can you break that down for the audience and distill that into what exactly it is? Define it?

    Michael Melissinos 04:13

    Okay, let me try to use it. I can use a lot of different metaphors, but let's use a surfer metaphor. Say a surfer had 1000 screens and he watched every beach in the world. And he's watching for when the conditions are right, for when the good waves are gonna come. So then he can, you know, with a button just ultimately transform right there in a second when he sees the conditions, right, like, oh, okay, Hawaii is picking up. Let's go there. Boom. So that's kind of what we do. We're just watching so many different markets, and we're watching for moves. And once we see something starting to form, we'll take a calculated bet, risk very small, not going to bet our whole business on it, we're not going to say, Oh, this is the one, let's-try-to-get-greedy type of thing. No, we'll just say, Alright, this could be the one. And when boom, we'll put a little bet on it. And then if it continues to work, if it works for us, if we're making money, we'll stay in it. If not, we're out, you know, and then we're back to our screens. And then we're looking for the next ones. And you know, unlike a surfer, he's got to choose one at a time, we can have positions in multiple and then kind of like a blackjack player, we can play multiple tables at once. We can, if we have an edge trading this way, only betting when the odds are in our favor, we have an edge. And then the composite of all these trades puts us in the odds of winning over time. So we're not betting our life and our business on one idea, two ideas, and then that didn't work out. We got to come up with something else like no, we're always just kind of watching and looking and taking calculated bets.

    Paul Barausky: 05:51

    So are you taking into account market sectors, subsectors, when you're following a trend? What kind of scale is that at? Or is it all across the board?

    Michael Melissinos 06:02

    No, we're watching all across the board. We have no prejudice, no bias, we don't care really where the money comes from. We don't care where profits come from. We don't want to make money our way. We just want to make money. And we want to stay in business, too. I think trend following philosophy has a lot in common with proper business practices. Well, you know, we want to stay in business so we can see as many opportunities and take advantage of as many opportunities as possible. Again, I know what's sexy is to indulge your intelligence, try to make calls, "this is going to happen." You know, the Fed said this, so this is going to happen over the next 18 months, let's put a big bet on it. And let's make a whole bunch of money in the next 18 months. Like, no, we're here to just grind it out, grind it out, and we're always around. And sooner or later, we're going to get some big moves. And we're gonna make a lot. That's kind of our MO.

    Clint Sorenson 06:59

    And let's talk about types of markets. Right? So I think Paul's question, what's the diversification look like? How many markets Are you trading? What types of markets because you have no bias? You're just like, hey, let's trade anything and everything. So tell us about how that's kind of set up.

    Michael Melissinos 07:13

    Right? Yeah, you know, a lot of different markets cycle in and out of, you know, good times and bad times. We know that from a lot of our research. So we're watching everything. We're watching stocks, we're watching fixed income. We're watching currencies, we're watching commodities. And now, most recently, we're watching crypto as well. And for us, me personally, only watching the futures markets. So the Bitcoin and Aetherium futures, I'm not interested in putting money in any crypto exchange. No, not at all. I'm just not comfortable at all. With that. So yeah, you know, and that includes all sub sectors all across the globe, you know, we're not just watching as far as currencies go, for example, we're not just gonna watch the dollar index, the euro, the yen, and the, you know, other big, big names are watching crazy stuff. You know, the the shekel, the Turkish Lira, the ruble, you know, Singapore dollar, anything and everything. And I think that's one of our advantages, too, is that we go to places people don't want to go.

    Paul Barausky 08:13

    So is it 100% quantitative? Or is there a qualitative layer to your selection of trades?

    Michael Melissinos 08:19:

    Well, I say qualitative in the sense that we don't have a real specific rule on what to trade, what to look at. When Bitcoin futures and then Ethereum futures came online, this is a good example because they're the most recent ones that kind of came online for us to watch and trade. Oh, we knew they were coming. We knew the CME was going to list them. And then we said, 'Okay, those are different. That would be a real opportunity, something different we don't have in our portfolio, a new trend we could possibly take advantage of. So okay, let's put that on our list.' But then we're going to say, 'Alright, well, we're only going to trade it if we see the liquidity there. We're not going to be the first guys in,' so that's the quantitative part. After we say, 'Yeah, we want to trade that, that's going to be good,' let's measure some of the data using not the non-futures data because Bitcoin has been around, you know, trading on the Kryptos exchange for a while, and we saw, 'Oh, this is a different thing. Wonderful. This offers us something different,' but we're only going to flex those quantitative muscles when it comes down to really trading it or not. We want to see the liquidity there. We want to see a thick bid offer, no thin market, that'd be an untradable market."

    Clint Sorenson 09:35

    Yeah, one of the things I was thinking about, too, about why I love trend following, a personal fan, obviously, trend following is kind of like the anti-ego philosophy for investing. And the reason why it's funny when we study it, you find out that a great trend-following system is only, you know, quote-unquote, accurate, meaning that when you take a position on it, it actually moves in the direction you want, like 30 to 50% of the time. Think about a like a trend-following system could be, quote-unquote, wrong more than it's right. And for some people, that is such a challenge. You always see traders out there talking about 90% hit rate, or 'I'm right more than I'm wrong.' It's such an ego way to approach markets. And I feel like trend following is such a counter-ego way. That's one of the reasons I like it from a philosophy perspective. It's like, 'Yeah, I can be wrong more than I'm right, but still make money.' Can you maybe expound on that a little bit? Like how does a trend follower, like for instance, a Dunn or a Jerry, have such a great long-term track record in the midst of being wrong more than being right? That sounds like something that's not even possible.

    Michael Melissinos 10:38

    Yeah, the math is simple. What gets complicated is the psychology. The math is, hey, all right, if you're gonna have, say, 40% winners, you make 10 trades, you win on four of them. Well, you better keep those six small, and you better crush those four. So the only way to crush those four and keep those six small is to cut those six as fast as possible if they're not working. And then to actually hold those four. So you know, and those four aren't all gonna be like 10 baggers or anything like that, but they could range. Some could be great. . Some could be like, fine, but you're gonna need, you're gonna need to ride those winners. And that is where I think the psychology is really difficult. I think people are better at cutting losers. They say, Yeah, this sucks. Let's go. I'd have another idea. You know, Jim Cramer just said another one. Okay, buy that one instead. But the hard thing is like, Okay, now you have a winner. Now you have to hold it. Wow. Well, I just made my money back from those losers. I want to take my money and run. Now I'm back to even now I want to find a new one. No, yeah, no, like this one could pay for the last 20. You know, maybe not the last 10. It could be the last 20. And you could have, you know, say for trades, make your year make your five years. And we just had that recently, what the inflation that kind of kicked off in mid 2020 Is that we just had a bunch of commodity trades that just paid for all the losers, the recent losers up into that time, and then some. So that's just kind of how it goes. And you're gonna have to get over that psychology to always want to find something to do. And then, Alright, well, you know, I want to take my money and run. Yeah, but now you're in the hard part of having to pick another winner. You know, like, there's not that many winners in general. And, Clint, I think you reposted something of mine on LinkedIn where a couple firms did some studies on the stocks that account for all the index gains over time. Yeah, that's a small No, it's, it's ridiculously small. But it's great information. Like, yeah, you can pick it. So you know, no wonder why people have trouble beating the index because it doesn't bother picking. It says, Alright, you're getting bigger, you're a winner. I'm gonna hold it, and I'm gonna ride.

    Paul Barausky 13:06

    I keep hearing, and all I keep thinking in the back of my head is "don't fight the tape". Yeah, it's very difficult. The real underlying message is don't fight the tape, up, down or sideways. And I was going to ask you about some good stories that tie in. Certainly, I tracked the CRB pretty closely. You rode that wave on commodities. I mean, my goodness, it just did this, and even fight it where other people want to outsmart it. Now it has come down from a high, as we coiled spring, lets out. What are some other examples of trends up or down in the last, you know, 18-24-36 months here? Like, here's a great example. In real life insights come out

    Clint Sorenson 13:47

    And Paul...I want to jump in on one thing. Remember on trend following? And I don't think we said this explicitly in the front. You know, they go long and short, right? So they've been going up and down. And it's such an advantage to be able to just…

    Paul Barausky 13:59:

    That's a good point because following something down, as I like to say, is the swirling motion down the bowl.

    Michael Melissinos 14:08

    That's the no bias, no prejudice advantage of our style. So, another good example of the last year or so is bonds, short bonds. As interest rates have risen, bond prices have come down. That's been pretty much the same across the world and across the yield curve, you know, from the US to Canada to Europe to Asia, interest rates have gone up. As trend followers, we're just saying, okay, we noticed this. We don't know where this is going to lead, but we know the possibility of where this could lead. We're always going to leave ourselves open to this could be a big one. So don't start reading stories. Well, yeah, it's risen so high, so fast. How much longer could this keep up? We don't fucking know. It could keep going. And then it's a whole nother year and a half where it keeps doing something you don't think it should be doing, or it could do. So that's another thing. We don't limit our imagination. Our profitability doesn't limit our imagination as well. Like, it could. Don't say it can't.

    Paul Barausky 15:18

    Right? Everything always lasts longer and costs more in the human condition, whether you're building a business or trading, and certainly a lot of folks talk about trying to ride something all the way to the inflection point, not trying to guess it.

