Buying a potential bottom, before you actually see the bottom. Buying the IPO of the next hot tech company at a sky high valuation. Buying just about any SPAC. LOTTO options. A lot of micro-CAPS. And nearly all Genomics plays. (Okay, I’ve probably offended the rest of my readers by now) 😂
I’ve done all that (and more). But if you’re speculating, you absolutely need to practice risk management. No matter how confident you are that you’re right, you will be wrong. Maybe not the first time, or the second, but eventually you will have gotten it wrong. So position size is key.
To me speculative plays are a bit like Blackjack, it’s a gamble, but there are also some statistics that can help keep it an even playing field, and if you’re good at counting cards, you can make a lot of money.
My friend @Drowsyinvestor
and I like to call it “Broken Clock Investments”. For me that means “because we’re always right sometimes! 😏 And really, that’s all you need to be right if your positioned correctly”. Drowsy takes a slightly different view “When the clock is right, it can change your life” ❤
We both agree, when speculating: Remember if the investment goes bad, a little is all you want, and if it goes well, a little is all you need.