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Making a big bet on one investment
#1

Making a big bet on one investment

I've been thinking of making a big bet on one investment. Going for something that has the potential to go up 100-1000%, with the high-risk that goes hand in hand with such high reward plays.

Foreign currencies are one such area, but I've been burned playing that game before so I think I'll stay away.

Small mining companies also offer high risk, high reward type situations. This is the one I may opt for given that there are inherent advantages to investing in micro-caps. The big "sharks" don't generally play this game because they're too small to invest in.

The other idea is to utilize something like GuruFocus -- and mimick the investment moves (albeit with a time lag) of guys like Soros and Paulson.

Anyone make some big bets that paid or didn't pay off, and what lessons have you learned? Have you found some good insiders who you source investment ideas from?
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#2

Making a big bet on one investment

A couple of years ago I made a pretty big bet, when the stock market was tanking and there was all the talk of the next big depression I put about 95% of my money into the stock market. I didn't time it exactly perfectly but still pretty good.

I was reading a lot of Warren Buffet at the time which is one of the things that made me make the decision - be greedy when everyone else is fearful - I didn't actually consider it that much of a risk, I just didn't believe all the talk of depression so worst case was I'd just have to wait a few more years for it to eventually come back.
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#3

Making a big bet on one investment

Buy Silver, it is ready to explode. Physical silver that is.

Our New Blog:

http://www.repstylez.com
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#4

Making a big bet on one investment

Quote: (12-15-2010 10:06 AM)rudebwoy Wrote:  

Buy Silver, it is ready to explode. Physical silver that is.

Do you have info sources? Why physical and not related stocks, for instance?
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#5

Making a big bet on one investment

I have done a lot of research, a good site is Max Kieser. In 2005 I went to a gold expo and gold was selling for $400/oz, people were pushing it too hard and I got turned off. Now look at where it is today.
I recently bought silver at $20/oz and it is now at $30/oz, due to the economic forecast in the USA - it will take off.
Stocks, ETF's, Bonds are the biggest scam going on Wall St today. Warren Buffett is a fraud, the system is designed to steal your money. Think about it, they get rich off your losses.

Our New Blog:

http://www.repstylez.com
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#6

Making a big bet on one investment

Quote: (12-15-2010 03:29 AM)subutai Wrote:  

I've been thinking of making a big bet on one investment.

Let's be clear - you want to gamble. You have no investment idea, and simply want a small chance of a big return. You could place it all on one number on a (single 0) roulette wheel. I don't see why that would be much better or worse than foreign currency or mining stocks.

Silver futures are obviously easier than physical silver.

If you are bullish on the market and want to bet on the January effect then buy cheap SPX or SPY options.
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#7

Making a big bet on one investment

Silver Futures are not backed by real silver. There has been cases where the bank could not pay out or deliver the silver, of course this is not too well reported.

Our New Blog:

http://www.repstylez.com
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#8

Making a big bet on one investment

Quote: (12-15-2010 08:40 PM)kimleebj Wrote:  

Quote: (12-15-2010 03:29 AM)subutai Wrote:  

I've been thinking of making a big bet on one investment.

Let's be clear - you want to gamble. You have no investment idea, and simply want a small chance of a big return. You could place it all on one number on a (single 0) roulette wheel. I don't see why that would be much better or worse than foreign currency or mining stocks.

Silver futures are obviously easier than physical silver.

If you are bullish on the market and want to bet on the January effect then buy cheap SPX or SPY options.

Well, I basically rely on "experts" who give their recommendations. I know this isn't the best way, but I figure it's better than picking blindly.
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#9

Making a big bet on one investment

http://www.lewrockwell.com/orig10/fry3.1.1.html

Our New Blog:

http://www.repstylez.com
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#10

Making a big bet on one investment

CFX is a good option if you want paper gold.
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#11

Making a big bet on one investment

Well, if we can figure out which stock will do as well in 2011 as Netflix has done in 2010, we can all make a few bucks.