    Michael Melissinos 15:35

    Of course. Yeah. And we're just there. We're sitting with the position in the now, you know. It's come from here, it's now here. All right, it's going up. All right, it's going down. Now we're gonna bet with that momentum. And we're gonna stick with that momentum as long as it's going. You know, momentum, trend, these are all very fuzzy words. But, you know, for us, for me, I care about multi-month, multi-year moves. I want to be there for those moves. I don't care about the week to week, and forget it like hour to hour, forget that, that's nothing. Some people could do that with very high tech. I don't care about that. I want big 18-month, 24-month moves like we had in bonds, like we had the downtrend in stocks, like we had the uptrend before that in commodities, and maybe in earlier years like with Bitcoin. Just sitting there, another really good example where I think some of the best moves come from where the trend and the fundamentals/sentiment don't agree. And Tesla was an amazing example of this. Such a polarizing name. People hate it, people love it, people hate Elon, they love him, yada, yada, yada. It's going up. That's all I can tell you. I don't know why. Maybe it's a crappy company, maybe it isn't. But it's gone from whatever it was 100 to 1500 to 2000, wherever it was before it started splitting everywhere. It's just a trend. It's just an opportunity. Nothing more. That's that. And yeah, I mean, it's trying to pound the psychology that we have on a daily basis, that we just don't care. We're only here to make money. Don't be confused about what this game is worth.

    Clint Sorenson 17:15

    You know, it’s funny—

    Paul Barausky 17:17

    Let everybody else watch the financial porn, as I call it. I guess I’ve got a question. Because you run a farm, Clint. You use these funds, What is it ideally in your head? What is a good farm look like? Like how diversified is it? Do you take leverage? What kind of waiting? I think that would help define it further.

    Clint Sorenson 17:44

    It's gotta be more and more, the more, the better, right? Diversification.

    Paul Barausky 17:47

    I'm really curious because say somebody's not familiar with trend time, they come in, they go, 'Okay, am I looking at 10 beaches? Do I got 100 different positions?' And your ideal world, if you got your fund cooking with gas, where you want it position-wise, whether you're short or long, right commodities or some market wherever–just what does it feel like to you to be healthy and positioned how you want in a foreign market?

    Michael Melissinos 18:14

    Well, I do think, from my research and real time experience, the odds of success increase. Let's start on the first thing on what kind of trends you're measuring. And you're looking to ride. I said, I want to be in trends for a year, 18 months, 24 months. So trading the markets that you're observing, say one to two times a year, on average, that's it, you're trading one to two times a week a month profit too short, you're gonna invite a lot of costs, a lot of slippage, and a lot of emotions, more emotions into it. I think then I think in terms of Okay, going with trends is a good idea. I understand. Okay, my great. Okay, yeah, but which ones like, What do I look at now? Like, how many should I look at? Shall I just trade oil? Should I just trade the bonds? Because I come from the bond world, I specialize in bonds. Yeah, but bonds, commodities only stocks only. Again, this is one area, they might go dead for a while, they might not produce many trends, you know, long term trends. So what are you going to do if that happens? What are you going to do if you run into a, you know, trying to think of the web like grains?

    Clint Sorenson 19:16

    Grains is a good example. They didn't trend for forever.

    Michael Melissinos 19:21

    Yeah, like, like, 10 plus years? 10 plus years. But like, "Oh, I'm a green guy." Well, you're a loser guy now, because you wanted it too picky. You wanted it your way. I want grains to make the money. Yeah, well, don't, because they're going to do what they do. So I think, I mean, when I first started, just to give you an example, I'll kind of build on it from there is where I am now. What I think is much better, what I'm doing now versus back then, is so my first day, 2011, I was trading 11 markets. That's all I could do, because I was constrained by capital as well. I can't trade 100 markets, you know, I can't even take the positions. I don't have enough money to even take the position, so I started trading 11, but then I grew to 20, 30, 40. And now, now I'm up to about 200. That includes a lot of different futures from commodities and bonds and currencies. And now trading and also looking at individual stocks from many different whacky sectors, you know, not just the S&P 50, you know, the brand names that everyone knows, but getting different, just getting different industries and stocks in different industries, from like cannabis, to AI, to 3D printing, and to robotics, you know, whatever, just trying to find as many different things as possible.

    So I do think, and again, my research has shown that you can do fine with, say, 20 markets, you know, 40-50, again, depends on what capital you can muster together to do it. But you might go through some really deep and prolonged drawdowns and quiet periods because you don't have a Bitcoin in your quiver in your portfolio to pull you out of a dead period where you're mostly in bonds or stocks or something. Like yeah, well, yeah, bonds and stocks have sucked over the last year. Yeah, but I've had grains and crypto amazing about. So meanwhile, you're still stuck in the mud, looking in your narrow view. Meanwhile, I'm all over the place. And I can take advantage of some of these other trends over here. So I think the more different, the better. And I think it's really hard sometimes to not get into a situation where you have overlap. You know, I think that's really easy to do in some of these areas, like bonds, where you have the 10-year bond and 10 different countries, kind of the same thing.

    Paul Barausky 21:36

    With a cabal of central bankers.

    Michael Melissinos 21:39

    Yeah. So, you know, you can call them different names. You could say, 'Yeah, well, they're different.' But they don't act differently, or they haven't acted differently in a long time. So can you count on that? You know, you can get the warm and fuzzies by saying, 'Yeah, I've got 10-year bonds all over the place.' But not really, they're all the same. So that's the type of stuff that we go into the weeds on, which is like, 'Okay, we're getting some overlap. Maybe don't be so overweight over here, because we're not getting rewarded for it.' We want to, you know, and again, like for a surfer, it'd be like the beach. It'd be like a beach on the same shoreline. You know, yeah, it's a different area, but it's the same damn tides, you know.

    Clint Sorenson 22:21

    The psychology part of this is so interesting, because I want to get back to that. I think when you think about loss aversion, it's really two prongs that you have to overcome as a trend follower. And I think this has made it so hard to be adopted by retail investors, especially in the past 10 years, where they're like, 'you know, stocks only go up' or whatever. When you start to think about loss aversion, right? If you think about Daniel Kahneman's research, like a loss is felt two times as much as a gain is what’s even worse if it's like you have a gain there. If you think about it, like if you have a gain, like giving up that gain, I think is such a challenge from a psychological perspective to talk about that because I see that a lot with trend followers, when people are invested in trend following strategies. Why did you let that profit go away, but you have to allow that or you're not going to get the big profits long term.

    Paul Barausky 23:07

    Explain that to me because I recall vividly about 10 years ago, I was at a bachelor party in Vegas. On Sunday, I had a few more chips, and I went on a major run. So I checked back in the hotel, lost the run to X and ended up out. So investing is never gambling. I always say that. But that sticks in my head. Every time I have a gain, I literally walk to check out and say, Check me back in for another year.

    Clint Sorenson 23:35

    Because you get this old adage, right, you never lose taking a profit. What? Come on, let's really talk about this. So, Michael, in our last five to ten minutes, jump into that for me.

    Michael Melissinos 23:45

    I think it goes back to our primitive days, where animals do this too. They let nothing go to waste. So when you make a kill, when you have something in your hands, you can't let it go because your survival depends on it. You know, I've been on safari in Africa and have seen these animals just don't quit, you know, they will kill you for that kill, they will steal it from you. And they have to do what they have to do because they're presented with an opportunity right in front of them. They can't see into the future. They can't say, 'well, yeah, you know, my risk of dying here.' No, I gotta get this meal. I gotta keep it. So I think that's one thing that makes it so hard for us to let go. We have it now, so I want it now. And I want to keep it because I don't know when I'm going to get one again. And that feeling of I don't know, when I'm impatient. I need to live now. That short term ism, and it's a really good trait. You know, it's a real good survival trait. It's just in the markets. This is not hunting in Africa. This is social psychology. So when you have a lot of people doing the same thing, they're butting heads like you're trying to get through a door. And everyone's has the same idea, the same view doing the opposite works taking the other side works, because there's just not, you know, I just think it's like a deep cosmic pattern that people want to do this, it feels good. This is Yes, yes. But in the markets and in life in general, you gotta go the opposite way. You got to be a contrarian with that. And yeah, I just, I don't know if that's like a real good answer. I think when you get into it, when you actually start trading, and putting money down, that's when you can really learn. I think there's only so much you can learn from reading a book and listening to smart people, I think you gotta get into it. Like, Oh, I see what they're talking about. Yeah, it's really hard to let that go. Because I've worked so hard for that, you know, I came all this way for this kill. Here it is, you know, I watch Cramer every day, read all these books. I found this stock, like after all this time, and here I am now. And I can't let this go. You know, I did all this work. You know, this is what I deserve. Type all this bullshit in your head. And like, No, it just means more to you. Don't be fooled. It just means more to you right now. Like, this is not the right thing to do. The right thing to do is to let this go. Because there's real risk here at this kill you roll up on a dead hippo, guess what, there's a pack of lions there, get the hell out. Because you ain't winning it. So same thing with a stock or a market or just an investment in general, that if it's not working, you don't always have time to find out why it's not working. Because the time it takes you to figure out, you're losing money, you're losing money as you figure it out. And then when you figure it out, you're likely already screwed, you likely lost a ton of money. At that point, you lost time, you have sunk costs of opportunity costs, and you just have to move on. Because there's other things. There's other things to get to. And yeah, like don't let the effort and the feelings really keep you from doing the correct thing.

    Paul Barausky 26:54

    So that is awesome. Two things. One is I'm, as we near the end of our time, I'm never playing cards with you because you clearly are emotionless in your decision making.

    Michael Melissinos 27:05

    Well, it's you know, you just know the odds, like, what's the money in the pot? What cards do I have? What cards are on the deck, you know, all right,

    Paul Barausky 27:12

    Take the emotion–I'm only saying this because I watched Rounders for the 12th time again last week, just get excited about emotionless decision making, and knowing what the odds are, and taking emotion–and not dying on a hill needlessly, which people do every day in.

