Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
I got this friend...
Old 05-03-2008, 01:27 PM   #1
Thinks s/he gets paid by the post
redduck's Avatar
 
Join Date: Mar 2005
Location: yonder
Posts: 2,052
I got this friend...

OK, I have this friend (no, it's not me), who put his entire IRA (about $60,000) into cash and then yesterday bought $60,000 of DNDN (Dendreon) a biotech stock at about $5.29 a share. He's about 62-63 years old, almost owns his house, and has no other real savings. He still works. He says buying DNDN was a move of desperation. I suggested that with what ever money he may have left that he invest in a small caliber pistol and a bullet. However, we have a mutual friend who really did well the last time DNDN had a huge run-up, sold it before it dropped, and could have launched into retirement with his earnings, but decided not to.

Has anyone here made an investment mainly out of desperation (or, just on a wild-ass tip) and actually had it work out?
__________________

__________________
redduck is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-03-2008, 01:38 PM   #2
Recycles dryer sheets
 
Join Date: May 2006
Posts: 442
Don't tell me he got an e-mail telling him to buy this stock. At his age it's just crazy to take large risks like that.
__________________

__________________
dmpi is offline   Reply With Quote
Old 05-03-2008, 01:39 PM   #3
Thinks s/he gets paid by the post
2B's Avatar
 
Join Date: Mar 2006
Location: Houston
Posts: 4,330
Quote:
Originally Posted by redduck View Post
OK, I have this friend (no, it's not me), who put his entire IRA (about $60,000) into cash and then yesterday bought $60,000 of DNDN (Dendreon) a biotech stock at about $5.29 a share. He's about 62-63 years old, almost owns his house, and has no other real savings. He still works. He says buying DNDN was a move of desperation. I suggested that with what ever money he may have left that he invest in a small caliber pistol and a bullet. However, we have a mutual friend who really did well the last time DNDN had a huge run-up, sold it before it dropped, and could have launched into retirement with his earnings, but decided not to.

Has anyone here made an investment mainly out of desperation (or, just on a wild-ass tip) and actually had it work out?
I hate to say it but he's probably doing the right thing. His $60,000 comes no where near what he needs to even think about retiring. At 62-63 he's had a full life of pissing away his money so I can't think of anything else to do but piss away what little he hadn't already pissed away.

If things flop as they probably will, he's not much worse off than before. If it goes up to $50, he might be able to start a reasonable portfolio to go into retirement in a few years. I'm sure he won't since after a big score like that he's sure he'll find another one.

No. I've never made a wild investment with a massive amount of my portfolio. I've made a few small commitments on tips and guesses and they generally did poorly. That's what's driven me to my asset allocation and to low fee, index funds.

I'm sorry about your friend. He's an addict and you can't really stop him. He has to decide he's hit bottom and get out of it himself. His life can have meaning, if for no other reason, as a bad example for the rest of us to not live like him.
__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
2B is offline   Reply With Quote
Old 05-03-2008, 01:42 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
mickeyd's Avatar
 
Join Date: Apr 2004
Location: South Texas~29N/98W
Posts: 5,880
Quote:
entire IRA (about $60,000)
At age 62-63 this limited number would scare the heck out of me. The undiversified investment of 100% of IRA funds in a single stock is not desperation, it is sheer lunacy.
__________________
Part-Owner of Texas

Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. Groucho Marx

In dire need of: faster horses, younger woman, older whiskey, more money.
mickeyd is offline   Reply With Quote
Old 05-03-2008, 02:03 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
kcowan's Avatar
 
Join Date: Jul 2006
Location: Pacific latitude 20/49
Posts: 5,700
Send a message via Skype™ to kcowan
We bought 40k shares of a startup when we were still working and had plenty of income (>$350k). It had been researched by our broker, we met the founder and executive team, we reviewed their business plan and everything seemed good so we went for it at $0.88 per share. We sold half of it when it got to $6.50 and the remaining 20,000 shares when it was at $9.15 in September.