Check out the one year chart for Netflix stock:

http://finance.yahoo.com/q/bc?s=NFLX+Basic+Chart&t=1y

For now, I am still long with Apple (AAPL), but maybe we can come up with something better for 2011.
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#12

Making a big bet on one investment

If you are talking about jumping into some teaser stock or option newsletter, do yourself a favor and go to stockgumshoe dot com first. It was only after I lost over $60K in the market, that I found out the company "advising" me had a horrendous track record. This website has unedited reviews and ratings from actual subscribers going back years. I'm not here to push any one service but I can tell you that after almost losing everything, I now make consistently good returns with a reasonable amount of risk. Just PM me if you want any specific information.

Overall, I am bullish on gold and silver and the SPX, but now is not the time. They have all peaked and will likely pull back sharply before running higher.

The Smart Money is 33% confident in a rally.
The Dumb Money is 79% confident in a rally

"Corporate insiders continue to sell heavily, and there is less concern now that the data is being skewed because of potential tax issues. Meanwhile, margin trading has picked up, leaving investors with a substantially negative "net worth"."
-12/16/2010 PM me for source

"Be brave when others are afraid, and afraid when others are brave."
-Warren Buffet

If you can pull the trigger when everyone around you is selling, and sell when everyone you know if recommending something, you will make money.

Learn the basics of technical analysis: Take a look at the chart for NFLX using full stochastics view. I have made thousands the last two months alone just on this stock.

More than anything, I recommend NOT picking your own trades. Even if you pick the right time to buy, you don't want to spend all day watching the market. Let someone tell you when to get in and when to get out by a trade trigger alert email. The secret is finding a company you can trust.
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#13

Making a big bet on one investment

young_money,
are you an "active trader" then? how often are you making trades? Daily? Do you actually have an edge doing that? (I have heard that most of the folks doing this do not really have an edge at that game, especially taking into account commissions and short-term capital gains tax) And how did you lose 60K in the market? I would not be interested in losing any money whatsoever, let alone 60K.

I prefer to buy and hold something solid over the long run, and not pay any attention to the markets. In other words, truly passive income, no bs with buying and selling stuff every day or week. Apple stock has been great over the last year, but can we do better than Apple for 2011 or 2012? I would like to think so.
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#14

Making a big bet on one investment

Prices are precisely information sensitive, essentially adjusting rather quickly in this new world of instant information, to reflect all known information. this means that any possible public information that is indicative of a higher probability of a price move gets instantly built into the price before you have a chance to evaluate the investment. This means no expectation of profit insofar as anything beyond luck is concerned. Then you have to factor in the possibility of misinformation, disinformation and incomplete information that could lead you to believe that reality is different than what it is. Due to these factors, I see most investments as having a worse expectancy than a casino table. At least in a casino, you can calculate how much of an edge the house has. In an investment, its unknown.

The only way to make an investment with a real profit expectancy, these days, in my opinion, is to have inside information. Another way would be to time very small entry and exit points in longer trends. But, in general, that is nothing but gambling as well. Information drives the market. There is no risk adjusted positive expectation with the public information that you get about any investment. This is especially relevant to single "big bets" more so than a lot of diverse small bets. Although, achieving true diversification is elusive for the average armchair investor, I believe.

I'm not an investment pro though. There may be guys on here who can elaborate and offer a better informed opinion.
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#15

Making a big bet on one investment

hydro, I agree with what you've written. (Although I'm still invested, for now.) The late Ken Uston, a professional gambler (blackjack card-counter) and author would have agreed, too. He had some interesting words about why he would not invest in the market. (And he even had worked at the Pacific Stock Exchange in San Fran!)

Check out his thoughts about halfway down the page:

http://www.gamblingtimes.com/blackjack/blackjack_9.html
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#16

Making a big bet on one investment

Maybe I'm way off but unless I got inside information, I'd still go with some form of diversification.
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#17

Making a big bet on one investment

Quote: (12-16-2010 03:28 PM)Chaz Wrote:  

hydro, I agree with what you've written. (Although I'm still invested, for now.) The late Ken Uston, a professional gambler (blackjack card-counter) and author would have agreed, too. He had some interesting words about why he would not invest in the market. (And he even had worked at the Pacific Stock Exchange in San Fran!)