    Michael Melissinos 27:30

    One of the best scenes there, I think, is very small. It's like when Matt Damon and Ed Norton are going to the country clubs and playing because they're trying to get that money back for a stake, you know, to pay KGB back. And he loses, or he folds at one of these country clubs, the guy bluffs him, and Ed Norton is pissed when, as they're leaving, he said, "Look, the move was folding. That was the correct move." Like, yeah, I understand we're against the clock and all this. But again, like those emotions will get you to do the wrong things. And because he was the best player in that movie, you know, he’s scripted as the best player in that movie, Matt Damon, he knew what the correct thing to do. And that is an adult responsible thing to do.

    Paul Barausky 28:13

    Yeah. You got it. You nailed it. And I hate to compare investing with gambling, but we're talking about reading the odds, knowing when to walk away, and the immortal words of the gambler, Kenny Rogers: know when to hold them and know when to fold them. I'd love to ask you as a guy that runs distribution for Sealy–real estate is a whole lot different than what you do, but I'm always curious: do you have an institutional fund? Do you have retail investors? Ours are non-public solicitation, so I can't talk about ours, but do you have funds open? What are you currently doing and running?

    Michael Melissinos 28:47

    I manage a private fund for accredited investors, so as long as they meet that definition, they can invest with me.

    Clint Sorenson 28:55

    Mike, what's your Twitter handle? How do people get in touch with you?

    Michael Melissinos 28:59

    I'm all over Twitter, mostly yelling negative things about the New York Rangers hockey.

    Paul Barausky 29:06

    You can jump on the Stars bandwagon, email. By the time this drops, we might not be down.

    Michael Melissinos 29:11

    I don't mind Dallas. I had Robertson on my fantasy team this year. So he did really well for me. I think I'm on the Florida Edmonton final.

    Paul Barausky 29:20

    I grew up in Philly; you can get on that bandwagon. There's no playoff–I’m joking. I’m a Flyers guy by birth. Oh no, I'm with you on the Panthers.

    Michael Melissinos 29:30

    The Panthers to me are again like a trend trader like ooh, this is that sneaky trend that no one everyone is dismissing like, Nah, they got lucky beating the Bruins there. Nah, they were the second wildcard the last team in, they had a crappy year. You know, that kind of snuck by. If Pittsburgh just won that stupid game at home. They wouldn't even have made the playoffs, but Pittsburgh blew it against the Blackhawks, like, epic fail, but that's the only reason at the end of the year that Florida got in, and now they beat the best regular season team ever. And now they got a one-0 lead against Toronto. Like, this is just one of those trends and like, watch this one. You don't know, this one's gonna be sneaky, because they got some good talent on the team. If they figure it out, they get motivated. They work hard. Hey, you don't know, man.

    Paul Barausky 30:21

    Well, I'll let you guys know I think the year I heard was of all the teams remaining, nobody's won a cup since 2007. And if we go back to Edmonton, who's really good when he going back to it feels like forever

    Clint Sorenson 30:34

    That was the Hurricanes, right? The Hurricanes won the cup back then, right?

    Paul Barausky 30:38

    Yeah, the Hurricanes won and it's been a long time for Toronto, but they're just cursed.

    Michael Melissinos 30:43

    '60s, I think is Toronto. Yeah.

    Paul Barausky 30:46

    What's the Twitter handle?

    Michael Melissinos: 30:50

    Sorry. Yeah, got sidetracked. The Twitter handle is M-melissinos, Mike Melissinos, so Mmelissinos.

    You'll find me on LinkedIn too. I have a Substack and a link on my Twitter as well. Website is Melissinos Trading. I know that's tough to spell.

    Clint Sorenson 31:04

    And then what's your podcast? You just started a podcast, which I can't wait to listen to all the time. So yeah, podcaster.

    Michael Melissinos 31:10

    Again, Jerry Parker, you know, one of my idols. You know, as I started learning about trend following, we're good friends, we invest in each other, we work together. So we have a Talking Trends podcast. It's on Apple, Amazon, Spotify, and we record the video too. So you can see us get really animated about things. And we do that every week, every Friday. So we've done two or three so far, we've done two, and I did one solo because Jerry was busy one week. But yeah, we'll be doing it every week and talking about all sorts of stuff, markets, and everything else.

    Clint Sorenson 31:41

    Well, thanks, Mike. I'm a feature–Paul will feature a paper by Man Group, which we didn't get to, but they talk about one of the top strategies when you have inflation, and it's all asset trend following, which I thought was pretty awesome, given where we are from a global perspective. So I think it'd be great. So we encourage all of our listeners to pick that paper up and also go to Mike's website. Listen to the podcast. That's it for me, Paul. Sorry.

    Paul Barausky 32:04

    It's great. Well, thanks for this episode. Appreciate it, guys. Thanks, Mike.

    Paul Barausky 00:03

    Well, hello, everyone and welcome to the latest episode of the fat pitch podcast. I'm your host, Paul Barofsky, Chief distribution officer for Celia investment securities. And as always, I'm joined by my co host, Clint Sorenson, from wealth shield. Clint today, I'm really excited to learn a lot about trend following and I'm not talking about the latest jeans or the newest Kardashian, we're talking about investing. So why don't you introduce the guest for this episode?

    Clint Sorenson 00:33

    Yeah, it's my pleasure. Thanks, Paul. And I'd like to thank Mike for joining us. So we got Mike Melissinos. And very excited to have him on the podcast. I got introduced to him a long time ago by a mutual friend. And I believe personally that he is the future of trend following and so I can't wait to get his wisdom and his knowledge. So Mike, thanks for joining us. Well, we start off and you give us a little bit background, where you come from, what do you do? Tell us a little bit about yourself?

    Michael Melissinos 00:58

    Yeah, thank you for having me. Well, I cut my teeth in Wall Street, in late 2007, had the bright idea to go to Bear Stearns, about six months before the top. And six months before it all went down. And in I was a naive 23 year old at the time, and I thought I was just going to, you know, just one day become a trader there and didn't really know, you know, I was just kind of following the lead or whatever it else was doing at the time. And then got introduced to this trend following thing around that same time, and just started following guys who were doing it. And guys like Jerry Parker, Dave, Drew's bill done. And then as I learned more about the markets, and then obviously, as the events unfolded, throughout the financial crisis, I was side by side living on the desk on Wall Street, watching it burn into flames. And then following these other guys who seemingly no one knew about, no one was talking about them. They were not on TV, they weren't getting any press. And they were just quietly doing their thing. And I'm just like a natural personally, what the hell is this? Like, all I care about is winning. And I'm like, Alright, these guys are winning. Does anyone else care about this? Like, how come no one wants to talk to these guys. So eventually, I, you know, bear went down, I stayed on JP Morgan. And then Lehman went down. It was just another one Aha, after another to, you know, just watching the market events unfold, and then watching the trend followers monthly performance, and like, Oh, now I understand. Now I understand what they're doing, how they're doing it. Okay. I gotta go do this. So, yeah, it just took me some time to figure out, alright, what the hell to do, I didn't know how to code or, you know, design a trading strategy, anything like this. So I was just, you know, I spent all my time in Barnes and Noble and an Excel and taking notes and calling guys like Jerry and David Drew's, and just writing notes and notes and notes. And, you know, just figuring out how to do it, and then getting the confidence to do it. You know, I was still, you know, when I finally mustered up the confidence to do it, I was 26. And that was 2011. And yeah, I started in 2011. started my own firm, I started managing three $100,000 accounts, just to keep costs low, admin low, you know, let's see how this goes type of thing. And then when I found you know, throughout that year, I started getting started talking to more people about what trend following is trying to, you know, educate them on it and all that stuff. And then, once I thought I had enough people to start a fund, I did that. And I started that in 2012. And still doing it today. Man, you got

    Paul Barausky 00:03

    Well, hello, everyone, and welcome to the latest episode of the Fat Pitch Podcast. I'm your host, Paul Barausky, Chief Distribution Officer for Sealy Investment Securities. And as always, I'm joined by my co-host, Clint Sorenson, from WealthShield. Clint, today I'm really excited to learn a lot about trend following, and I'm not talking about the latest jeans or the newest Kardashian. We're talking about investing. So why don't you introduce the guest for this episode?

    Clint Sorenson 00:33

    Yeah, it's my pleasure. Thanks, Paul. And I'd like to thank Mike for joining us. So we've got Mike Melissinos, and I'm very excited to have him on the podcast. I got introduced to him a long time ago by a mutual friend. And I believe personally that he is the future of trend following, and so I can't wait to get his wisdom and his knowledge. So Mike, thanks for joining us. Well, let's start off and you give us a little bit of background. Where do you come from, what do you do? Tell us a little bit about yourself.

    Michael Melissinos 00:58

    Yeah, thank you for having me. Well, I cut my teeth on Wall Street in late 2007. I had the bright idea to go to Bear Stearns about six months before the top and six months before it all went down. I was a naive 23-year-old at the time and I thought I was just going to one day become a trader there and didn't really know. I was just kind of following the lead of whatever else was doing at the time. And then got introduced to this trend-following thing around that same time and just started following guys who were doing it, guys like Jerry Parker, Dave Drews, Bill Dunn. And then as I learned more about the markets and obviously as the events unfolded throughout the financial crisis, I was side by side living on the desk on Wall Street, watching it burn into flames. And then following these other guys who seemingly no one knew about, no one was talking about them. They were not on TV, they weren't getting any press, and they were just quietly doing their thing. And I'm just a natural person who cares about winning. And I'm like, "Alright, these guys are winning. Does anyone else care about this? How come no one wants to talk to these guys?" So eventually, bear went down, I stayed on JP Morgan, and then Lehman went down. It was just one "aha" after another to just watching the market events unfold and then watching the trend followers' monthly performance and like, "Oh, now I understand. Now I understand what they're doing, how they're doing it. Okay. I gotta go do this." So yeah, it just took me some time to figure out what the hell to do. I didn't know how to code or design a trading strategy or anything like this. So I was just spending all my time in Barnes and Noble and Excel and taking notes and calling guys like Jerry and David Drews and just writing notes and notes and notes. And just figuring out how to do it and then getting the confidence to do it. When I finally mustered up the confidence to do it, I was 26. And that was 2011. I started in 2011, started my own firm. I started managing three $100,000 accounts just to keep costs low, admin low, you know, let's see how this goes type of thing. And then when I found throughout that year, I started talking to more people about what trend following is, trying to educate them on it and all taht stuff. And then, once I thought I had enough people to start a fund, I did that. And I started that in 2012 and still doing it today.

