I want to go all-in on a Stock, seeking Advice
Been thinking a lot about the Warren Buffet quote: "Diversification protects wealth, but concentration builds wealth". I'm doing the math on my future net worth, and I just don't see a path to becoming "Fuck you" rich until I'm in my 50s... unless I take some serious risks.
I'm considering taking 1/2 of my portfolio and putting it into a small cap, growth stock backed by some big names. I don't want to say which one right now because then the discussion will just be all about the stock and why it is garbage, and why I'm an idiot.
I'm more so asking you guys for stories about concentrated bets you have made and how it played out? Did you chicken out, sell when you were down, only for the stock to rally 3x? Did you go all-in on a start up and have it 10x? Did you lose your life savings at the age of 30?
For reference (and for Pizz) my life situation:
- Have $300k in stocks
- $250k in annual income (PE Associate, ignore title)
- 27 y/o
I’m hoping TQQQ leads me to the promised land. Have consistently buying weekly during this dip, will buy more as it continues dropping.
We're gonna get another really good buying opportunity tomorrow with this Russia Ukraine shit. Futures looking blood red. Bet Nasdaq will be down 2-3%, which means TQQQ could see a 8-9% decline. Possible 45 incoming tomorrow. I gave up on dumping any more money into this shit after I bought in at the top and have around an 82 average. Luckily it's only 5-10% of my portfolio. Maybe this week is the time the ape in. Once there's more certainty on the russia ukraine stuff, there should be some nice bounces
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Lol my pick isn't as risky as that I would say. It's at least listed and it's top holders include by Blackstone / Tiger Global and what not. But it's getting crushed for macro reasons.
Yeah I'm addicted to salary because it's amazing. $100k+ to put into investments every single year. If you take risks like I'm talking about, you can still beat a lot of guys who go the entrepreneurship route without ever leaving your cushy seat. At least that's my theory and why I'm making this post
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I made a bet on a penny stock and turned the last few k to my name into 25k+... that being said, if I had kept holding I would've lost it all. Honestly, my goal is to be where you're at in my mid/late 20's, so first off- congrats, and if you have any advice I would welcome it- but second off, capital preservation is an insanely important part of getting "fuck you" money. I've watched friends piss away 5 figures trying to get rich quick, and if you have mid 6 figs to invest you could easily be pulling in a teacher's salary on a good year before dividends just by investing in the S&P. In other words, for what it's worth, you're in insanely good shape. If you keep letting that compound and investing aggressively, you could for sure have big time "fuck you" money in your 30s. Just an intern's opinion fwiw
Thank you for being the one person to share some experiences.
I’ll just say it because the convo has totally gone sideways anyway.
Im thinking about BHG (Bright Health Group). Went public in 2021 and has been hammered because of the growth stock sell off (down 80-90%) despite the company reporting solid revenue growth and being a “buy” by most research analysts.
13Fs just released a few days ago, and you can see that Blackstone was buying the dip the whole way down between September and December. Lots of household names in the top 10 holders that have been adding to their position.
If this stock ever gets back to IPO levels I will comfortably be a millionaire in my 20s. Am I that crazy? It’s not like it’s a penny stock.
I'm certainly not one to give financial advice, but just something to consider: the pain of money lost is much worse than the pain of profit missed out on. You are in a scenario where you could buy my dream car 10 times over. If I were in your position, there wouldn't be a need to take excessive risk, I would just buy S&P and add to it. But to each their own. I am thankful that I had the fortune to make the trade I did and reap the benefits, but I have lost thousands trying to replicate it before just buying ETFs and investing like an adult. That being said, you're undoubtedly much smarter than I am, so take my words with a grain of salt at most. What intrigues you about BHG? Just institutions buying the dip or specific catalysts?
I put all of my money into a mix of BTI and MO a while back
What's the thesis on Altria? Been seeing it tossed around a bunch.
Name the stock, ill help you out by investing in one or two shares 🚀🔥🤑
There is something to be said about taking outsized risk in hopes of outsized returns -- but it has to be in the appropriate environment. I don't think this is the appropriate environment. I 40X'd my portfolio from March 2020 to June 2021 by taking a lot of risk through a series of concentrated stock trades, and for me that has been life-changing, but I took all that risk because I knew I had a small window of opportunity in a momentum bubble and the clock was rapidly ticking until the music stopped.
Right now if you go all-in on a small-cap, you are effectively saying that you can time the bottom. Even if your stock is 70% off its highs, it can easily fall another 50%+ in this environment. If you can stomach losing 50% of your investment, I guess go for it, but I wouldn't recommend catching falling knives right now. You have to have a rock-solid thesis on why this is near the bottom for your stock, and it can't be "it's down 70% from its 52 week high". Good luck.