Check out his thoughts about halfway down the page:

http://www.gamblingtimes.com/blackjack/blackjack_9.html

Uston sums it up pretty much it exactly. Also, market makers can strategize to throw off what the price should do due to market expectation of all the small investors out there. So you have to take that into account as well, essentially making the market completely unpredictable based on normal supply and demand, at least in any timeframe under 5 years.

Supposedly, the one class of securities for which you can calculate an actual probability is derivatives trading. However, your also up against the smartest quantitative traders out there when you enter that game. Its not for the average person.
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#18

Making a big bet on one investment

Quote: (12-15-2010 08:52 PM)rudebwoy Wrote:  

Silver Futures are not backed by real silver. There has been cases where the bank could not pay out or deliver the silver

I call B.S. You don't buy futures from a bank - you buy them from a commodities futures broker. Your contract is guaranteed by your counterparty, his broker, your broker, and all the other exchange brokers, and they post margin daily. The CBOT has been safe since 1848!

Quote: (12-15-2010 10:07 PM)subutai Wrote:  

I basically rely on "experts" who give their recommendations.

So why are you posting this here?
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#19

Making a big bet on one investment

"Anyone make some big bets that paid or didn't pay off, and what lessons have you learned? Have you found some good insiders who you source investment ideas from?"

This is why.
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#20

Making a big bet on one investment

Quote: (12-16-2010 07:20 PM)subutai Wrote:  

"Anyone make some big bets that paid or didn't pay off, and what lessons have you learned? Have you found some good insiders who you source investment ideas from?"

I bet $500 on a single number at Bodog's roulette until they stopped giving me reload bonuses. I bet five figures that Holyfield would win the rematch against Tyson, Phil Ivey would not win the WSOP main event last year, and the Superbowl would not go into overtime. But those latter bets were not longshots.

I designed the quant equity model for a major broker-dealer and know hedge fund managers. You should read Malkiel's A Random Walk Down Wall Street.
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#21

Making a big bet on one investment

Quote: (12-16-2010 07:50 PM)kimleebj Wrote:  

Quote: (12-16-2010 07:20 PM)subutai Wrote:  

"Anyone make some big bets that paid or didn't pay off, and what lessons have you learned? Have you found some good insiders who you source investment ideas from?"

I bet $500 on a single number at Bodog's roulette until they stopped giving me reload bonuses. I bet five figures that Holyfield would win the rematch against Tyson, Phil Ivey would not win the WSOP main event last year, and the Superbowl would not go into overtime. But those latter bets were not longshots.

I designed the quant equity model for a major broker-dealer and know hedge fund managers. You should read Malkiel's A Random Walk Down Wall Street.

[Image: tard.gif]
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#22

Making a big bet on one investment

Quote: (12-16-2010 01:40 PM)Chaz Wrote:  

young_money,
are you an "active trader" then? how often are you making trades? Daily? Do you actually have an edge doing that? (I have heard that most of the folks doing this do not really have an edge at that game, especially taking into account commissions and short-term capital gains tax) And how did you lose 60K in the market? I would not be interested in losing any money whatsoever, let alone 60K.

I prefer to buy and hold something solid over the long run, and not pay any attention to the markets. In other words, truly passive income, no bs with buying and selling stuff every day or week. Apple stock has been great over the last year, but can we do better than Apple for 2011 or 2012? I would like to think so.

At the time, I had just made about $200K on a business venture and foolishly bought stock and long term options on what I considered solid investments, which included gold mining stocks, Google, etc. Needless to say, they did not pan out.

As you know, the market has changed and even great companies and rising commodities can take it on the chin for an extended period of time. Higher than usual volatility will be here for a while, because the majority of people are rightfully skeptical of the US recovery. This volatility can be your friend or worst enemy. Don't be fooled by the recent 3 month run in the markets. They are just trying to grab every sucker around until the end of the year, and then it will be back to higher volatility.

Now, I am not recommending day trading by any means. This is much worse that buying and holding a group of diversified stocks, although there is not a large chance that you will make much profit with that strategy unless you just get lucky.

The real key to making money now is in tracking market sentiment and being able to identify when everyone is a little too pessimistic or a little too optimistic in the markets overall. Looking at a chart of the SPX, what would you say today? Let me assure you, we are overbought. Check out the full stochastics at the bottom of the chart. Riding a little high, don't you think?