    Clint Sorenson 03:57

    great timing.

    Paul Barausky 03:59

    For the guy who's self admittedly clenched talk to me about trend following for two years, but if you know plenty, he hasn't stopped to explain it to me yet. Right? Can you break that down for the audience distill that into what exactly? It define it?

    Michael Melissinos 04:13

    Okay, let me try to use it. I can use a lot of different metaphors, but use maybe like a surfer metaphor, say a surfer had like 1000 screens, and he watched every beach in the world. And he's watching for when the conditions are right, for when the good waves are gonna come. So then he can, you know, with a button just ultimately, you know, just transform right there in a second when he sees the conditions, right, like, oh, okay, Hawaii is picking up. Let's go there. Boom. So that's kind of what we do. We're just watching so many different markets, and we're watching for moves. And once we see something starting to form, we'll take a calculated bet, risk very small, you know, not going to bet our whole Business on it, we're not going to say, Oh, this is the one, let's try to get greedy type of thing. No, we'll just say, alright, this could be the one. And when boom, we'll put a little bed on it. And then if it continues to work, if it works for us, if we're making money, we'll stay in it. If not, we're out, you know, and then we're back to our screens. And then we're looking for the next ones. And you know, unlike a surfer, he's got to choose one at a time, we can have positions and multiple and then kind of like a blackjack player, we can, you know, playing multiple tables at once we can, if we have an edge trading this way, you know, only betting when the odds are in our favor, we have an edge. And then the composite of all these trades puts us in a in the odds of winning over time. So we're not betting our life and our business on one idea, two ideas. And then that didn't work out. We got to come up with something else like no, we're all just always kind of watching and looking and taking calculated bets.

    Paul Barausky 05:51

    So are you taking into account market sectors subsectors, when you're following a trend? What kind of scale? Is that at? Or is it all across the board?

    Michael Melissinos 06:02

    No, we're watching all across the board. We have no prejudice, no bias, we don't care, really where the money comes from. We don't care where profits come from. We don't want to make money our way. We just want to make money. So and we want to stay in business, too. I think, you know, trend following philosophy has a lot in common with proper business practices. Well, you know, we want to stay in business. So we can see as many opportunities and take advantage as many opportunities as possible. Again, I know what's sexy, is to indulge your intelligence, try to make calls, this is going to happen. You know, the Fed said this, so this is going to happen over the next 18 months, let's put a big ass bet on it. And let's make a whole bunch of money in the next 18 months. Like, no, we're here to just grind it out, grind it out, and we're always around. And sooner or later, we're gonna get some big moves. And we're gonna make a lot. That's kind of our Mo.

    Clint Sorenson 06:59

    And let's talk about types of markets. Right? So I think Paul's question, what's the diversification look like? How many markets Are you trading? What types of markets because you have no bias? You're just like, hey, let's trade anything and everything. So tell us about how that's kind of set up.

    Michael Melissinos 07:13

    Right? Yeah, you know, a lot of different markets cycle in and out of, you know, good times and bad times. We know that from a lot of our research. So we're watching everything. We're watching stocks, we're watching fixed income. We're watching currencies, we're watching commodities. And now, most recently, we're watching crypto as well. And for us, me personally, only watching the futures markets. So the Bitcoin and Aetherium futures, I'm not interested in putting money in any crypto exchange. No, not at all. I'm just not comfortable at all. With that. So yeah, you know, and that includes all sub sectors all across the globe, you know, we're not just watching as far as currencies go, for example, we're not just gonna watch the dollar index, the euro, the yen, and the, you know, other big, big names are watching crazy stuff. You know, the the shekel, the Turkish Lira, the ruble, you know, Singapore dollar, anything and everything. And I think that's one of our advantages, too, is that we go to places people don't want to go.

    Paul Barausky 08:13

    So is it 100% quantitative? Or is there a qualitative layer to your selection of trades?

    Michael Melissinos 08:19

    Well, I say qualitative in the sense that we don't have a real specific rule on what to trade what what to look at, you know, when Bitcoin futures and then Aetherium futures came online, this is a good exam, because of the most recent ones that kind of come online for us to watch and trade. That, oh, we knew they were coming. We knew the CME was going to list them. And then we said, Okay, those are different, that would be a real opportunity, something different we have, we don't have in our portfolio, a new trend we could possibly take advantage of. So okay, let's put that on our list. But then we're going to say, alright, well, we're only going to trade it if we see the liquidity there. We're not going to be the first guys in so that's the quantitative part after we say, Yeah, we want to trade that that's going to be good. Let's measure some of the data using not the non futures data because Bitcoin has been around, you know, trading on the Kryptos exchange for a while and we saw Oh, this is a different thing. Wonderful. This offers us something different but we're only going to flex those quantitative muscles when it comes down to really trading it or not. We want to see the Quiddity there we want to see a thick bid offer. No thin Mark that'd

    Clint Sorenson 09:35

    be a tradable, tradable market. Yeah, one of the things I was thinking about to about why I love trend following a personal fan, obviously trend following is is kind of like the anti ego philosophy for investing. And the reason why it's funny when we study it, you find out that like a great trend following system is only you know, quote unquote, accurate, meaning that you when you take a position on it actually moves in the direction you want, like 30 to 50% of the time Think about like a trend following system could be, quote unquote wrong more than it's right. And for some people, that is such a challenge, you always see traders out there talking about 90% hit rate, or I'm right more than I'm wrong. It's such an ego way to approach markets. And I feel like trend following such a counter ego way. That's one of the reasons I like it from a philosophy perspective is like, yeah, I can be wrong more than I'm right, but still make money. Can you maybe expound on that a little bit? Like how does a trend follower, like for instance, like a done or cherry has such a great long term track record? In the midst of being wrong? More than being right? That sounds like something that's not even possible?

    Michael Melissinos 10:38

    Yeah, the math is simple, or it gets complicated is the psychology. The math is, hey, all right, if you're gonna have, say, 40% winners, you make 10 trades, you win on four of them, Well, you better keep those six small, and you better crushed those four. So the only way to crush those four, and keep those six small is to cut those six as fast as possible, if they're not working. And then to actually hold those four. So you know, and those four aren't all gonna be like 10 baggers, or anything like that, but they could range, you know, some could be great. Some could be like, fine, but you're gonna need, you're gonna need to ride those winners. And that is where I think the psychology is really difficult. I think people are better at cutting losers. They say, Yeah, this sucks. Let's go. I'd have another idea. You know, Jim Cramer just said another one. Okay, buy that one instead. But the hard thing is like, Okay, now you have a winner. Now you have to hold it. Wow. Well, I just made my money back from those losers. I want to take my money and run. Now I'm back to even now I want to find a new one. No, yeah, no, like this one could pay for the last 20. You know, maybe not the last 10. It could be the last 20. And you could have, you know, say for trades, make your year make your five years. And we just had that recently, what the inflation that kind of kicked off in mid 2020 Is that we just had a bunch of commodity trades that just paid for all the losers, the recent losers up into that time, and then some. So that's just kind of how it goes. And you're gonna have to get over that psychology to always want to find something to do. And then Alright, well, you know, I want to take my money and run. Yeah, but now you're in the hard part of having to pick another winner. You know, like, there's not that many winners in general. And, Clint, I think you reposted something of mine on LinkedIn where a couple firms did some studies on the stocks that account for all the index gains over time. Yeah, that's a small No, it's, it's ridiculously small. But it's great information. Like, yeah, you can pick it. So you know, no wonder why people have trouble beating the index because it doesn't bother picking it says, Alright, you're getting bigger, you're a winner. I'm gonna hold it, and I'm gonna ride.

    Paul Barausky 13:06

    I keep hearing all I keep thinking in the back of my head is don't fight the tape. Yeah, it's very difficult. The real underlying message, don't fight the tape up, down or sideways. And I was gonna ask you about some good stories that tie in certainly I tracked the CRB pretty closely, you rode that wave on commodities. I mean, my goodness, it just did this, and even fight it where other people want to outsmart it. Now it has come down from a tie, as we coiled spring, lets out. What are some other examples of trends up or down in the last, you know, 1824 36 months here? Like, here's a great example, in real life insights come out. And Paul

    Clint Sorenson 13:47

    want to jump in on one thing, remember on trend following? And I don't think we said this explicitly in the front, you know, they go long and short, right. So they've been going up and down. And it's such an advantage to be able to just

    Paul Barausky 13:59

    say that that's a good point. Because following something down as I like to say, the swirling motion down the bowl, yeah.

    Michael Melissinos 14:08

    That's the no bias, no prejudice, advantage of our style. So another good example of the last, say year or so is bonds, short bonds, as interest rates have risen, the bond prices have come down. That's pretty much been the same across the world across the yield curve, you know, from the US to Canada to Europe to Asia, interest rates have gone up. So as stupid trend followers, were just saying, Okay, we noticed this, we notice the bond prices going down. We don't know where this is going to lead, but we know the possibility where this could lead you know, we're always going to leave ourselves open to this could be a big one. So don't start reading stories. Well, yeah, it's risen so hard, so high so fast, you know, how much longer could this keep up? We don't fucking know. It could, it could keep going. And then it's a whole nother year and a half where it keeps doing something you don't think it should be doing or it could do. So that's another thing we don't limit our imagination does not limit our profitability as well. Like, it could don't say it can't.