These things don't come along very often but they are worth it if you can handle volatility. Often they produce handy tax loss selling in December. The broker has presented several others since and none have been stars. A couple doubled. But several just bumped a long and gradually dropped.
__________________
For the fun of it...Keith
kcowan is online now   Reply With Quote
Old 05-03-2008, 02:25 PM   #6
Moderator Emeritus
CuppaJoe's Avatar
 
Join Date: Jun 2007
Location: At The Cafe
Posts: 6,866
No, I'm not a risk-taker myself but I know a guy who knows a guy who plunked $10,000 in GOOG when it was a startup. Now I know a guy who knows a guy who is a billionaire.
__________________
CuppaJoe is offline   Reply With Quote
Old 05-03-2008, 02:34 PM   #7
Thinks s/he gets paid by the post
 
Join Date: Dec 2007
Posts: 4,764
Could have hit Vegas and threw it on black. At least its almost a 50/50 chance to double his money
__________________
Notmuchlonger is offline   Reply With Quote
Old 05-03-2008, 03:56 PM   #8
Thinks s/he gets paid by the post
 
Join Date: Apr 2007
Posts: 1,304
Quote:
Originally Posted by redduck View Post
OK, I have this friend (no, it's not me), who put his entire IRA (about $60,000) into cash and then yesterday bought $60,000 of DNDN (Dendreon) a biotech stock at about $5.29 a share. He's about 62-63 years old, almost owns his house, and has no other real savings. He still works. He says buying DNDN was a move of desperation. I suggested that with what ever money he may have left that he invest in a small caliber pistol and a bullet. However, we have a mutual friend who really did well the last time DNDN had a huge run-up, sold it before it dropped, and could have launched into retirement with his earnings, but decided not to.

Has anyone here made an investment mainly out of desperation (or, just on a wild-ass tip) and actually had it work out?
IMO, this is a result of desperation. Instead of giving some legitimacy to his gambling, he should just go to the nearest casino and put the $60k on red or black 3 time and then have somewhere between $0 and $180K.
Sorry to hear that he is in such a bind. This is not good.
If it were me, I would be forced to hold onto the J*B.
__________________
Life is GREAT!
megacorp-firee is offline   Reply With Quote
Old 05-03-2008, 04:45 PM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,614
If I were in his shoes, I still wouldn't do it. Sure, $60K isn't enough to retire on, but the marginal utility of $60K to a 63 YO with no other savings is immense. Okay, so you'll still have to keep working--wouldn't it be nice to at least take a vacation every year, or travel to see your kids? Wouldn't it be nice to not lose your home if you are out of work for a year?

A desperation gamble like this only makes sense if the marginal utility of the larger sum is greater than the lesser sum. For example, I remember a fictional story about a guy who had only half the money he needed to go to med school. He wanted nothing more than to be a doctor. He could get no financial aid. His plan: go to Vegas and bet the entire wad on red or black. If he loses, he joins the Army, they pay for his med school, and he pays them back with some years of service. Thus, if he wins the bet he's good, and if he loses the bet he's only slightly worse off than he was with only 50% of the cash he needed.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline   Reply With Quote
Old 05-03-2008, 05:44 PM   #10
Recycles dryer sheets
barbarus's Avatar
 
Join Date: Aug 2007
Posts: 433
Quote:
Originally Posted by 2B View Post
At 62-63 he's had a full life of pissing away his money so I can't think of anything else to do but piss away what little he hadn't already pissed away.
I'm sorry about your friend. He's an addict and you can't really stop him. He has to decide he's hit bottom and get out of it himself. His life can have meaning, if for no other reason, as a bad example for the rest of us to not live like him.
He might well have squandered his money on good living, but it is equally possible that he may have just never earned much to begin with. For any number of people the sum of 60kilobucks represents a lifetime of frugality.

The firearm investment advice is a valid one though, because his money is almost certainly about to depart from his sphere of influence.
__________________
Consult with only myself as your adviser or representative. My thoughts should be construed as investment advice of the highest caliber. Past performance is but a pale shadow and guarantee of even greater results in the future.
barbarus is offline   Reply With Quote
Old 05-03-2008, 05:46 PM   #11
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,031
When my FIL realized in his fifties that he did not have nearly enough saved up for retirement, he started making large gambles with his money in an effort to catch up. First he tried trading futures. He lost about $50K with that. Then he decided to buy a huge mansion in the northeast to cash in on the RE boom. He bought a bit late in the cycle, ended up putting a lot of money in the house (lots of costly repairs + insane taxes and heating costs) and by the time he was ready to sell, the market had already softened. To sell the place he had to cut the price drastically and overall ended up losing about $100K on that "investment". He also invested tens of thousands of dollars (about 30% of his overall portfolio) in shares of his non-publicly traded company stock thinking that the stock would make him a millionaire when it went public. Unfortunately the company went bankrupt and his investment vanished overnight. Lost just about $40K on that deal. Finally in 2006 he decided to sell all of his investments and go 100% emerging markets (at age 60). So far he has made pretty good money on that bet, about $40K. Win some, lose some, but he probably would have done a lot better if he had not gambled so much along the way.

