The world was emerging out of the worst financial crisis since the Great Depression. Unemployment skyrocketed to all-time highs, global financial institutions went under, and the stock market crash of 2008 led economists to title this time period “The Great Recession.” During the week of October 6, 2008, stock markets around the world fell by over 15%. Internationally, Indonesia halted trading after dropping 10% in a day, Iceland closed its markets for three days after plunging 77%, and there was widespread panic in England after substantial drops in the London Stock Exchange. The head of the International Monetary Fund (IMF) warned that the world financial system was teetering on the “brink of systemic meltdown.” Business Week called it the “Panic of 2008.” While many investors approached the market cautiously, one investor decided that the timing was perfect to dive in. He decided to invest his entire net worth in the stock market during the panic.
David began investing at the age of 13 when he used his savings to purchase shares in two companies. His first investment grew 50%, but his second one – in American Online (AOL) – grew 5,000% before he sold it. His successes allowed him to pursue a finance degree at the University of Florida where he earned an academic scholarship and graduated cum laude in 2003. Not all of David’s investments had happy endings. Like many investors, David found himself part of the dot com bust, but that taught him a valuable lesson: real investment analysis requires more than luck. Everyone knew the saying, “Buy low, sell high,” but no one knew the ultimate question of when to buy and when to sell. It took David 10 years to find those answers.
After college, David went to work on Wall Street as a valuation analyst for mergers and acquisitions. As his experience grew, he started developing unique valuation formulas and methodologies that proved insightful for investing in the stock market. Initially, he dismissed his findings, but after several years, all of his research proved right, so he started using those techniques to invest his own money in the stock market. As a result, David had great investing success. His analysis foresaw the Great Recession, so David decided to cash out of the stock market and use his profits to travel around the world for a year.
It was during his travels that David had the opportunity to read The Intelligent Investor by Benjamin Graham. This book was hailed in the financial world as the “Bible of Investing.” It preaches a fundamental value investing approach that Warren Buffett used to become one of the world’s greatest investors. “When I read the book, I was immediately able to piece together how the entire market functioned and how to pick the best investments,” said David.
While staring out the oversize window of a truck going down a dusty road on safari in Africa, he discovered how to fully implement Graham’s teachings. What it required was David’s valuation techniques and some modern-day technology. It was then that David crafted a 20 page investing thesis that he scribbled in the margins of his travel journal.
David returned to the US during the financial crisis. Lehman Brothers had gone under, the stock market was plummeting, and his ill-timed sabbatical meant there weren’t any jobs. With only $3,000 dollars in the bank, David found himself at a crossroad. In order to survive the recession, he needed to make money any way he could. With little chance of employment, he was left with the stock market, which was in significant disarray. He started researching thousands of companies, whereas the normal analyst on Wall Street was responsible for 10 to 20. David had never implemented his theories and ideas on such a large scale, but his early experience paid off. He found numerous undervalued companies, but didn’t have money to invest. That’s when he hatched a plan.
David went back to the University of Florida to consult with his old Finance professor, Dr. Andy Naranjo. Naranjo found his valuation theories fascinating and he said, “the only way to prove that your theories work is to do something bold and undeniable.”
Finally, An Entrepreneur
Following that meeting, David made one of the toughest decisions of his life. He decided to liquidate his 401k and max out all his credit cards. He poured the money into the stock market. Then, he used margin (brokerage debt) to gain even more leverage. David made a huge bet that his research was correct. A single mistake would have resulted in bankruptcy. His risk-adverse mother didn’t speak to him for three days after he confessed to what he had done. This all-in bet was the boldest thing he had ever done, but to David, risk is not defined by volatility; instead, risk is the threat of buying overvalued investments. As such, his gamble was always a smart – but nervous wrecking – move. Success would have been undeniable.
David used his valuation analysis to pick the very best investments. Two years later, those original investments resulted in stock market gains of over 1,200%. His investing methodology is now part of a company he created called WikiWealth.com. WikiWealth has the largest breadth of comprehensive investment research in the world. David “founded WikiWealth to mobilize the diverse talents of Main Street investors to produce the highest quality investment research. Now everyone can meet their investment goals as he did.” David believes that investors deserve the highest quality research. He spent two years creating that research, but that was only the beginning of his entrepreneurial future. Note: David eventually sold WikiWealth in 2016.