    Paul Barausky 15:18

    Right? Everything always lasts longer and cost more to human condition, whether you're building a business or writing a trade, and certainly a lot of folks talk about so you're really trying to ride something all the way to the inflection point, not try to guess it.

    Michael Melissinos 15:35

    Of course. Yeah. And we're just there. We're sitting with the position in the now you know, it's come from here. It's now here. All right, it's going up. All right, it's going down. Now we're gonna bet with that momentum. And we're gonna stick with that momentum as long as it's going. And you know, momentum trend. These are all very fuzzy words. But, you know, for us, for me, I care about multi month multi year moves. I want to be there for those moves. I don't care about the week to week, you know, and forget it like hour to hour forget, that's nothing. Some people could do that with very high tech. I don't care about that. I want big 18 Month 24 month moves like we had in bonds, like we had the downtrend in stocks, like we had the uptrend before that in commodities, and maybe in earlier years, like with Bitcoin, just sitting there another really good example where I think some of the best moves come from our where the trend and the fundamentals at slash sentiment don't agree. The and Tesla was an amazing example of this. Such a polarizing name. People hate it. People love it. People hate Elon, they love them, yada, yada, yada. It's going up. That's all I can tell you. I don't know why. Maybe it's a crappy company. Maybe it isn't. But it's gone from whatever it was 100 to 1500 to 2000 wherever it was before it started splitting everywhere. It's just a trend. It's just an opportunity. Nothing more. That's that. And yeah, I mean, it's it's, again, trying to pound the psychology that we have on a daily basis that we just don't care. We're only here to make money like Don't be confused about you know, it's

    Clint Sorenson 17:15

    funny game.

    Paul Barausky 17:17

    Let everybody else watch the financial porn as I call it. I guess I got a question. Because you run a farm Clint, you use these funds. What is it ideally in your head? What is a good farm look like? Like how diversified is it? Do you take leverage? What kind of waiting? I think that would help define it further is going to tell me it would be

    Clint Sorenson 17:44

    it's gotta be more and more by the border the better right diversification

    Paul Barausky 17:47

    really? Curious? Because say somebody's not familiar with trend time they come in they go okay, am I looking at 10 beaches? Do I got 100 different positions and your ideal word if you got to fund your fund cooking with gas where you want it position and forget whether you're short and long, right commodities or some market wherever, just what does it feel like to you to be healthy and position how you want in a foreign market?

    Michael Melissinos 18:14

    Well, I do think, from my research and real time experience, the odds of success increase. Let's start on the first thing on what kind of trends you're measuring. And you're looking to ride. I said, I want to be in trends for a year, 18 months, 24 months. So trading the markets that you're observing, say one to two times a year, on average, that's it, you're trading one to two times a week a month profit too short, you're gonna invite a lot of costs, a lot of slippage, and a lot of emotions, more emotions into it.

    I think then I think in terms of Okay, going with trends is a good idea. I understand. Okay, my great. Okay, yeah, but which ones like, What do I look at now? Like, how many should I look at? Shall I just trade oil? Should I just trade the bonds? Because I come from the bond world, I specialize in bonds. Yeah, but bonds, commodities only stocks only. Again, this is one area, they might go dead for a while, they might not produce many trends, you know, long term trends. So what are you going to do if that happens? What are you going to do if you run into a, you know, trying to think of the web like grains?

    Clint Sorenson 19:16

    Grains is a good example didn't trend for forever? Yeah,

    Michael Melissinos 19:21

    like, like, 10 plus years? 10 plus years. But like, Oh, I'm a green guy. Well, you're a loser guy now, because you wanted it too picky. You wanted it your way. I want grains to make the money. Yeah, well, don't because they're going to do what they do. So I think I mean, when I first started, I, just to give you an example, I'll kind of build on it from there is where I am now. What I think is much better. What I'm doing now versus back then is so my first day 2011 I was trading 11 markets. That's all I could do, because I was constrained by capital, as well. I can't trade 100 markets, you know, I can't even take the positions. I don't have enough money to even take the position so I started trading Levin, but then I grew to 20 3040. And now now I'm up to about 200. That includes a lot of different futures from commodities and bonds and currencies. And now trading and also looking at individual stocks from many different whacky sectors, you know, not just the s&p 50, you know, the brand names that everyone knows, but getting different, just getting different industries and stocks in different industries, from like cannabis, to AI to 3d printing and to robotic, you know, whatever, just trying to find as many different things as possible. So I do think, and again, my research has shown that you can do fine with, say, 20 markets, you know, 4050, again, depends on what capital you can muster together to do it. But you might go through some really deep and prolonged drawdowns and quiet periods because you don't have a Bitcoin in your quiver in your portfolio to pull you out of a dead period where you're mostly in bonds or stocks or something. Like yeah, well, yeah. bonds and stocks has sucked over the last year. Yeah, but I've had grains and crypto amazing about. So meanwhile, you're still stuck in the mud, looking in your narrow view. Meanwhile, I'm all over the place. And I can take advantage of some of these other trends over here. So I think the more different, the better. And I think it's really hard sometimes to not, you know, get into a situation we have overlap. You know, I think that's really easy to do in some of these areas, like bonds, where you have the 10 year bond and 10 different countries, kind of the same thing.

    Paul Barausky 21:36

    With a cabal of central bankers.

    Michael Melissinos 21:39

    Yeah. So, you know, you can call them different names. You can you could say, Yeah, well, they're different. Yeah, but they don't act different, or they haven't acted different in a long time. So can you count on that? You know, you can get the warm and fuzzies by Yeah, I got 10 year bonds all over the place. Yeah. But you know, not really, they're all the same. So that's the type of stuff that, you know, we go into the weeds on, which is all right, we're getting some overlap. Maybe don't be so overweight over here, because we're not getting rewarded for it. We want to, you know, and again, like for a surfer, it'd be like the beach. It'd be like a beach on the same shoreline. You know, yeah, it's a different area, but it's the same damn tides, you know. So, yeah,

    Clint Sorenson 22:21

    the psychology part of this is so interesting, because I want to get back to that, because I think when you think about loss aversion, it's really two prongs that you have to overcome as a trend follower. And I think this has made it so hard to be adopted by retail investors, especially in the past 10 years, where they're like, you know, stocks only go up or whatever, when you start to think about loss aversion, right. If you think about Daniel Kahneman 's research, like a loss is felt two times as much as a gain is what's even worse, if it's like you have a game there. If you think about it, like if you have a game, like giving up that game, I think is such a challenge from a psychological perspective to talk about that. Because I see that a lot with trend followers, when people are invested in trend following strategies. Why don't you let that profit go away, but you have to allow that or you're not going to get the big profits long term.

    Paul Barausky 23:07

    When that to me because I recall vividly about 10 years ago, I was at a bachelor party in Vegas. On Sunday, I had a few more chips, and I went on a major run. So I checked back in the hotel last the run to x and ended up out so investing is never gambling. I always say that. But that sticks in my head. Every time I have a game, I literally walked to check out and said check me back in for another

    Clint Sorenson 23:35

    year because you get this old adages, right, you never lose taking a profit, what? Come on, like, let's really talk about this. So Michael, in our last kind of five minutes, 510 minutes jump into that, for me,

    Michael Melissinos 23:45

    I think it goes back to our primitive days where you know, an animals do this to they let nothing go to waste. So when you make a kill, when you have something in your hands, you can't let it go. Because your survival depends on it. You know, I've been on safari in Africa and have seen these animals just don't quit, you know, they will kill you for that kill, they will steal it from you. And they have to do what they have to do because they're presented opportunity right in front of them. They can't see into the future. They can't say well, yeah, you know, my risk of dying here. No, I gotta get this meal. I gotta keep it. So I think that's one thing that makes it so hard for us to let go is to we have it now. So I want it now. And I want to keep it because I don't know when I'm going to get one again. And that feeling of I don't know, when I'm impatient. I need to live now. That short term ism, and it's a really good trait. You know, it's a real good survival trait. It's just in the markets. This is not hunting in Africa. This is social psychology. So when you have a lot of people doing the same thing, they're butting heads like you're trying to get through a door. And everyone's has the same idea the same view doing The opposite works taking the other side works, because there's just not, you know, I just think it's like a deep cosmic pattern that people want to do this, it feels good. This is Yes, yes. But in the markets and in life in general, you gotta go the opposite way. You got to be a contrarian with that. And yeah, I just, I don't know if that's like a real good answer. I think when you get into it, when you actually start trading, and putting money down, that's when you can really learn. I think there's only so much you can learn from reading a book and listening to smart people, I think you gotta get into it. Like, Oh, I see what they're talking about. Yeah, it's really hard to let that go. Because I've worked so hard for that, you know, I came all this way for this kill. Here it is, you know, I watch Cramer every day, read all these books. I found this stock, like after all this time, and here I am now. And I can't let this go. You know, I did all this work. You know, this is what I deserve. Type all this bullshit in your head. And like, No, it just means more to you. Don't be fooled. It just means more to you right now. Like, this is not the right thing to do. The right thing to do is to let this go. Because there's real risk here at this kill you roll up on a dead hippo, guess what, there's a pack of lions there, get the hell out. Because you ain't winning it. So same thing with a stock or a market or just an investment in general, that if it's not working, you don't always have time to find out why it's not working. Because the time it takes you to figure out, you're losing money, you're losing money as you figure it out. And then when you figure it out, you're likely already screwed, you likely lost a ton of money. At that point, you lost time, you have sunk costs of opportunity costs, and you just have to move on. Because there's other things. There's other things to get to. And yeah, like don't let the effort and the feelings really keep you from doing the correct thing.