I agree, but in March 2020 how did you know COVID wasn't going to turn out to be much worse? You can say what you did at any price level. Any stock that is down 70% can go down another 50% - which is really just saying it can go from 70% of highs to 85%. You will never know if you're catching a falling knife or got a great buying opportunity until after the fact.
I didn't know anything, whether I was catching a falling knife or buying near the bottom, but I put my first dollar into my stock picks when SPY was already in a bear market more than 20% down in mid-March. And I proceeded to watch my "investments" tank literally another 30% in two weeks. Even after the April recovery I was still in the red, and it took me until May to breakeven. I was lucky that the market had a pretty much vertical recovery.
You can't compare this environment to the COVID crash for all the obvious reasons. SPY was 200 points lower, multiples were not stretched like they are today, and monetary policy was basically handing out free money vs. the quantitative tightening that's going to happen in the next 24 months. SPY has not even corrected 10%. Multiples are getting compressed and we've probably reached peak earnings given inflationary headwinds on revenue and margins.
just add to position as price goes down. what you're suggesting is actually timing the market.
How could you make that many stock trades if you're in IB? Wouldn't compliance get on your ass? Or did you go leverage ETF style with TQQQ, SOXL etc.?
15 day holding period for individual stocks
I share your sentiment, but it's been pretty much said that if you're serious the best path would be a 3x ETF like UPRO or TQQQ or SOXL...honestly way better than any single stock
I'm not sure if you were investing back when the short VIX Funds blew up, but that was right around when I was graduating college in 2017.
https://www.etfstrategy.com/volatility-blow-up-leads-to-inverse-vix-etn-casualty-38482/
Moral of the story is that these ETFs that use leverage, derivatives, futures, etc. can still go to practically zero. And I watched it happen not that long ago. Shorting the VIX was the hottest retail trader play of 2016 and 2017. Similar to how everyone is piling in TQQQ now. If you want to go long the SP500 with leverage, try to find some cheap debt options and do like 50% leverage.
Wow, you need to do more research before you post things you do not know about. What you've stated is entirely 100% false. Those are ETNs. Entirely different. Much less comparing a VOLATILITY ETN to a levered SPY index is insanity. No they literally CANNOT go to zero. That's the whole benefit of this over simply using margin.
Now can there be an EXTREME drawdown? Yes, obviously, but I can point to literally only two events in history of the past century where a 3x BACKTESTED fund would have been in a drawdown so far that it would taken over a decade to recover...1929 and 2000 tech bubble. Yes, I did NOT mention 2008 because that has been backtested to just have an extreme drawdown with a recovery cycle that would have been ~7 years. Again, this is assuming YOU BOUGHT THE VERY TOP AND NEVER BOUGHT AGAIN.
Advocating for options over these funds is ridiculous. You have A LOT to learn. Don't go around spreading misinformation like this again.
ETN =/= Levered ETF
Thank you.
just to give you my 2 cents, why not pour your savings into your PE fund and do co-investing? It’ll look good because You have skin in the game and you can make a serious IRR if your fund is doing well.
Pizz, you work in the public markets. When is the right time to buy small cap / high growth / negative FCF companies
Not yet. I like to think of small cap negative FCF businesses as shitco’s, because most never end up scaling to higher growth nor profitability. The Russel 2000 is still expensive in my mind.
My fund does not allow co-investing unfortunately. That would be an amazing perk though.
That sucks. I’ve made a lot of money through that.
Apple
How are you planning to execute the trade? I have a couple of underlyings that I'm tracking for a LEAP trade. If you truly believe in it and have a long term outlook then I think executing the trade in this manner can be better justified over just owning it outright. I like the defined risk approach and I think that's generally more "acceptable" of a risk profile for an individual.
Bitcoin
I bet too small and sold too early on both Tesla and Gamestop.
OP - you're going to have to do your own HW here and *obligatory disclaimer* anything that I'm about to say isn't financial advice. This is at best my opinion
I'd try to figure out my investment horizon and required returns to hit the 'fuck you' number. With that in mind, what is your 'fuck you rich' number? $10MM or $100MM? More? Assuming you dump half your portfolio ($150k) in the stock for 23 years (latency between your current age and 50 years of age) with no PMT, then simple RRI is 20% and ~33% for 10MM and 100MM, respectively. Can a small-cap, growth stock provide these returns? Sure. Should you do this? I have no idea. Couldn't you get 20-33% returns elsewhere through diversification? Something to think about. Of course, if you want your 'fuck you rich' # sooner, then it would significantly up your required return. Maybe you'd continue dumping some of your annual income into the stock and that would also change things. Maybe you put in stops or get into some options to protect yourself? I don't know.
But on the stock, it's really up to your risk tolerance, hedging, etc. It's a major bet and is the stock liquid enough for you to exit cleanly? What does the downside look like? If you've done the diligence, have a solid rationale, etc., then who am I--or anyone here--to call you 'an idiot' or the stock 'garbage'? Seems a bit extreme.
