Ian Dunlap is an investor with one of the highest win percentages in the United States. He is also the founder of Red Panda Academy, through which he teaches his blueprint for success to students who often have little to no experience with trading. Using completely custom formulas, Ian is able to teach in 30 days what took him years to grasp. In December 2018, Ian celebrated his third highest day in trading, earning US$56,000 in about 2 hours. Ian’s passion for investing is rooted in his upbringing. Growing up in East Chicago, Indiana, he didn’t come from an affluent area or a rich family. Perhaps what had the greatest impact on him was when a relative was taken advantage of by a dishonest investor. Through that experience, Ian witnessed the fear and distrust that can accompany investing.
“One of the biggest ones (mistakes I made) was not investing early enough in the market. I got started late at 24. And the stock market is the easiest thing to invest in.”
– Ian Dunlap
Worst investment ever
A college friend called Ian into his dorm room one day in 2005, showed him a social media website, and asked if he had seen it and if he was on it. Twenty minutes later, Ian had signed up for an account and was hooked, spending maybe two to three hours a day on the site. He was mainly using it for his party promoting and other businesses, and started using it to run advertising. He called a relative and said:
“Listen, I don’t call and ask you for anything. When I tell you this is the greatest thing I have come across in life, I’m willing to take the last of my money, if you will take some of your money (of which he had a lot), and invest in this company with me.”
His relative answered: “What the hell are you talking about? You’re in college … What do you know about investing in a technology company?”
It was clearly a different time for venture capital. His relative refused. He tried to get friends and other family members involved also but had the same response. And Ian was young black college kid. At the time, one of his friends worked at MySpace, which was the hottest thing that was being tipped to destroy Instagram. Referring to the website Ian wanted to invest in, his friend said: “I think this company is going to kill us … I know we have all the artists, all the kids are on here, but this thing that you’re on, is nothing like we’ve ever seen.”
It turned out that the US$125,000 investment, of which he would have put $10,000 of his own money, would have turned into $26.4 million. That company was what was known at the time as TheFacebook.com.
Now every time he sees his relative on the holidays, the relative says: “I probably should have given you the money you wanted.” Ian says we all have made such “boneheaded decisions”, when if we would have just invested a little bit of capital, it would have changed our lives forever.
- Be more convincing. Ian laments not being persuasive enough to get the family member (or anyone else) to put in some money so they could invest in Facebook (FB:US, FB.OQ), which is currently trading at around $195/share (Facebook initially offered its stock at $38/share on May 18, 2012). Facebook turned into one of the biggest tech companies in history, and he regrets not following up more and failing to make a better case for the investment.
- Stay true to your convictions. Whenever you have a position that is true to your heart and you know it is going to work, you may be the only person on the face of the earth that believes it, but you have to let your conviction carry you.
“Most top investors did not start out in the industry. They took back roads, got into the industry and formulated their own strategy. And that’s how they became so effective.”
– Ian Dunlap
- Investigate. When you see a business that you think is interesting, investigate it, ask questions, and find out if you could invest in it.
- At some point, an investor has to take action. But do not act without doing research. Do not act without assessing the risk.
- Size your position. This is a critical risk-management concept because sizing your position matters so much. Investigate, do your preliminary research, and try to invest US$10,000 (if you have US$100,000 liquid) to get the first step of taking the action going, but then size that position carefully.
Put some money into the market every month. Start with a small amount. Then you will have the financial freedom that you want. Even in a down market, especially when we hit a recession in a couple years, buy more.
“I always tell people just buy index funds, hold them … You don’t have to be the second coming of (Warren) Buffett to make money, just buy the S&P 500, the Dow or the equivalent in your country. I got started late. That’s why I’m so passionate about it.”
– Ian Dunlap
No. 1 goal for the next 12 months
To have a more balanced life. The money is fun but first and foremost, take care of your health.
“I’ve had 14 family members die in 17 years. At no funeral have I ever thought about business. Not once. I didn’t care about a chart, long-term, short-term. It doesn’t matter. Take care of your health. That’s the most important thing. The money will be there … especially if you’re investing automatically.”
– Ian Dunlap
Listen to every past episode (of My Worst Investment Ever) so you don’t make the dumb mistakes that me and the other guests have made.
You can also check out Andrew’s books
- How to Start Building Your Wealth Investing in the Stock Market
- My Worst Investment Ever
- 9 Valuation Mistakes and How to Avoid Them
- Transform Your Business with Dr. Deming’s 14 Points
Connect with Ian Dunlap
Connect with Andrew Stotz
Further media mentioned
- Michael Lewis (2010) The Big Short: Inside the Doomsday Machine
- Gregory Zuckerman (2009) The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson Defied Wall Street and Made Financial History
- Michael Burry (2006) A Primer on Scion Capital’s Subprime Mortgage Short
- Adam McKay, director (2015) The Big Short