    Paul Barausky 26:54

    So that is awesome. Two things. One is I'm as we neared the end of our time, I'm never playing cards with you because you clearly are emotionless in your decision making. Well,

    Michael Melissinos 27:05

    it's you know, you just know the odds, like, what's the money in the pot? What cards do I have? What cards are on the deck, you know, all right,

    Paul Barausky 27:12

    take the medicine. I'm only saying this because I watched Rounders for the 12th time again last year, just get excited about emotionless decision making, and knowing what the odds are, and taking the most and not dying on a hill needlessly, which people do every day.

    Michael Melissinos 27:30

    best I think scenes there. It's very small is like when Matt Damon and Ed Norton are going to the country clubs and playing because they're trying to get that money back for a steak, you know, the pay KGB back. He loses, or he folds at one of these country clubs. That guy bluffs them. And Ed Norton is pissed when as they're leaving, and he said, Look, the move was folded. That was the correct move. Like, yeah, I understand we're against the clock and all this. But again, like those emotions will get you to do the wrong things. And because he was the best player in that movie, you know, his script is the best player in that movie, Matt Damon, he knew what the correct thing to do. And that is an adult responsible thing to do. Yeah, And one of the

    Paul Barausky 28:13

    you got it. You nailed it. And I hate to compare investing with gambling, but we're talking about reading the ads knowing when to walk away and the immortal words of the gambler, Kenny Rogers, know when to hold them and know when to fold them. I'd love to ask you as the guy that runs distribution for CLE real estates and a whole lot different than what you do, but I'm always curious, do you have institutional fund? Do you have retail investors? RS or non public solicitation? So I can't talk about you know, ours, but do you have funds open? What are you currently doing and

    Michael Melissinos 28:47

    rarely manage a private fund for accredited investors? So as long as they meet that definition, they can invest with me?

    Clint Sorenson 28:55

    Yeah, Mike, what's your Twitter handle? How did people get in touch with you? Twitter hit Yeah, I'm

    Michael Melissinos 28:59

    all over Twitter, mostly yelling negative things about the New York Rangers. Hockey.

    Paul Barausky 29:06

    You can jump on the stars bandwagon email. By the time this drops, we might not be down.

    Michael Melissinos 29:11

    I don't mind Dallas. I had Robertson on my fantasy team this year. So he did really well for me. I think I'm on the Florida Edmonton final.

    Paul Barausky 29:20

    I grew up in LA you can get on that bandwagon. There's no playoff flyers guy by birth. Oh no, I'm with you. Panthers.

    Michael Melissinos 29:30

    The Panthers to me are again like a trend trader like ooh, this is that sneaky trend that no one everyone is dismissing like, Nah, they got lucky beaten the Bruins there. They were the second wildcard the last team in they had a crappy year. You know that kind of snuck by if Pittsburgh just won that stupid game at home. They wouldn't even have made the playoffs but Pittsburgh blew it against the Blackhawks like epic fail, but that's the only reason at the end. To the year that Florida got in, and now they beat the best regular season team ever. And now they got a one oh lead against Toronto. Like, this is just one of those trends and like, watch this one. You don't know, this one's gonna be sneaky, because they got some good talent on the team. If they figure it out, they get motivated. They work hard. Hey, you don't know, man?

    Paul Barausky 30:21

    Well, I'll let you guys know I think the year I heard was of all the teams remaining. Nobody's won a cup since 2007. And if we go back to Edmonton, who's really good when he going back to it feels like forever

    Clint Sorenson 30:34

    for hurricanes when my hurricanes won the cup back then, right? Yeah, yeah, hurricanes.

    Paul Barausky 30:38

    One. And it's been a long time for Toronto, but they're just

    Michael Melissinos 30:43

    60s, I think. Toronto. Yeah.

    Paul Barausky 30:46

    What's the Twitter handle? Sorry. Yeah. The name of the Twitter handle

    Michael Melissinos 30:50

    is m mill. Xenos. So Mike mill Xenos. So MLC knows, yeah, you'll find me on LinkedIn, too. I have a substack to have a link on my twitter as well. Website is mellow. Xenos trading. I know that's tough to spell.

    Clint Sorenson 31:04

    And then what's your podcast? You just started a podcast, which I can't wait to listen to all the time. So yeah,

    Michael Melissinos 31:10

    again, Jerry Parker, you know, one of my idols. You know, as I started learning about trend following, you know, we're good friends, we invest in each other, we work together. So we have a talking trends podcast, it's on Apple, Amazon, Spotify, and we recorded the video too. So you can you can see us get really animated about things. And we do that every week, every Friday. So we've done two or three. So far, we've done two and I did one solo because Jerry was busy one week. But yeah, we'll be doing it every week and talking about all sorts of stuff, markets and everything else.

    Clint Sorenson 31:41

    Well, thanks, Mike. I'm a feature Paul will feature a paper by man group, which we didn't get to, but they talk about one of the top strategies when you have inflation and it's all asset trend falling, which I thought was was pretty awesome, given where we are from a global perspective. So I think it'd be great. So we encourage all of our listeners to pick that paper up and also go to Mike's website. Listen to the podcast. That's it for me, Paul. Sorry.

    Paul Barausky 32:04

    It's great. Well, thanks for this episode. Appreciate it, guys. Thanks, Clint.

    Clint Sorenson: 03:57

    Man, you’ve got great timing.

    Paul Barausky

    For the guy who's self-admittedly clenched, talk to me about trend following for two years, but if you know plenty, he hasn't stopped to explain it to me yet. Right? Can you break that down for the audience and distill that into what exactly it is? Define it?

    Michael Melissinos

    Okay, let me try to use it. I can use a lot of different metaphors, but let's use a surfer metaphor. Say a surfer had 1000 screens and he watched every beach in the world. And he's watching for when the conditions are right, for when the good waves are gonna come. So then he can, you know, with a button just ultimately transform right there in a second when he sees the conditions, right, like, oh, okay, Hawaii is picking up. Let's go there. Boom. So that's kind of what we do. We're just watching so many different markets, and we're watching for moves. And once we see something starting to form, we'll take a calculated bet, risk very small, not going to bet our whole business on it, we're not going to say, Oh, this is the one, let's try to get greedy type of thing. No, we'll just say, alright, this could be the one. And when boom, we'll put a little bet on it. And then if it continues to work, if it works for us, if we're making money, we'll stay in it. If not, we're out, you know, and then we're back to our screens. And then we're looking for the next ones. And you know, unlike a surfer, he's got to choose one at a time, we can have positions in multiple and then kind of like a blackjack player, we can play multiple tables at once. We can, if we have an edge trading this way, only betting when the odds are in our favor, we have an edge. And then the composite of all these trades puts us in the odds of winning over time. So we're not betting our life and our business on one idea, two ideas, and then that didn't work out. We got to come up with something else like no, we're always just kind of watching and looking and taking calculated bets.

    Paul Barausky:

    So are you taking into account market sectors, subsectors, when you're following a trend? What kind of scale is that at? Or is it all across the board?

    Michael Melissinos:

    No, we're watching all across the board. We have no prejudice, no bias, we don't care really where the money comes from. We don't care where profits come from. We don't want to make money our way. We just want to make money. And we want to stay in business, too. I think trend following philosophy has a lot in common with proper business practices. Well, you know, we want to stay in business so we can see as many opportunities and take advantage of as many opportunities as possible. Again, I know what's sexy is to indulge your intelligence, try to make calls, "this is going to happen." You know, the Fed said this, so this is going to happen over the next 18 months, let's put a big bet on it. And let's make a whole bunch of money in the next 18 months. Like, no, we're here to just grind it out, grind it out, and we're always around. And sooner or later, we're going to get some big moves. And we're gonna make a lot. ??

    Clint Sorenson

    Let's discuss the different types of markets. Paul asked about diversification and how many markets you trade. Could you tell us more about the types of markets you trade in? Do you have any biases or preferences, or are you open to trading anything and everything? Please provide us with some insights into how your approach to trading is structured in this regard.

    Michael Melissinos 07:13

    Right. Yeah, you know, a lot of different markets cycle in and out of good times and bad times. We know that from a lot of our research. So we're watching everything. We're watching stocks, we're watching fixed income, we're watching currencies, we're watching commodities. And now, most recently, we're watching crypto as well. And for me personally, I'm only watching the futures markets, the Bitcoin and Ethereum futures. I'm not interested in putting money in any crypto exchange. No, not at all. I'm just not comfortable at all with that. So yeah, you know, that includes all sub-sectors all across the globe. We're not just watching the dollar index, the euro, the yen, and the other big names. We're watching everything. The shekel, the Turkish Lira, the ruble, Singapore dollar, anything and everything. And I think that's one of our advantages, too, is that we go to places people don't want to go.

    Paul Barausky 08:13

    So is it 100% quantitative? Or is there a qualitative layer to your selection of trades?

    Michael Melissinos 08:19:

    Well, I say qualitative in the sense that we don't have a real specific rule on what to trade, what to look at. When Bitcoin futures and then Ethereum futures came online, this is a good example because they're the most recent ones that kind of came online for us to watch and trade. Oh, we knew they were coming. We knew the CME was going to list them. And then we said, 'Okay, those are different. That would be a real opportunity, something different we don't have in our portfolio, a new trend we could possibly take advantage of. So okay, let's put that on our list.' But then we're going to say, 'Alright, well, we're only going to trade it if we see the liquidity there. We're not going to be the first guys in,' so that's the quantitative part. After we say, 'Yeah, we want to trade that, that's going to be good,' let's measure some of the data using not the non-futures data because Bitcoin has been around, you know, trading on the Kryptos exchange for a while, and we saw, 'Oh, this is a different thing. Wonderful. This offers us something different,' but we're only going to flex those quantitative muscles when it comes down to really trading it or not. We want to see the liquidity there. We want to see a thick bid offer, no thin market, that'd be an untradable market."

