Freedom Fighter Interview #13 – Michael Melissinos

Gen Y Finance Guy Freedom Fighter, Interview 16 Comments

Today we have the 13th in a series of interviews. Our guest is Michael Melissinos of  Melissinos trading. Micheal went to work on Wall Street after he graduated college to pursue his passion for trading. He quickly realized that Wall Street proper was not the right place for him to achieve the vision he had for his life. Determined to make an exit and start his own firm, Michael began studying the markets and different approaches. He developed his strategy and started trading client capital in 2011.

Now I will turn it over to Michael…

Michael Melissinos

1) Who are you and what do you do? What is your story? How are you fighting for your Freedom? Where did you start, where in the journey are you, and where do you ultimately want to end up?

My name is Michael Melissinos and I’m a trend-following fund manager.

I left Wall Street at 24yrs old to pursue a life of service to like-minded investors by committing to my passion of trading. After working at Bear Stearns through its collapse and at JP Morgan during the Financial Crisis, I quickly realized that Wall Street would not allow me to achieve any kind of freedom; maybe financially, but definitely not emotionally, physically or spiritually. Both of these market events made me question the traditional investing approach, the static, non-adaptive and non-diversified buy-and-hold approach.

Following Bear’s collapse, I began researching different ways to approach markets. I wanted to move away from the traditional style that only invested in stocks and bonds, that only made money on the long side and didn’t manage risk well, especially when markets turned downward. I wanted a style that was practical, didn’t need the ability to predict market movement in order to win and could adapt to the ever-changing market trends; a system based on timeless principles that could work in other areas of life as well.

Finally, in late 2010, I solidify a trading system that works (according to my research) and I’m compatible with. My strategy is built on diversification (trading trends in all markets; currencies, fixed income, commodities and stocks), trading with the long-term trend, riding winners and cutting losers.

I began trading client capital in January 2011. Since that time, I’ve produced one of the better track records amongst my peers and my client-base has grown from 4 to 30; AUM has grown about 10x.

My goal is to be the best diversified trend-following trader on the planet and to continue to serve like-minded individuals who are looking to grow their capital aggressively in a practical, systematic and disciplined manner.

Going forward, I see myself managing $20-50M within the next three years and maintaining one of, if not the best track records in the industry.

2) What is your favorite Quote or Mantra that you live by?

“Intention equals Result” – Ed Seykota.

I prefer and enjoy very direct language and thinking. I do not believe in “cause and effect” but “intention equals result.” I believe the results we get directly stem from how we structure our lives, namely how we behave. This quote reminds me that I’m responsible for everything that happens to me; I must not blame anyone or anything for what occurs, and I must not complain either.

3) Where in the world are you from?

I was born in New Jersey. I currently live in NYC and on the NJ shore.

4) What is the worst financial decision you have ever made?

Not starting my money management business earlier; I waited 6-9 months too late and I missed some good trends in 2010.

5) What is the best financial decision you have ever made?

Continuing to invest in my trading system through it’s roughly two-year flat/losing streak from late 2011 to mid-2013.

6) Are you a morning or a night person? What time do you wake up and go to sleep?

From birth to about a year ago, I was a huge night owl. Now, I have a hard time staying up past 1130pm.

I wake up at 6am and go to bed at 10-1030pm.

7) What is your definition of Financial Freedom? And what is your FREEDOM number?

I define Financial Freedom as the ability to live within a budget while allowing for room for a few small mistakes. Many people do not leave themselves a buffer between their monthly income and expenses, so if/when an unexpected financial setback occurs (something breaks, an injury or illness, etc), they cannot calmly handle the situation without borrowing money. If I have to sum up the definition even further, I think it’s the ability to live within your budget without ever having to borrow money.

My Freedom number is having at least 10x of my monthly expenses in savings (which does not include investments).

8) What is your favorite Asset Class to invest in (i.e Real Estate, Stocks, Bonds, Peer to Peer lending, etc)? Why? And what platforms do you use (i.e TD Ameritrade for stocks, Realty Shares for Real Estate, Prosper for Peer to Peer lending, etc.).

I prefer trading the asset class that presents the most opportunity for profit. Opportunities ebb and flow between market sectors over time. In my fund, I trade futures markets due to the ability to diversify easily, get in and out of markets easily and the low costs.

I trade using institutional trading platforms and my own proprietary software.

9) What is your favorite online financial resource, paid or free (i.e. Mint, Personal Capital, blogs, podcasts, Tasty Trade, etc.)?

