Speculative investments?

[97guns]

I know speculation can be subjective and it’s probably not a good idea to carry too many speculative investments into retirement but I’m just curious if you have any. Money that won’t hurt you or you really could care less if you were to lose 100% of it, curious because I just threw 4% of my net worth to what I consider high risk securities, high yielding dividend REITs and ETFs that are yielding double digits or very close, its generating close to $1000 a month added income

 

[UnrealizedPotential]

I have in fact done this. I have 6% in a UBS 2X fund. But it is in an investment area which I have some knowledge. I would not do this just based on yield and attractive price alone.

An example would be AMZA, which is trading at what I believe to be an attractive NAV. The yield is 24%. But I do not understand how it makes its money or the companies it invests in, so I do not invest in it. But if someone understands it, and wanted to put small amount in, hey it's their money, it's their decision.

 

[97guns]

I had AMZA but didn’t like the price action on it so I cut my $200 loss after collecting a $520 dividend payment, I have a few paying 21%

 

[ERD50]

So you are getting 17% annual divs from these? That would tell me they are risky, and you are likely to lose significant amount of the investment over time.

But if it is a small number, who knows how the odds may play out - like you say, 'speculative'. Personally, I plan to live long enough that speculative plays would just average out over time, and I don't believe they can be reasonably counted on to be positive over time. So I just stick to my broad based AA. But have fun and good luck!


-ERD50

 

[Fermion]

I was very proud of my 15% dividend payment in Seadrill. It seemed like easy money.

 

[Zathras]

Very little, but I do some.
I invested 2.5% of my portfolio years ago into a company because I liked the product, and fully supported the goals of the company.
Very high risk, but it has paid off very well.

 

[Teacher Terry]

4 years ago we invested 3k in mining Bitcoin and other coins with my son. He was the brains of the operation. WE just let him use our basement for the miners. WE made enough profit that the electricity to mine was paid for as well as some profit. He invested about double what we did and told me that they have made about 30k and I think we are at half of that. We each have about 14 coins left and the big decision is when to cash out to realize more profit. WE usually cash out a few when it hits a new high.

 

[Fermion]

4 years ago we invested 3k in mining Bitcoin and other coins with my son. He was the brains of the operation. WE just let him use our basement for the miners. WE made enough profit that the electricity to mine was paid for as well as some profit. He invested about double what we did and told me that they have made about 30k and I think we are at half of that. We each have about 14 coins left and the big decision is when to cash out to realize more profit. WE usually cash out a few when it hits a new high.

So out of curiosity, how many coins could one have purchased four years ago for $3K? They were about $100 each back then?

If so, then a $3K investment instead of buying mining equipment and not needing electricity usage would be worth 30 coins today, or about $180,000

 

[Teacher Terry]

i will have to ask my son. WE did not invest the 3k all at once. It was over a period of time. So I would need to know what coins cost each time we added 1k to the mining operations to compare. For instance we invested 1k initially and they invested a little more to get going. The electricity was always paid for out of the profits. We still have one newer miner that is actually still making $. We went in full well knowing that we could have lost the $. Also when mining you never know how much $ you will make. The people that got into mining a few years before we did made a lot more $ then we did. So we had no way of knowing if we would do better back then simply buying coins and holding or mining. WE figured the amount of $ was so small that we were willing to risk losing it for the opportunity of possibly making a lot of $. At one point many of our friends/family were in on it and had quite the mining operation. At some point most cashed out their profits to secure them.

 

[youbet]

I know speculation can be subjective

Yes! What's speculative and what's not is a subjective thing....... One person's speculative bet is another's conservative investment!

and it’s probably not a good idea to carry too many speculative investments into retirement

That's strictly a function of how well funded your retirement is. As you say, " it's probably not a good idea to carry too many speculative investments into retirement." But, what is "too many?" Actually it's not a good idea to carry too much of anything into retirement, including ultra-conservative investments.

but I’m just curious if you have any.

Sure. And I find them very entertaining. Most of my stretch bets are in the energy sector right now but it has varied over the years. Having a little money in the game stimulates me to keep active with current events and economics (my undergrad major).

My biggest win was buying stock in a community bank years ago when the bank was a trailer parked on a gravel lot in a Chicago suburb. It was successful, split numerous times and when bought out by a regional bank turned into a very fortunate experience for me.

My biggest loss was an off shore driller that went belly up. Ouch!

Anyone remember ISM/OSM? One of our now mostly inactive members brought it to our attention. A wild, wild ride but very profitable. My final shares expire and cash-out mid January, 2018.

I'm ahead overall over the years but not by so much that I've become disinterested or complacent.

Of course, the vast majority of my FIRE portfolio is in broad-based domestic index funds and vanilla municipal bond funds. Oh, and an active fund or two (like pssssst Wellesley).

 

[dunkelblau]

Mine aren't for yield, I prefer long-odds mean reversion bets (aka 'roadkill with a pulse'). So I end up in pink sheet penny stocks mostly. Sounds risky but I spread it out thin so my fluctuations have been less than the major indices. Losing 100% on any one name is "more likely than not" but losing on an aggregate basis would not be a "could care less" for me.

I enjoy this game because a small improvement in my batting average is something I think I can reach and can have a major effect on overall returns. By contrast I'm confident that I can't do anything to improve my odds betting on the household names.

 

[gcgang]

What did Mark Twain say, two times you should not speculate: when you can't afford it, and when you can?

IMHO having a small amount (<10%) in high risk makes sense. With a small amount of that 10%, look for things that could return 10x+ investment, but realize they're likely to go bust.

I've blown $25-50k on restaurant, travel startups. OTOH, a $50k commitment to an oil deal that ended up demanding a lot more $, was a major reason I was able to FIRE.

Still like to look at things, but find it harder to commit. The amount that I'd have to invest to "move the needle (make a difference in my lifestyle)", is beyond what I'm willing to lose.

But I've recently been cutting back even on the REIT and other Hi yield play "standard" speculations, adding to (tax sheltered) CD ladder, putting less into speculating. More satisfied to not lose than regretful of missing out on further gains at this point in the cycle. Both the market cycle, and my lifecycle.

 

[Winemaker]

When I FIRED, I had a privatecorp 401k that was only 7 months old; old megacorp was bought out. That $24,000 was rolled over into my play/speculative IRA, it is now about $29,000. I did take a hit with a container leasing company, but it is slowly clawing it's way back. I just bought it too soon!

 

[traineeinvestor]

Leaving aside the difficulty of distinguishing an investment from a speculation, I allow myself to put small amounts of money into highly risky speculative investments - I have set my self a cap which, if I lost the lot, wouldn't affect our finances.

Currently I have about half of my cap invested in (i) a microchip biotech firm and (ii) platinum.

Edited to add: DW invested in a small retail business which has consistently lost money and will be shut down when the lease expires early next year + has recently made a private equity investment in a PRC on-line business.

 

[Fermion]

When I FIRED, I had a privatecorp 401k that was only 7 months old; old megacorp was bought out. That $24,000 was rolled over into my play/speculative IRA, it is now about $29,000. I did take a hit with a container leasing company, but it is slowly clawing it's way back. I just bought it too soon!

Yes, I did that with $1700 from a 401K and now it is around $86,000. It was rolled over back in 2001 though so it has been a long time, not a short term gain.