    Clint Sorenson 09:35:

    "One of the things I was thinking about, too, about why I love trend following, a personal fan, obviously, trend following is kind of like the anti-ego philosophy for investing. And the reason why it's funny when we study it, you find out that a great trend-following system is only, you know, quote-unquote, accurate, meaning that when you take a position on it, it actually moves in the direction you want, like 30 to 50% of the time. Think about a trend-following system could be, quote-unquote, wrong more than it's right. And for some people, that is such a challenge. You always see traders out there talking about 90% hit rate, or 'I'm right more than I'm wrong.' It's such an ego way to approach markets. And I feel like trend following is such a counter-ego way. That's one of the reasons I like it from a philosophy perspective. It's like, 'Yeah, I can be wrong more than I'm right, but still make money.' Can you maybe expound on that a little bit? Like how does a trend follower, like for instance, a Dunn or a Cherry, have such a great long-term track record in the midst of being wrong more than being right? That sounds like something that's not even possible."

    Michael Melissinos 10:38

    Yeah, the math is simple. What gets complicated is the psychology. The math is, hey, all right, if you're gonna have, say, 40% winners, you make 10 trades, you win on four of them. Well, you better keep those six small, and you better crush those four. So the only way to crush those four and keep those six small is to cut those six as fast as possible if they're not working. And then to actually hold those four. And those four aren't all gonna be like 10 baggers or anything like that, but they could range. Some could be great, some could be like, fine, but you're gonna need to ride those winners. And that is where I think the psychology is really difficult. I think people are better at cutting losers. They say, 'Yeah, this sucks. Let's go. I have another idea. You know, Jim Cramer just said another one. Okay, buy that one instead.' But the hard thing is like, okay, now you have a winner. Now you have to hold it. Wow. Well, I just made my money back from those losers. I want to take my money and run. Now I'm back to even. Now I want to find a new one. No, yeah, no, like this one could pay for the last 20. You know, maybe not the last 10. It could be the last 20. And you could have, you know, say four trades make your year, make your five years. And we just had that recently, with the inflation that kind of kicked off in mid-2020. We just had a bunch of commodity trades that just paid for all the recent losers up until that time and then some. So that's just kind of how it goes. And you're gonna have to get over that psychology to always want to find something to do. And then, 'alright, well, you know, I want to take my money and run.' Yeah, but now you're in the hard part of having to pick another winner. You know, like, there's not that many winners in general. And, Clint, I think you reposted something of mine on LinkedIn where a couple of firms did some studies on the stocks that account for all the index gains over time. Yeah, that's a small number. It's ridiculously small. But it's great information. Like, yeah, you can pick it. So you know, no wonder why people have trouble beating the index because it doesn't bother picking. It says, 'Alright, you're getting bigger, you're a winner. I'm gonna hold it, and I'm gonna ride.'"

    Paul Barausky 13:06

    I keep hearing, and all I keep thinking in the back of my head is "don't fight the tape". Yeah, it's very difficult. The real underlying message is don't fight the tape, up, down or sideways. And I was going to ask you about some good stories that tie in. Certainly, I tracked the CRB pretty closely. You rode that wave on commodities. I mean, my goodness, it just did this, and even fight it where other people want to outsmart it. Now it has come down from a high, as we coiled spring, lets out. What are some other examples of trends up or down in the last, you know, 18-24-36 months here? Like, here's a great example. In real life insights come out, and Paul...

    Clint Sorenson 13:47

    I want to jump in on one thing. Remember on trend following? And I don't think we said this explicitly in the front. You know, they go long and short, right? So they've been going up and down. And it's such an advantage to be able to just...

    Paul Barausky 13:59:

    That's a good point because following something down, as I like to say, is the swirling motion down the bowl."

    Michael Melissinos 14:08:

    That's the no bias, no prejudice advantage of our style. So, another good example of the last year or so is bonds. Short bonds as interest rates have risen, bond prices have come down. That's been pretty much the same across the world and across the yield curve, from the US to Canada to Europe to Asia, interest rates have gone up. As trend followers, we're just saying, okay, we noticed this. We don't know where this is going to lead, but we know the possibility of where this could lead. We're always going to leave ourselves open to this could be a big one. So don't start reading stories. Well, yeah, it's risen so high, so fast. How much longer could this keep up? We don't fucking know. It could keep going. And then it's a whole another year and a half where it keeps doing something you don't think it should be doing, or it could do. So that's another thing. We don't limit our imagination. Our profitability doesn't limit our imagination as well. Like, it could. Don't say it can't.

    Paul Barausky 15:18

    Right? Everything always lasts longer and costs more in the human condition, whether you're building a business or trading, and certainly a lot of folks talk about trying to ride something all the way to the inflection point, not trying to guess it.

    Michael Melissinos 15:35

    Of course. Yeah. And we're just there. We're sitting with the position in the now, you know. It's come from here, it's now here. All right, it's going up. All right, it's going down. Now we're gonna bet with that momentum. And we're gonna stick with that momentum as long as it's going. You know, momentum, trend, these are all very fuzzy words. But, you know, for us, for me, I care about multi-month, multi-year moves. I want to be there for those moves. I don't care about the week to week, and forget it like hour to hour, forget that, that's nothing. Some people could do that with very high tech. I don't care about that. I want big 18-month, 24-month moves like we had in bonds, like we had the downtrend in stocks, like we had the uptrend before that in commodities, and maybe in earlier years like with Bitcoin. Just sitting there, another really good example where I think some of the best moves come from where the trend and the fundamentals/sentiment don't agree. And Tesla was an amazing example of this. Such a polarizing name. People hate it, people love it, people hate Elon, they love him, yada, yada, yada. It's going up. That's all I can tell you. I don't know why. Maybe it's a crappy company, maybe it isn't. But it's gone from whatever it was 100 to 1500 to 2000, wherever it was before it started splitting everywhere. It's just a trend. It's just an opportunity. Nothing more. That's that. And yeah, I mean, it's trying to pound the psychology that we have on a daily basis, that we just don't care. We're only here to make money. Don't be confused about it, you know.

    Clint Sorenson 17:15

    Paul Barausky 17:17

    "Let everybody else watch the financial porn, as I call it. I guess I’ve got a question. Because you run a farm, Clint, and you use these funds, what is, ideally in your head, what does a good farm look like? Like how diversified is it? Do you take leverage? What kind of weighting? I think that would help define it further, it's going to tell me."

    Clint Sorenson 17:44

    It's gotta be more and more by the border, the better, right? Diversification."

    Paul Barausky 17:47

    I'm really curious because say somebody's not familiar with trend time, they come in, they go, 'Okay, am I looking at 10 beaches? Do I got 100 different positions?' And your ideal word, if you got your fund cooking with gas, where do you want it position-wise, whether you're short or long, right commodities or some market wherever? Just what does it feel like to you to be healthy and positioned how you want in a foreign market?"

    Michael Melissinos 18:14

    "Well, I do think, from my research and real-time experience, the odds of success increase. Let's start with the first thing: what kind of trends are you measuring and looking to ride? I said I want to be in trends for a year, 18 months, 24 months. So, trading the markets that you're observing, say one to two times a year, on average. That's it. If you're trading one to two times a week or a month, it's too short. You're going to invite a lot of costs, a lot of slippage, and a lot more emotions into it."

    "I think then, I think in terms of, okay, going with trends is a good idea. I understand. Okay, great. But which ones? Like, what do I look at now? How many should I look at? Should I just trade oil? Should I just trade bonds? Because I come from the bond world, I specialize in bonds. Yeah, but bonds, commodities only, stocks only? Again, this is one area. They might go dead for a while; they might not produce many long-term trends. So, what are you going to do if that happens? What are you going to do if you run into a, you know, trying to think of the word, like grains?"

    Clint Sorenson 19:16

    "Grains is a good example. They didn't trend for forever, yeah."

    Michael Melissinos 19:21

    Like, like, 10 plus years? 10 plus years. But like, "Oh, I'm a green guy." Well, you're a loser guy now, because you wanted it too picky. You wanted it your way. I want grains to make the money. Yeah, well, don't, because they're going to do what they do. So I think, I mean, when I first started, just to give you an example, I'll kind of build on it from there to where I am now. What I think is much better, what I'm doing now versus back then, is so my first day, 2011, I was trading 11 markets. That's all I could do, because I was constrained by capital as well. I can't trade 100 markets, you know, I can't even take the positions. I don't have enough money to even take the position, so I started trading Levin, but then I grew to 20, 30, 40. And now, now I'm up to about 200. That includes a lot of different futures from commodities and bonds and currencies. And now trading and also looking at individual stocks from many different whacky sectors, you know, not just the S&P 50, you know, the brand names that everyone knows, but getting different, just getting different industries and stocks in different industries, from like cannabis, to AI, to 3D printing, and to robotics, you know, whatever, just trying to find as many different things as possible. So I do think, and again, my research has shown that you can do fine with, say, 20 markets, you know, 40-50, again, depends on what capital you can muster together to do it. But you might go through some really deep and prolonged drawdowns and quiet periods because you don't have a Bitcoin in your quiver in your portfolio to pull you out of a dead period where you're mostly in bonds or stocks or something. Like yeah, well, yeah, bonds and stocks have sucked over the last year. Yeah, but I've had grains and crypto amazing about. So meanwhile, you're still stuck in the mud, looking in your narrow view. Meanwhile, I'm all over the place. And I can take advantage of some of these other trends over here. So I think the more different, the better. And I think it's really hard sometimes to not get into a situation where you have overlap. You know, I think that's really easy to do in some of these areas, like bonds, where you have the 10-year bond and 10 different countries, kind of the same thing.

