Ian Dunlap – Always Stay True to Your Convictions

May 7, 2019

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Ian Dunlap is an investor with one of the highest win percentages in the country and founder of Red Panda Academy. Through Red Panda, Ian 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 most 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 and showed him a social media website, asking if he had seen it and if he was on it. Twenty minutes later, he had signed up for an account and was hooked, spending maybe two to three hours a day on the site. He mainly using it for his party promoting and other business, 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 (he had a lot of money), 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?”

This clearly was a different time for venture capital. His relative refused. He tried to get other friends and other family members involved also, but got the same answer. And Ian was young black college kid. At the time, one of his friends worked at MySpace, which at the time 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 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”, in which if we would have just invested a little bit of capital, it would have changed our lives forever.

Some lessons

Be more convincing. Ian laments not being persuasive enough to get the family member to put in some money so they could invest in Facebook (FB:US, FB.OQ), which is currently trading at - US$190.56/share. 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

Andrew’s takeaways

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 step of taking the action going, but then size that position carefully.

Actionable advice

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

#1 goal for 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 died 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

Parting words

“Listen to every past episode (of My Worst Investment Ever) so you don’t make the dumb mistakes and that the other guests made.”

You can also check out Andrew’s books

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