Don’t invest like Andrew Dawood – you may never be so lucky.
The Dubai-born Egyptian turned around $ 50,000 in savings into $ 1.7 million on a series of white knuckle bets on Bitcoin BTCUSD (+ 3.71%).,
Chinese electric vehicle manufacturer NOK NOK, -0.80%,
and video game retailer GameStop Corp. GME, -5.47% over four years, he told MarketWatch in an interview.
He can technically call himself a millionaire; But he’s risking everything to hit a goal of more than $ 3 million by 2025.
Dawood’s story represents, in many ways, the new breed of Wall Street shopper, intent on creating wealth and willing to make oversized stakes in hopes of minting a shipload of money on Wall Street – even if it is the one entire bet at risk.
Dawood, who works as a flight attendant for one of the world’s largest airlines (he declined to identify the company by name), said he had saved around $ 40,000 over four years, including the entire amount on the Bittrex exchange in, among other places Bitcoin invested an average price of around USD 4,200 between August 13th and 28th, 2017 with 9.71 tokens.
MarketWatch reviewed the trade slips it shared to confirm its transactions.
“In my opinion, I’ll sell it and be more than happy if it costs $ 5,000 or $ 6,000,” the 31-year-old told MarketWatch.
Then a mishap struck and he wasted 3.95 bitcoins trying to increase his stake in the digital asset by selling it as the price rose in hopes of buying more if it lost value.
“But it did not work. Every time I sold it just went up and I quickly bought again. I kept repeating it over and over and reduced my bitcoin to 5.76 bitcoin, ”he explained.
It turned out to be a bug and by that point had withdrawn about $ 70,000 from his account.
Dawood said he eventually sold his remaining bitcoin to a man he met through www.localbitcoins.com, a website that brings crypto buyers and sellers together and promotes person-to-person transactions.
The buyer wanted to transfer the proceeds of the sale to him, but Dawood was more comfortable meeting in a public place. Dawood arranged to meet at a nearby shopping mall in Dubai.
He accepted 370,000 Emirati Dirhams AEDUSD, 0.00,
that’s roughly the equivalent of $ 100,000 at the time in exchange for his 5.76 bitcoin.
“I counted that [money] and then deposited [it] in my 2 bank accounts in separate transactions.
For most people, this is where the story ends, especially after making a profit of almost 4 bitcoins on his crypto foray.
However, Dawood was eager to find a new investment. For example, on January 23, 2020, he bought 15,500 shares of NIO at $ 4.64 and another portion of 6,565 shares at $ 4.12 days later when the stock slipped before making a final purchase of 2,055 shares at 12 in July. $ 79.
In total, he held on to more than 24,000 NIO shares, which cost him just over $ 125,000, including an additional $ 25,000 accumulated from winning bets at Organigram Holdings OGI (-0.42%) .,
and Canadian cannabis company Aphria, which was bought by rival Tilray Inc. TLRY, + 7.87% in a deal announced earlier this year.
Almost a year after its purchase in January 2020, Dawood sold its 24,000+ shares in NIO in December, which were bought at an average price of $ 7.18 to $ 46.603 for a total of $ 1.124 million.
Sax Bank trading extracts from Andrew Dawood
Then he took the money from his NIO investment and poured the entire sum into GameStop Corp. GME, -5.47%,
Purchased more than 50,500 shares on December 28, 2020 for approximately $ 22.
“It’s a stupid move, I agree,” he told MarketWatch. “And my friends and family all told me not to do it.” But Dawood did it anyway.
Against a backdrop of a stock market awash with central bank liquidity around the world and a prevailing low interest rate climate that has encouraged investors young and old to explore potential avenues, the stories of exciting investors seem to be growing in the Berkshire Hathaway BRK. A, + 0.54% BRK.B, + 0.77% CEO Warren Buffett or Peter Lynch grimace.