    Paul Barausky 21:36

    With a cabal of central bankers.

    Michael Melissinos 21:39

    "Yeah. So, you know, you can call them different names. You could say, 'Yeah, well, they're different.' But they don't act differently, or they haven't acted differently in a long time. So can you count on that? You know, you can get the warm and fuzzies by saying, 'Yeah, I've got 10-year bonds all over the place.' But not really, they're all the same. So that's the type of stuff that we go into the weeds on, which is like, 'Okay, we're getting some overlap. Maybe don't be so overweight over here, because we're not getting rewarded for it.' We want to, you know, and again, like for a surfer, it'd be like the beach. It'd be like a beach on the same shoreline. You know, yeah, it's a different area, but it's the same damn tides, you know."

    Clint Sorenson 22:21

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    "The psychology part of this is so interesting, because I want to get back to that. I think when you think about loss aversion, it's really two prongs that you have to overcome as a trend follower. And I think this has made it so hard to be adopted by retail investors, especially in the past 10 years, where they're like, 'you know, stocks only go up' or whatever. When you start to think about loss aversion, right, if you think about Daniel Kahneman's research, a loss is felt two times as much as a gain, which is even worse if it's like you have a gain there. If you think about it, giving up that gain is such a challenge from a psychological perspective. I see that a lot with trend followers, when people are invested in trend following strategies. 'Why don't you let that profit go away?' But you have to allow that or you're not going to get the big profits long term."

    Paul Barausky 23:07

    When that happened to me, I recall vividly about 10 years ago, I was at a bachelor party in Vegas. On Sunday, I had a few more chips, and I went on a major run. So I checked back in the hotel, lost the run to X and ended up out. So investing is never gambling. I always say that. But that sticks in my head. Every time I have a gain, I literally walk to check out and say, "check me back in for another

    Clint Sorenson 23:35

    year," because you get this old adage, right, "you never lose taking a profit." What? Come on, let's really talk about this. So, Michael, in our last five to ten minutes, jump into that for me.

    Proofread text:

    "I think it goes back to our primitive days, where animals do this too. They let nothing go to waste. So when you make a kill, when you have something in your hands, you can't let it go because your survival depends on it. You know, I've been on safari in Africa and have seen these animals just don't quit, you know, they will kill you for that kill, they will steal it from you. And they have to do what they have to do because they're presented with an opportunity right in front of them. They can't see into the future. They can't say, 'well, yeah, you know, my risk of dying here.' No, I gotta get this meal. I gotta keep it. So I think that's one thing that makes it so hard for us to let go. We have it now, so I want it now. And I want to keep it because I don't know when I'm going to get one again. And that feeling of 'I don't know when' and 'I'm impatient, I need to live now', that short-termism, it's a really good trait. It's just in the markets. This is not hunting in Africa. This is social psychology. So when you have a lot of people doing the same thing, they're butting heads like you're trying to get through a door. And everyone has the same idea, the same view, doing the opposite works, taking the other side works because there's just not, you know, I just think it's like a deep cosmic pattern that people want to do this, it feels good. This is yes, yes. But in the markets and in life in general, you gotta go the opposite way. You got to be a contrarian with that. And yeah, I just don't know if that's a really good answer. I think when you get into it, when you actually start trading and putting money down, that's when you can really learn. I think there's only so much you can learn from reading a book and listening to smart people. I think you gotta get into it, like 'Oh, I see what they're talking about'. Yeah, it's really hard to let that go because I've worked so hard for that, you know, I came all this way for this kill. Here it is, you know, I watch Cramer every day, read all these books, I found this stock. Like after all this time, and here I am now. And I can't let this go. You know, I did all this work. You know, this is what I deserve. Type all this bullshit in your head. And like, 'No, it just means more to you. Don't be fooled. It just means more to you right now'. Like, this is not the right thing to do. The right thing to do is to let this go. Because there's real risk here, at this kill, you roll up on a dead hippo, guess what, there's a pack of lions there, get the hell out. Because you ain't winning it. So same thing with a stock or a market or just an investment in general, if it's not working, you don't always have time to find out why it's not working. Because the time it takes you to figure out, you're losing money, you're losing money as you figure it out. And then when you figure it out, you're likely already screwed, you likely lost a ton of money. At that point, you lost time, you have sunk costs, opportunity costs, and you just have to move on. Because there are other things. There are other things to get to And yeah, like don't let the effort and the feelings really keep you from doing the correct thing.

    Paul Barausky 26:54

    So that is awesome. Two things. One is I'm as we neared the end of our time, I'm never playing cards with you because you clearly are emotionless in your decision making. Well,

    Michael Melissinos 27:05

    it's you know, you just know the odds, like, what's the money in the pot? What cards do I have? What cards are on the deck, you know, all right,

    Paul Barausky 27:12

    take the medicine. I'm only saying this because I watched Rounders for the 12th time again last year, just get excited about emotionless decision making, and knowing what the odds are, and taking the most and not dying on a hill needlessly, which people do every day.

    Michael Melissinos 27:30

    "Proofread for spelling and punctuation":

    One of the best scenes, I think, is very small. It's like when Matt Damon and Ed Norton are going to the country clubs and playing because they're trying to get that money back for a stake, you know, to pay KGB back. He loses, or he folds at one of these country clubs. That guy bluffs them. And Ed Norton is pissed when, as they're leaving, he said, "Look, the move was to fold. That was the correct move." Like, yeah, I understand we're against the clock and all this. But again, those emotions will get you to do the wrong things. And because he was the best player in that movie, you know, his script is the best player in that movie, Matt Damon, he knew what the correct thing to do. And that is an adult responsible thing to do. Yeah.

    "Proofread spelling and punctuation":

    Paul Barausky 28:13

    "You got it. You nailed it. And I hate to compare investing with gambling, but we're talking about reading the ads, knowing when to walk away, and the immortal words of the gambler, Kenny Rogers: know when to hold them and know when to fold them. I'd love to ask you as the guy that runs distribution for CLE Real Estate and a whole lot different than what you do, but I'm always curious: do you have an institutional fund? Do you have retail investors? Are they public or non-public solicitation? So I can't talk about ours, but do you have funds open? What are you currently doing?"

    Michael Melissinos 28:47

    "I manage a private fund for accredited investors, so as long as they meet that definition, they can invest with me."

    Clint Sorenson 28:55

    "Yeah, Mike, what's your Twitter handle? How did people get in touch with you?"

    Michael Melissinos 28:59

    "I'm all over Twitter, mostly yelling negative things about the New York Rangers hockey."

    Paul Barausky 29:06

    "You can jump on the Stars bandwagon, email. By the time this drops, we might not be down."

    Michael Melissinos 29:11

    "I don't mind Dallas. I had Robertson on my fantasy team this year. So he did really well for me. I think I'm on the Florida Edmonton final."

    "Proofread spelling and punctuation":

    Paul Barausky 29:20

    I grew up in LA, you can get on that bandwagon. There's no playoff flyers guy by birth. Oh no, I'm with you. Panthers.

    Michael Melissinos 29:30

    The Panthers to me are again like a trend trader like ooh, this is that sneaky trend that no one everyone is dismissing like, "Nah, they got lucky beating the Bruins there. They were the second wildcard the last team in, they had a crappy year." You know, that kind of snuck by if Pittsburgh just won that stupid game at home. They wouldn't even have made the playoffs, but Pittsburgh blew it against the Blackhawks like epic fail, but that's the only reason at the end of the year that Florida got in, and now they beat the best regular season team ever. And now they got a one-oh lead against Toronto. Like, this is just one of those trends and like, "watch this one. You don't know, man?"

    Paul Barausky 30:21

    Well, I'll let you guys know I think the year I heard was of all the teams remaining, nobody's won a cup since 2007. And if we go back to Edmonton, who's really good when he going back to it feels like forever

    Clint Sorenson 30:34

    for hurricanes when my hurricanes won the cup back then, right? Yeah, yeah, hurricanes.

    Paul Barausky 30:38

    One. And it's been a long time for Toronto, but they're just

    Michael Melissinos 30:43

    '60s, I think. Toronto. Yeah.

    Paul Barausky 30:46

    What's the Twitter handle? Sorry. Yeah. The name of the Twitter handle.

    Michael Melissinos: 30:50

    "...is m mill. Xenos. So Mike Melissinos. So MLC knows, yeah, you'll find me on LinkedIn too. I have a Substack and a link on my Twitter as well. Website is MelliosXenos Trading. I know that's tough to spell.

    Clint Sorenson 31:04

    And then what's your podcast? You just started a podcast, which I can't wait to listen to all the time. So yeah,

    Michael Melissinos 31:10

    Again, Jerry Parker, you know, one of my idols. You know, as I started learning about trend following, we're good friends, we invest in each other, we work together. So we have a Talking Trends podcast. It's on Apple, Amazon, Spotify, and we recorded the video too. So you can see us get really animated about things. And we do that every week, every Friday. So we've done two or three so far, we've done two, and I did one solo because Jerry was busy one week. But yeah, we'll be doing it every week and talking about all sorts of stuff, markets, and everything else.

    Clint Sorenson 31:41

    Well, thanks, Mike. I'm a feature Paul will feature a paper by Man Group, which we didn't get to, but they talk about one of the top strategies when you have inflation, and it's all asset trend following, which I thought was pretty awesome, given where we are from a global perspective. So I think it'd be great. So we encourage all of our listeners to pick that paper up and also go to Mike's website. Listen to the podcast. That's it for me, Paul. Sorry.

    Paul Barausky 32:04

    It's great. Well, thanks for this episode. Appreciate it, guys. Thanks, Clint."

Melissa Shoemaker
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