The Biggest Risk

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tennisplyr
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The Biggest Risk

Post by tennisplyr »

What's the biggest investment risk you've ever taken and how did it work out? Do you have any regrets or things you would have done differently?
“Those who move forward with a happy spirit will find that things always work out.” -Retired 13 years 😀
BlueNote
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Re: The Biggest Risk

Post by BlueNote »

tennisplyr wrote:What's the biggest investment risk you've ever taken and how did it work out? Do you have any regrets or things you would have done differently?
Bought a $20,000 (potentially collectible) guitar mostly using 0% interest credit card offers, expecting to sell it within six to twelve months at a substantial profit. Looking back, I still can't believe we actually did this. By some stroke of luck sold it about one year later to someone in New York who wired me four monthly installments of $5000 without even so much as a phone conversation. This was after a failed eBay auction. That was eight years ago. (I was 30.) I can't figure out which is crazier: That I bought a $20K guitar or that someone in New York was willing to send a complete stranger $20,000 trusting that after the last payment he would get a guitar in the mail in return.
red5
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Re: The Biggest Risk

Post by red5 »

I suppose putting my investment portfolio into the hands of an advisor for 7 years. Other than that I have not made any substantial risky bets on anything at all.

I suppose my biggest risk currently is putting a smallish portion of my portfolio into small caps and emerging markets.
sschullo
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Re: The Biggest Risk

Post by sschullo »

Of course I would have done things differently. But the could of, should of and would of is pointless. What matters is that there is only so much you can learn by other people's experience (and its important, but limited). The bottom line is that each individual has to learn and discover for himself or herself how to navigate the stock market gyrations, the over supply of information and constant drumbeat of trying to get that "gem" that will make you rich overnight. I interrupt my "regrets" as valuable mistakes which are great teachers that eventually led to a comfortable retirement.
Never in the history of market day-traders’ has the obsession with so much massive, sophisticated, & powerful statistical machinery used by the brightest people on earth with such useless results.
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Trevor
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Re: The Biggest Risk

Post by Trevor »

Using P2P loans (Lending Club) as a replacement for bonds in my portfolio. I have 6 figures loaned out over about 3.5k people. Working amazingly well so far. Tax bracket isn't too high so I'm not getting killed by taxes.

The real test will be in a few years once my loans start maturing and have more defaults.
WWJD - What Would Jack Do?
technovelist
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Re: The Biggest Risk

Post by technovelist »

I bought silver on the day of the top in 1980.
On margin.

Needless to say, it didn't work out too well. :oops:
However, I did learn an important lesson: don't use margin, at least with precious metals.
In theory, theory and practice are identical. In practice, they often differ.
Sconie
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Re: The Biggest Risk

Post by Sconie »

In 1979 put (what was then, for me) significant money into several oil well drilling limited partnerships. With the on-set of the early 1980s economic recession and subsequent collapse of oil prices, my financial situation pretty much 'crashed & burned.'
I know you think you understand what you thought I said but I'm not sure you realize that what you heard is not what I meant. - Alan Greenspan
fanmail
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Re: The Biggest Risk

Post by fanmail »

Went all in on my own business. Came out unscathed, but the return on investment was not commensurate with the amount of risk taken. I was a little younger, a little dumber, and thought I would always make big $.
texasdiver
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Re: The Biggest Risk

Post by texasdiver »

When we moved to Texas for my wife's residency we bought a house in the country with a zero-down adjustable rate "doctor's loan" Not risky like buying silver on margin but that's all I can think of. It turned out OK. When we went to sell 5 years later the house hadn't appreciated much but the loan had actually adjusted downwards so we were able to at least walk away with the commission eating pretty much all our profit.
texasdiver
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Re: The Biggest Risk

Post by texasdiver »

Trevor wrote:Using P2P loans (Lending Club) as a replacement for bonds in my portfolio. I have 6 figures loaned out over about 3.5k people. Working amazingly well so far. Tax bracket isn't too high so I'm not getting killed by taxes.

The real test will be in a few years once my loans start maturing and have more defaults.
Wow.
pkcrafter
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Re: The Biggest Risk

Post by pkcrafter »

Perhaps the biggest investment risk for all investors is not educating themselves in money management and investment basics.


Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
lazyday
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Re: The Biggest Risk

Post by lazyday »

Distressed banks 2008-9.

Lost quite a bit on the lowest quality banks, balanced by gains on better names like Barclays. By any sensible risk adjusted measure, my total return across all banks was horrendous, and could have been much worse.

Paid adequate attention to % in each sector or company, but not enough to how much kept plowing in to rebalance or "double down". Now, while I still buy and sell too early, I'm slower in adding money to a down position.
Fallible
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Re: The Biggest Risk

Post by Fallible »

pkcrafter wrote:Perhaps the biggest investment risk for all investors is not educating themselves in money management and investment basics.
Paul
That would well describe my first mutual fund investment with the family stockbroker. It turned out to be the biggest risk because I had not properly educated myself on financial advisors and therefore naively thought the broker was the least risky route. I lost money to his commissions, brokerage fees, the fund's front-end load and other expenses I probably still don't know about. Sheesh...
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
Awsi Dooger
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Re: The Biggest Risk

Post by Awsi Dooger »

Moved to Las Vegas to bet sports. Worked out great. I owe my investing dollars to sports betting, with a huge assist to Steve Jobs later.

I became intrigued by Apple when I bought a Quadra 610 DOS Compatible in maybe '93, as an aid in my sports betting research via Excel spreadsheets. Once I started reading about Jobs I realized he wouldn't settle for different shapes of beige boxes in his second tour at Apple. I didn't know what it would be, but it would be revolutionary. On the political website Democratic Underground I took quite a bit of heat for that opinion beginning in the early 2000s. There were a dependable blowhard handful of posters who mocked Apple virtually every day, dismissing the company as, "overpriced hardware...blah, blah, blah." I call that type Bar Stoolers. Ultimate simpletons, like the guys who who sit at sports bars and overreact to the most recent play or game. They are so paralyzed by short term high decibel conventional wisdom they are completely ignorant of the big picture, the variables that actually dictate outcomes and down the road success or failure. I actually owe mega thanks to those Bar Stoolers at the DU website, because I invested more and more in AAPL the more they insisted I was a gullible fool. I started donning an Apple avatar on that site merely to remind them of my overriding theme. I still have that avatar there even though I seldom post anymore. Admittedly, I'm kicking myself for not dumping far more into Apple in those years, instead of an erratic split between my sports betting bankroll and Apple. I really didn't know much about investing at that point. My dad opened the Fidelity account for me, sharing the enthusiasm for Apple. He had a Quadra 650 and an early Powerbook that was built like a tank.

The Las Vegas sports betting scene was simple to identify as incredibly vulnerable, almost from the outset. It was total mythology that the numbers were super sharp and nearly impossible to beat. My first hint was spring 1984, when I was living in Los Angeles but commuting to Las Vegas every weekend to bet the USFL. That was easy pickings. It was like college disparity but since it was technically pro football the oddsmakers for some reason would hang absurdly low pointspreads. Consequently you could bet the same handful of teams every week. Years later the chief Nevada oddsmaker conceded that the worst job he had ever done was on USFL pointspreads. Yep. And thank you very much indeed. Anyway, I was in line to bet Michigan Panthers minus the points versus the San Antonio Gunslingers when the sportsbook supervisor at the Stardust announced that they were hanging a number on the women's NCAA championship game for the first time. That caught my interest. I had attended both semifinal games a night earlier at Pauley Pavilion: "Make USC 5."

Five? I literally wobbled out of line and started talking to myself. Five was an absurdly low number. The two best teams -- USC and Louisiana Tech -- had met in the semifinal. USC with Cheryl Miller, Pam and Paula McGee, Cynthia Cooper, etc. had pulled out a tight game from Kim Mulkey and company. Tennessee in the other semi struggled with upstart Cheyney State. We had talked about a projected pointspread after both games ended. USC had routed Tennessee early in the season on a neutral court. All of us agreed the number should be in the teens. I said I would be scared to take the Vols minus anything less than 20.