As for me, I don't have the heart of a gambler so no way would I ever take that much risk with my money. My strategy is to build wealth slowly but surely.
__________________
FIREd is offline   Reply With Quote
Old 05-03-2008, 06:59 PM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,380
Quote:
Originally Posted by FIREdreamer View Post
When my FIL realized in his fifties that he did not have nearly enough saved up for retirement, he started making large gambles with his money in an effort to catch up. First he tried trading futures. He lost about $50K with that. Then he decided to buy a huge mansion in the northeast to cash in on the RE boom. He bought a bit late in the cycle, ended up putting a lot of money in the house (lots of costly repairs + insane taxes and heating costs) and by the time he was ready to sell, the market had already softened. To sell the place he had to cut the price drastically and overall ended up losing about $100K on that "investment". He also invested tens of thousands of dollars (about 30% of his overall portfolio) in shares of his non-publicly traded company stock thinking that the stock would make him a millionaire when it went public. Unfortunately the company went bankrupt and his investment vanished overnight. Lost just about $40K on that deal. Finally in 2006 he decided to sell all of his investments and go 100% emerging markets (at age 60). So far he has made pretty good money on that bet, about $40K. Win some, lose some, but he probably would have done a lot better if he had not gambled so much along the way.
Just to do the things you mention, especially the mansion in the NE, he must have been fairly well off. Maybe what he really needed was more conservative investments, and the knowledge that he could likely have a nice life on less income than he thought.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 05-03-2008, 07:31 PM   #13
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,031
Quote:
Originally Posted by haha View Post
Just to do the things you mention, especially the mansion in the NE, he must have been fairly well off. Maybe what he really needed was more conservative investments, and the knowledge that he could likely have a nice life on less income than he thought.

Ha
Well FIL + MIL's net worth was around $600K as of 2007 (right before the divorce and after selling the mansion) including about $180 in home equity. But FIL was easily making at least $200K a year so, by using the $280K equity they had in their previous house as a downpayment, they were able to qualify for a large mortgage on the mansion. They also took a second mortgage to pay for all the repairs. So they were not doing too poorly but I would not say they were well off... Also, the money he used to buy the company stock was borrowed and he is still trying to pay it back.
__________________
FIREd is offline   Reply With Quote
Old 05-03-2008, 10:36 PM   #14
Recycles dryer sheets
barbarus's Avatar
 
Join Date: Aug 2007
Posts: 433
Quote:
Originally Posted by FIREdreamer View Post
But FIL was easily making at least $200K a year so
I would not say they were well off
Good Christ!!!
$200k+ /yr and not well off?

I give up.
__________________
Consult with only myself as your adviser or representative. My thoughts should be construed as investment advice of the highest caliber. Past performance is but a pale shadow and guarantee of even greater results in the future.
barbarus is offline   Reply With Quote
Old 05-03-2008, 11:08 PM   #15
Full time employment: Posting here.
 
Join Date: Jan 2008
Posts: 798
Quote:
Originally Posted by barbarus View Post
Good Christ!!!
$200k+ /yr and not well off?

I give up.
Believe it or not, $200k/year can go pretty fast. Taxes take a pretty huge chunk off the top. All the breaks the lower income people get disappear at that income. A kid or two in private colleges can be full price. Keeping up with Jones takes the rest.

P.S. DNDN looks like a real stinker unless that new cancer product is successful. Maybe he has some inside information?
__________________
RockOn is offline   Reply With Quote
Old 05-03-2008, 11:33 PM   #16
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,031
Quote:
Originally Posted by barbarus View Post
Good Christ!!!
$200k+ /yr and not well off?