I prefer podcasts, and to a lesser extent, blogs.

10) When it comes to building wealth, do you spend more time figuring out how to cut expenses or increase income? Why?

Both are important, but if I have to choose, I pick increasing income. Major profit opportunities do not come around very often. When they do, you have to pounce otherwise you may be waiting around a long time before another one comes along. We don’t live forever, so we have to be efficient at capturing income opportunities to maximize our standard of living while we’re alive.

11) How many hours a week do you watch TV? What’s your favorite show?

Under 5 hours. I love The Profit on CNBC and I love anything that has to do with nature. Recently, my favorite nature show is Cosmos (with Neil Degrasse Tyson).

12) If you had to recommend 1 book, what would it be? And why?

Govopoly in the 39th Day” by Ed Seykota.

I believe we’re at an interesting point in history, a turning point if you will. A point where the old regimes are giving way to a new economy, an economy built on innovation, trust and transparency. Today, the regimes control people and stifle competition. This eats an economy and society from the inside out – like a parasite eats a host. Thankfully, when the parasite kills the host it also kills itself. I believe the new society will emerge when the parasite kills off the rest of the host (the current economy). I think the new economy will rival the industrial revolution for the top spot of the best economic expansion of all time.

But, in the process of getting to a better economy, the current structure needs to die. The death process will likely be a volatile and tumultuous one. To handle the shift, people need a plan to survive financially; people in the US do not want to end up in a position like citizens in Greece or Puerto Rico.

Ed’s book outlines the current economic situation, how it’ll likely shift to the next phase and he presents a plan to handle the shift. His direct language and explanation, I believe, are a work of genius and really help people understand what he’s talking about and how to take action.

13) What is the best piece of advice you have ever received or what advice would you give to the readers?

You are responsible for everything that happens to you. No matter what, you can always do something to improve or change your situation. You have the power to make change. What stands between our current situation and our desired one are the feelings we’re unwilling to feel.

For example, today’s western society has an obsession with money. Many people want to be rich or just wealthier than they are. One thing that keeps them from attaining wealth is patience. Given the trend in technology the past couple of decades, we as a society, do not like the feeling of patience. We don’t want to feel it so we do everything we can to medicate it – usually through using more technology. If we come to understand the positive intention of patience, we may be able to structure our plan to obtain wealth more efficiently and quickly.

14) What does living life by design look like to you? A typical day, week, month, year, or whatever?

My daily routine:

6-9am – 1) Mobility, stretching, deep belly breathing and a few yoga poses to get the endorphins pumping and cobwebs out; 2) Journal – a) what do I feel grateful for?; b) how do I feel about my plan today?; c) what good shall I do today?; d) What is my purpose, and how do I envision it?; 3) Eat and decaf coffee.

9-12pm – Priority tasks (these typically include writing educational marketing material for investors, writing my book, conducting trading research or some other creative task that helps advance my business)

12-2pm – 1) Read and eat; 2) text friends and comment on some social media posts.

2-6pm – 1) More priority tasks (prospecting, administration work, writing and/or trading research); 2) Gym

6-1030pm – 1) Eat; 2) Stretch, soft tissue work and deep breathing; 3) Read my book; 4) Make dinner with or for my fiancée; 5) Hang out with my fiancée or with friends; 6) Journal – a) how do i feel about today?; b) how do I intend to maintain or improve upon today’s performance? (trading, fun, friends, fitness, mindfulness); c) what do I learn today?; d) what good have I done today?; 7) Sleep

15) What is holding you back from living life by design?

I currently design my life according to my goals and interests. Sometimes I put goals on hold and this likely has to do with a fear of commitment or some other feeling I’m not willing to feel.

16) Where can we find you online? If you’re a blogger, this is the perfect plug to talk about your blog and why it’s great.

My firm website – www.melissinostrading.com

My personal website – www.michaelmelissinos.com

Twitter – https://twitter.com/mmelissinos

Thanks.

Mike

Comments 16

  1. Hi guys. Please feel free to ask me any questions. I’ll answer them here in the comments section. Thanks.

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    Author

    Hey Michael –

    It was a pleasure having you on the blog today. I have a few questions myself if you don’t mind:

    Are you technically running a Hedge Fund?

    What is the minimum investment to access your fund?

    Do you need to be an accredited investor?

    Cheers!

    1. Are you technically running a Hedge Fund? I operate a fund that is registered with the NFA and CFTC; exempt from SEC registration. I trade futures markets not securities like many “hedge funds”.