Now the Stardust is using 5. Pure comedy. I called my friends. They shared my enthusiasm and wired money. I canceled the USFL bet and bet everything on USC. Then I dashed to the Barbary Coast to pick up the wired cash. The limit was only $550. I kept betting until I took the number up to -9. It felt so powerful. They had no idea who I was but they had to respect an opinion on an obscure event. I left myself with only enough money for a Stardust buffet and then gas for the drive back to Los Angeles.

The game was an uncomfortable sweat. USC chocked in the first half and trailed at halftime. I was in disbelief. Finally they kicked it into gear midway through the second half and pulled away. The -5 was never at stake. But I had to sweat the higher numbers, with USC freshman clods shooting free throws in the final seconds. I believe the final margin was 12.

When I returned to cash those tickets the following weekend, the same supervisor stopped the action and announced, "There he is, boys." Little did I know that I had started a trend. The number got bet up to -11.5, I was told, before the bettors stopped. The Stardust was miffed that somehow the bettors knew exactly when to cut. The sportsbook had hesitated to book that game and then got hammered on the outcome. "Don't expect another gift like that again. We're out of the women's basketball business."

The second example was perhaps even more comical. A month or so later the NHL playoffs began. Only the ill-fated Gary Austin's sportsbook on the Strip was booking daily NHL over/unders. But the Dunes sportsbook had an eccentric fatso manager who liked to put up stuff on a whim. Recently he had been throwing up NHL over/unders. On that first afternoon of the playoffs, there was nothing on the board. Hey, I asked him, what happened to hockey totals? He was insulted that a young guy smack out of college was questioning how aggressive he was as an oddsmaker. "Sure, I'll put them up. Give me a few minutes."

He made them up off the top of his head. That's the way it worked in those years. It was difficult not to laugh. Suddenly I had 1.5 or 2 goal middles on every game. Gary Austin's had known enough to shade the totals down in the playoffs. Not this guy. He was still throwing up 8 and 8.5 everywhere. So I calmed myself and bet under for the limit several pops apiece. Then I shot back to Austin's and played the other way, but always going heavy on the under.

Some of the middles hit clean. I think I collected every under, or maybe all but one.

I had seen enough. This town is candy. At least the sports side. Mistakes galore, regardless of the impression elsewhere. Do the legwork, let the applicable math trend in your favor, and it will work out. It did. :happy
FredL
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Re: The Biggest Risk

Post by FredL »

I don't think P2P lending, Lending Club or others, are risker than junk bond and some sector fund. I have read Forbes, Bloommberg, Fortune, The Wall Street Journal, Money magazine etc. They all say Lending Club is good as long as you only select the rated A borrowers. As buying individual bond, before it matures you have to sell it on the 2nd market which could lost money.
HIinvestor
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Re: The Biggest Risk

Post by HIinvestor »

We put most of my savings for 5 years into ONE stock that tanked! Lost just about all of it and then the company folded! Then we took what remaining funds we had and invested with H's buddy in over-priced high ER, front and back loaded mutual funds and LOST money in the bull market! We have since taken our cash and moved it to Schwab, Fidelity and Vanguard, where we are slowly investing in low cost index funds and a few select individual stocks.

The one good thing we did with the over-priced "full service" broker was buy local municipal zero coupon bonds with guaranteed 9% fixed interest rate, which we used to help fund our kids' college educations.
basspond
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Re: The Biggest Risk

Post by basspond »

IVF didn't work. Adoption did.
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meowcat
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Re: The Biggest Risk

Post by meowcat »

Being in 100% equities at 51. It's worked out great, no regrets.
What the bold print givith, the fine print taketh away. | -meowcat
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Trevor
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Re: The Biggest Risk

Post by Trevor »

FredL wrote:I don't think P2P lending, Lending Club or others, are risker than junk bond and some sector fund. I have read Forbes, Bloommberg, Fortune, The Wall Street Journal, Money magazine etc. They all say Lending Club is good as long as you only select the rated A borrowers. As buying individual bond, before it matures you have to sell it on the 2nd market which could lost money.

I have only about 10% in A rated borrowers :) (although I'm looking to slowly increase that). If you are only going for grade A I don't see much point, might as well just invest into Total Bond Market. I have nearly 50% of my notes in grade C. I also don't plan on selling anything on the secondary market.
WWJD - What Would Jack Do?
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