[Image: attachment.jpg414]   

Besides technical indicators, I subscribe to a service that tracks basically every market indicator in existence and gives me an idea of what is really happening behind the scenes.

Now once you know which way the wind is blowing, now you have any idea of how to invest, short or long. This is where you want to start tracking reliable stocks that always seem to come and go with the overall index. A good example is NFLX, CMG, AMZN, DECK, etc. How many times could you make 10% on your money just by buying NFXL when the full Sto's are around 20 and selling when they hit 80? And this strategy works for stocks that are trending up, down, or sideways. You just need some volatility and the ability to track it.

[Image: attachment.jpg415]   

Find stocks that are leaders in their industry, that tend to follow trend channel support and resistance that you can buy and sell every 3 to 6 weeks for a 10% profit. And always put your stop loss in immediately after you buy, right below trend channel resistance or the 50 day moving average. This should take care of limiting your losses if the SPX falls out the first week of January and the leaders take a bit hit.

Also, you are correct about commissions cutting into your profits. I almost never spend more than $5 on a stock or options trade. Use optionshouse dot com. I also don't spend more than 20 minutes a day watching the markets. I learned most of this from the company that sends me trigger alerts when it's time to buy and time to sell.

P.S.- If you can't tell already, it's time to buy NFLX. Set your stop loss just below the green line.
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#23

Making a big bet on one investment

young_money,

Thanks for all this good info on technical analysis. I will have to do some research on this, and come back, maybe ask some questions.


subutai,

young_money likes Netflix for an short-term gain of 10% or so. Well... It's not 100-1000%, but it's a start towards building the empire...
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#24

Making a big bet on one investment

Quote: (12-15-2010 03:29 AM)subutai Wrote:  

I've been thinking of making a big bet on one investment. Going for something that has the potential to go up 100-1000%, with the high-risk that goes hand in hand with such high reward plays.

Foreign currencies are one such area, but I've been burned playing that game before so I think I'll stay away.

Small mining companies also offer high risk, high reward type situations. This is the one I may opt for given that there are inherent advantages to investing in micro-caps. The big "sharks" don't generally play this game because they're too small to invest in.

The other idea is to utilize something like GuruFocus -- and mimick the investment moves (albeit with a time lag) of guys like Soros and Paulson.

Anyone make some big bets that paid or didn't pay off, and what lessons have you learned? Have you found some good insiders who you source investment ideas from?

What about residential property?

Market is screwed, debt problems are going no where and there is still a massive oversupply. On top of it, looks like it will stay flat for a while, so few people are going to be buying. It may get worse still, but chances are its at rock bottom.

Thing is, because are rock bottom and you can buy property in some traditionally good areas for peanuts. Decent condos in Miami for under 50k, with rental returns of 20%+ in some cases. Shitholes in Buffalo for under 15k, but its still only 15k. Ohio is another state worth looking at.

That is high risk, but long term it may be a winner and that sort of cash flow is nothing to sneeze at. Even if the market does not rise for another 10 years, people still need a place to live and rentals are rising in price. As long as you are covering your costs and you are putting money in your pocket you are coming out on top. And there are so many outright bargains on the market at the moment you could clean up if you have some money to burn.
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#25

Making a big bet on one investment

Quote: (12-17-2010 03:41 AM)Chaz Wrote:  

technical analysis.

Why do you think this technical analysis is superior to astrology? Working on both the sell side and the buy side, I never met anyone who did it. There might be some references to price levels in the sell-side company reports, but nobody takes those seriously because they are purely for marketing and business generation.

And what about the evidence? It would be straightforward to program and backtest these goofy indicators, but the studies are scarce. In contrast, there is replicated research that uses past returns to forecast future returns, but it doesn't resemble this subjective stuff. You know where to find it.

I won't rant about market efficiency. But I'll just say this. The Roosh philosophy values values travel and lifestyle more than conformist material comforts. This appeals to a young and poor demographic. Realistically, these readers have, maybe, $10K to invest. If they earned an extra 10% per year then that would be one thousand grocery dollars. They would be far better off focusing on their careers and educations or economizing on their lifestyles.
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