      What is the minimum investment to access your fund? Please see the Performance page on my website for information on the minimum investment amount. In general, I place more emphasis on the personal qualities of the investor and much less on the dollar amount they plan on investing.

      Do you need to be an accredited investor? Yes. But I do have plans on opening the fund to a small number of non-accredited investors.

  3. Hi Mike, thank you for sharing your life experiences, thus far. Some questions come to mind, no problem if you prefer privacy.
    1) what was your salary and position when laid off from J.P.Morgan?
    2) what is your income from managing your hedge fund today? What overhead expense do you charge the fund?
    3) how did you meet your fiancée, and what do you plan for your life together? (kids? travel? FI/RE? school? goals? etc?)
    4) is your family-of-origin:-) supportive of your trading and fund management?
    5) what is your fund’s performance year-over-year in comparison to the S&P500?

    Thanks! Your life looks like you have managed it into a pretty sweet routine, and continued success to you.

    1. 1) I don’t care to comment on the specific amount, but I held an entry-level position.
      2) I don’t care to comment on my income. Overhead can range from $5-20k depending on how “institutional” you want your operation to be.
      3) We met in high school and got together several years later. We plan to do what we like doing – working while doing our jobs well and traveling.
      4) In the beginning, they felt skeptical…not so much anymore.
      5) Please see my website for my performance numbers http://www.melissinostrading.com

  4. This seems like a paid advertisement for the fund instead of a FI story.

    GenY, what is the purpose of this story when anyone can get FI running a fund, taking a % of fees AUM and then the fund will definitely not outperform VTI and yet the fund manager makes millions?

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      Author

      John- this was not a paid advertisement and I am sorry you don’t see the point of sharing a story that doesn’t resonate with you.

      I wish everything published on the blog would resonate with every reader, but that would be a fools goal.

      Have you read any of the prior freedom fighter interviews that you could resonate with?

      I also don’t agree that anyone can get rich managing a fund. You have to be able to raise money first and even then it’s no guarantee to riches.

      At the end of it all, everyone has a unique story and my goal with these interviews is to showcase as diverse a selection as possible.

      Cheers!

      1. Yes, a few of the past stories did resonate and even if it was not directly relatable they did make sense.

        I hope most of the blog audience realizes that AFTER fees, the investor in hedge funds will not come out ahead compared to if they invested in low cost index funds (from Vanguard) and periodically re-balance.

        1. John, I wonder what evidence you can present to justify your claims regarding investor returns in different vehicles, such as hedge funds and “low cost index funds”.

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          Author

          John – Glad that some of these have resonated with you in the past.

          I think it is very difficult to put a blanket statement over an entire industry. As there are money managers that have outperformed the indexes after fees. People like Warren Buffett and Ray Dalio come to mind. Who knows, Mike just might be one of those managers.

          I think we also have to remember that these types of decisions need to be made based on individual goals and circumstances.

          Thanks for helping create additional conversation in the comments. Always good to keep people thinking.

          Also would love to see some links to studies that have facts around some of the statements you have made with respect to hedge funds performance after fees vs. Vanguard passive index investing.

          I know there are a lot of studies out there that show something like 80% of mutual fund money managers under performing the indexes after fees, but I have not seen or read much in regard to hedge funds.

          Cheers!

          1. GYFG, here is a link for what you want, from Bloomberg written by Ritholtz. http://www.bloombergview.com/articles/2015-02-12/hedge-funds-underperform-as-investors-give-them-more-money Additionally, just this year WSJ, Fortune, and Goldman have all put out articles/papers echoing Ritholtz; the fund charges are usually a 2% fee plus 20% of the profit, which makes the net to investor less (while taking greater risk) than a simple Vanguard (or other) index. Vanguard and Fidelity both charge a 0.05% fee on the greater market indices. For a $1,000,000 portfolio, that is $500/year.

            Mike, I did find your story of interest and wish you well. What you are selling is your ability and proprietary screen for investments. So please don’t be too hard on people who are looking for hard answers on investment performance in a very scary environment.

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              Author
  5. Mike, a bit late to the party here haha & having read the comments it’s a shame it was interpreted as a pitch rather than simply a story about someone with a bit of ambition 🙂

    Loved reading your transformation from employee to owner, mindset & philosophy.. It seems you’re in a great place to give back as well, which is awesome too

    Would love to connect & I’ll reach out through the methods you’ve suggested!

    Cheers for bringing this FFI (freedom fighter interview) Dom, great to see stories that vary 🙂

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