Brokers who offer commissions without commission are riding this wave of new investors. For example, Fidelity Investments announced that 4.1 million new accounts were added in the first three months of 2021, an increase of nearly 160% over the same period last year. And the surge in individual investors earlier in the year was due to many brokers taking a bump in 2020 when trading platforms added 10 million new accounts, according to JMP Securities, as stuck investors used pandemic stimulus funds to place stock bets.
Art Hogan, National Securities chief marketing strategist, said that “there are literally thousands of stories” like Dawoods that “worked the other way round.”
“To me, this is a great side story that really has nothing to do with investing, but it is in the nature of what it happens,” said Hogan.
The Dow Jones Industrial Average DJIA, + 0.81%,
The S&P 500 Index SPX (+ 0.39%) and the Nasdaq Composite Index COMP (-0.07%) have seen choppy trading for the past few weeks, but the indices are not far from record highs as investors grappling with the prospect of higher inflation and a sizzling contribution -pandemic economy.
Read: Will individual investors stay after the “breathtaking” share trading spurt from the pandemic?
A recent article in the New York Times made crypto trader Glauber Contessoto famous after documenting the 33-year-old’s failed leveraged bets on “meme” asset Dogecoin DOGEUSD, + 0.15%,
That had made him about $ 2 million from early to mid-May.
Dogecoin has since seen a steep decline along with the rest of the crypto complex.
See: Individual investors are back – that is what it means for the stock market
Dawood says he wants people to know his story because he thinks too few of his friends and people his age are investing and he believes that saving is not enough to create wealth.
There are a few things you should know about Dawood’s GameStop bet. If he had been just as patient with his GME bet as he was with NIO, he would have been a millionaire many times over.
His shares would have been worth $ 17.5 million if he’d sold GameStop around the peak in January, and those stocks would still be worth around $ 12 million if he’d owned them today.
But he says he sold them for $ 33 because a paper win isn’t a profit at all.
Even so, Dawood expanded its portfolio to around $ 1.7 million. Nothing to sneeze in, but hardly the money he could have made.
Does he have any regrets? “Of course,” he said. But he lives with it.
What did Dawood do with the proceeds from GameStop?
He put it back in NIO and it will stay there until it reaches $ 100. He has already lost part of that bet. NIO is trading at $ 37.92 as of Wednesday, or roughly half where Dawood originally bought it.
In the meantime, he has topped his income by selling covered calls against his investment portfolio. A call is an option that gives the holder the right, but not the obligation, to buy the underlying asset at a specific strike price at a specific point in time.
By selling calls, Dawood is effectively betting that the price will not rise above the strike price while collecting the premium paid by the buyer for the option.
Check out: How an option trading frenzy lifts stocks and arouses fears of a market bubble
If the value of his shares rises above the exercise price, he pays the option buyer the difference between the share price and the exercise price. If the stock falls or does not rise enough to hit the strike price, it retains the premium paid by the option buyer. With this strategy he has earned tens of thousands so far and lived part of this income from NIO and most recently invested in NIO.
Dawood is currently on an eight month unpaid vacation from its airline gig as much of the world tries to get out of COVID. Its expenses are minimal.
His company pays for the apartment he has lived in for several years, and he drives a humble vehicle for a budding millionaire: a 2011 Ford Figo:
Andrew Dawoods 2011 Ford Figo
He said he plans to end his high-risk parlays once it hits $ 3 million. At that point, he could buy real estate and buy something more stable and secure than meme stocks and crypto.
“I’ll tell you, when you think about such things, if you say to yourself,” If I get that amount, I’ll quit “or whatever your goal is … you really just roll the dice,” the National Securities. Hogan added.
“Congratulations to him, as it turns out so far … but this is not an investment, it is a gamble,” said Hogan.
Right now, Dawood isn’t blinking despite the recent NIO slump. “I believe in NIO,” he said, and “Tesla Inc. TSLA, -0.12% was too expensive for me,” he said.