My favorite traders are the ones that always talk about their gains and how they timed the market/found a diamond trade/made it big, but never talk about their losses. So let's talk about my win. I made a major bet on a tech company that specializes in graphics cards (how many of you figured out what this stock is? 0% chance no one did) back in late 2014 when it was under $5. Then I sold it in late 2018 after--I thought--it peaked and was on a correction/downtrend for like $50. 10x holding period return seemed pretty great to me. Then I forgot about the stock. Well... I'm a moron because it's trading at north of $200 now. Hindsight I suppose. Could have retired. Should have gotten back in during the downturn in 2020/COVID, but didn't. On the opposite end, I entered a stock at it's top in 2015 and lost 70% of my position. Didn't even put in stops or monitor it. I was a bozo.
Anyways, good luck man. You know what's best for you.
I won't spend time explaining the risks because I'm sure there's plenty of comments on that already. Going to go straight to the stocks since I am an avid single equities trader. Here are some clear sectors that will benefit in the near future:
1. Sports betting - the players leading the market will benefit long-term. Buy DraftKings, maybe Penn National, maybe Fubo.
2. Weed - I feel like I've heard chatter around this for years. It will eventually happen, but I think the timeline remains far more unclear than it does for sports betting. Main US plays are Trulieve and Green Thumb, main Canadian/international plays are Canopy Growth and Tilray.
3. Renewables - everyone and their mom knew this one was coming. I wouldn't look at hydrogen because I think the timeline is further out than solar is. I wouldn't look at anything that is too large already either (exclude Enphase, Tesla etc). So probably top plays are SunRun, Array, Canadian Solar.
4. Meta whatever verse - pardon my negative connotation, but I am personally not a fan of it. However, there is one clear play within this sector that currently looks to have insane potential - and that is Matterport. Matterport mainly offers those 360-view 3D house scanning things, but it also has potential for the creation of true real life assets within the metaverse. Alternatively, could take a gamble on Roblox which is basically a metaverse kids game.
The next ones after that I think would be charging/battery (future tech basically), advertising (short-term play as consumer spending goes down, companies restart advertising), and MAYBE neo-banking/neo-finance (Robinhood, Revolut, Paysafe; long-term I think Square/Block can compete with PayPal as well).
I wouldn't buy EV because they're already priced at a fat premium. If you like Polestar (GGPI SPAC) then maybe have a dabble at that given it's current lack of premium (unlike what happened to CCIV which was the Lucid SPAC) - problem with Polestar is it's not mainly US market and US market likes to overprice stuff that is sold within US.
Personal opinion on top 3:
1. DKNG - safest pick to make it long-term, have significant customers as is;
2. MTTR - if I had a 5-year horizon, I think this will at one point be a 5x if not a 10x. It just was trading at 5x its current price 3-4 months ago for what it's worth.
3. ARRY - it's too good of a business to not generate M&A buzz with at least a 2x current valuation. Good prospects after they acquired STI Norland, they're basically trading at 1.25x 2021 sales after the acquisition.
NVAX & you are welcome!
Concentrated, non-correlated, bets are the way to go. Just make sure you can survive a total loss. In this case, with your salary, I'd say cap your allocation to 1/3rd.
Thanks, I like this idea. I will probably leave 1/3 in the standard index funds too
Non-correlated my friend. Any stock you buy has market beta. I would say you should sell an industry etf against your stock position. Do the same for your top 3-4 ideas. If you’re a shitty stock picker you will lose. If you are a good stock picker, you will outperform through general macro conditions.
How are so many people in finance able to trade individual stocks?
There's a lot of "how do I get rich quick" conversation lately. I don't know if it's because some people have gotten rich on bitcoin, NFT, or what else. I think it's a big risk in a personal portfolio. Especially at our income levels if you can be reasonable in your lifestyle, you can save and invest and by 40 have some serious dough
Yeah there’s definitely some FOMO from people who made millions in the pandemic. But it’s also a result of getting older and realizing that the average finance guy is not “rich rich”. I also don’t see my Individual pick (or any small cap stock investment that I may do) as a get rich quick scheme. It would be a several year hold.
To answer your question about individual names, we can trade any stock at my firm as long as the public equities side of the company doesn’t have a stake in it. They have a particular niche so it’s easy to avoid.
Then why would you do this investment with what sounds like a significant portion of your NW? Personal finance 101 is investing broadly in the market, and if you want to take concentrated bets, take a portion of your NW - 1-20/25% - to play with (not the expectation all in one investment). Saying you want to go all in on one small cap stock does sound like a get rich quick attitude. There's a reason hedge funds don't do this. As certain as you are that this investment is going to kill it, you have to know that you never know.
I guess my advice is to have 20% as "play" money for spec investments, and normally I'd say that would be in 10-ish investments? So maybe 5-7% in this one name is on the pretty risky spectrum but okay, and if you lose it all it sucks but doesn't kill you
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