I give up.
Sorry, when I think "well off" I think networth and not income. A couple in their sixties making $200K a year and with a networth of $600K does not strike me as particularly "well off". If you look only at the income side of the equation then yes a couple making $200K is well off (as long as they can keep making that kind of money indefinitely).
__________________
FIREd is offline   Reply With Quote
Old 05-04-2008, 12:58 AM   #17
Thinks s/he gets paid by the post
redduck's Avatar
 
Join Date: Mar 2005
Location: yonder
Posts: 2,052
RockOn...
Barely any information at all unless you want to count some out-dated info from Cramer's website and I think even Cramer has reversed his position and is thinking it's a poor risk. But, DNDN is quite volatile and as I understand it, it's all coming to a head in the next 2-3 months. Either their one drug gets approved or it doesn't. So, it's a big roll of the dice for my friend and he knows it. But, since it seems that no mutual funds are buying it, it doesn't look like a good bet. Hey, I'm real happy with my brand new "pssst, Wellesley" (thanks, Unclemick).

My son says I should find a new friend, because this friend isn't going to have any money.
__________________
redduck is offline   Reply With Quote
Old 05-04-2008, 07:26 AM   #18
Thinks s/he gets paid by the post
2B's Avatar
 
Join Date: Mar 2006
Location: Houston
Posts: 4,330
Quote:
Originally Posted by FIREdreamer View Post
Sorry, when I think "well off" I think networth and not income. A couple in their sixties making $200K a year and with a networth of $600K does not strike me as particularly "well off". If you look only at the income side of the equation then yes a couple making $200K is well off (as long as they can keep making that kind of money indefinitely).
I'll pile on.

Anyone that has a $200K income has no reason to not be extremely well off in their sixties. Any sensible contribution rate into a thrift plan and diversified investments should have made them millionaires.

Of course, that's what this forum is all about. LBYM and invest sensibly. Income isn't the issue. It's what you do with it.

When DW took over her parents accounts, I expected her to find a couple of million. I was shocked and seriously disappointed. Her father was a retired Brig General and a VP in a significant publically traded company. He was making big bucks when he retired in the 1980's. They only had a couple of hundred thousand bucks. It was scattered among a few high fee, load mutual funds and some variable annuities. I suspect he was easy prey to his "buddies." He seemed to know everyone. On all the account documents he signed he always listed his net worth as either 2 or 3 million. We both decided that MIL bled the assets with frequent redecorating and some high cost home expansions. They really didn't spend that much on travel.

They were both in LTC. DW and I had to get the house sold to keep their care going. Both were strongly against the sale because they were going to move back their when the got "better." This caused DW to delay the sale until the account balances were approaching zero. When done, my FIL swore at my wife and threatened to sue her. He even called a lawyer that already knew his whole sad story. Fortunately, it didn't go anywhere. MIL has since passed on and FIL's Alzheimer's is far enough along where he's lost to any complicated thought like moving home.

My father was a mail man and raised 5 kids. Mom never held a job since the 1950's. He didn't pay for our colleges but those that were committed to going made it through. He had a decent retirement on SS and postal pension. He died with about $250K in assets which was about what my in-laws had ex-house. Unfortunately, he was also the victim of a variable annuity that probably reduced his estate by $100K due to poor returns/high fees.
__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
2B is offline   Reply With Quote
Old 04-16-2009, 07:35 PM   #19
Thinks s/he gets paid by the post
redduck's Avatar
 
Join Date: Mar 2005
Location: yonder
Posts: 2,052
Anybody have any idea what DNDN did this week?
__________________
redduck is offline   Reply With Quote
Old 04-16-2009, 07:54 PM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Moemg's Avatar
 
Join Date: Jan 2007
Location: Sarasota,fl.
Posts: 10,029
Quote:
Originally Posted by redduck View Post
Anybody have any idea what DNDN did this week?

I just looked . Did your friend hang onto it even when it dropped to $2.61 ? The tricky thing will to know when to sell . I had friends who rode Jds uniphase up and down the tech bubble .
__________________

__________________
Moemg is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
A friend sent this to me today... serie1926 Other topics 41 02-24-2008 11:17 AM
The loss of a friend kaudrey Other topics 10 08-02-2007 01:11 PM
Help for a friend Tandemlovers Hi, I am... 3 06-06-2007 10:39 AM
How to encourage a friend Tommy_Dolitte Young Dreamers 31 05-22-2005 10:55 AM
Anyone Have A Friend That..... Tommy_Dolitte Young Dreamers 0 09-18-2004 11:35 AM

 

 
All times are GMT -6. The time now is 07:47 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.