Individual stocks for fun

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workingovertime
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Individual stocks for fun

Post by workingovertime » Fri Aug 11, 2017 8:02 am

I pretty much invest the "boglehead" way but I'm considering gambling a bit just for fun. It would be money that I could lose all and not feel guilty about. It would be few hundreds at most. If you were to do this, which stock would you invest in? I'm thinking of ones you speculate would be a huge winner.... like Apple, Amazon, Bitcoins, etc 10-20 years ago. I wouldn't really buy anything that is too established as it has already been known in the market too long.

I thought about doing this Jan, 2017 with the company Mobileye (makes autonomous driving sensor type things) because I thought there was autonomous driving could only flourish in the future but I decided not to at the end. I could have doubled my money (or could have lost it all, I know). I want to find out about something bigger though. A company that is maybe even less known but has huge potential.

Again, just doing it for fun... just like if I were to go spend this money going out with my wife for the weekend so don't care too lose. Thanks

aristotelian
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Re: Individual stocks for fun

Post by aristotelian » Fri Aug 11, 2017 8:20 am

Have you seen the Bogleheads hedge fund competition thread? There are some good picks there.

I have a Yahoo watch list to test out my stock picks if I ever get enough play money to have a decently diversified stock portfolio.

My most recent add was a Greece ETF (GREK) value play. I "bought" that using profits from First Solar, AMD, and Boeing. I also like Tesla.
Last edited by aristotelian on Fri Aug 11, 2017 8:52 am, edited 1 time in total.

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TomatoTomahto
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Re: Individual stocks for fun

Post by TomatoTomahto » Fri Aug 11, 2017 8:20 am

I honestly don't get the concept of "fun" money. Disclosure: I'll buy lottery tickets, because winning $300M would be life changing; I know the odds, but I can't fantasize if I don't own at least one ticket, which is cheaper than a movie ticket. Doubling $500, or even going 10x on $500 doesn't remind me of fun.

aristotelian
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Re: Individual stocks for fun

Post by aristotelian » Fri Aug 11, 2017 8:26 am

TomatoTomahto wrote:I honestly don't get the concept of "fun" money. Disclosure: I'll buy lottery tickets, because winning $300M would be life changing; I know the odds, but I can't fantasize if I don't own at least one ticket, which is cheaper than a movie ticket. Doubling $500, or even going 10x on $500 doesn't remind me of fun.
In my mind, the idea would be to increase TLH opportunities but that is probably just an excuse to have play money...I figure you would need $5-$10k per holding to make it worthwhile.

workingovertime
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Re: Individual stocks for fun

Post by workingovertime » Fri Aug 11, 2017 8:29 am

TomatoTomahto wrote:I honestly don't get the concept of "fun" money. Disclosure: I'll buy lottery tickets, because winning $300M would be life changing; I know the odds, but I can't fantasize if I don't own at least one ticket, which is cheaper than a movie ticket. Doubling $500, or even going 10x on $500 doesn't remind me of fun.
I'm with you. I'm looking for something that would be more than 10x of $500. Think investing in the very early days of Apple, Amazon... Of course, this is all gamble so chances of being able to pick something like that, that early on would be very minimal...

ny_rn
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Re: Individual stocks for fun

Post by ny_rn » Fri Aug 11, 2017 8:32 am

I trade cryptocurrency (bitcoin and ethereum) for fun. I'm sure it'll meet all of your speculative needs.

Grt2bOutdoors
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Re: Individual stocks for fun

Post by Grt2bOutdoors » Fri Aug 11, 2017 8:57 am

TomatoTomahto wrote:I honestly don't get the concept of "fun" money. Disclosure: I'll buy lottery tickets, because winning $300M would be life changing; I know the odds, but I can't fantasize if I don't own at least one ticket, which is cheaper than a movie ticket. Doubling $500, or even going 10x on $500 doesn't remind me of fun.
Hate to disappoint you, but I bought the winning ticket early this morning. :wink: Perhaps you bought one with the same set of numbers, in that case, I'm more than happy to share the prize with you and others because winning a fraction of that pot would still be life-changing.

As far as picking stocks in the hedge fund contest - two years in a row I picked LMT but I didn't purchase it in real life. :oops:
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

workingovertime
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Re: Individual stocks for fun

Post by workingovertime » Fri Aug 11, 2017 9:05 am

ny_rn wrote:I trade cryptocurrency (bitcoin and ethereum) for fun. I'm sure it'll meet all of your speculative needs.
Feel like it is too late to jump on it though. Only if I could have near the beginning of it.. ONLY IF! is the key word :D

The hedge fund contest seems like a good place to look though. Thanks

BogleAlltheWay
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Re: Individual stocks for fun

Post by BogleAlltheWay » Fri Aug 11, 2017 9:15 am

workingovertime wrote:
TomatoTomahto wrote:I honestly don't get the concept of "fun" money. Disclosure: I'll buy lottery tickets, because winning $300M would be life changing; I know the odds, but I can't fantasize if I don't own at least one ticket, which is cheaper than a movie ticket. Doubling $500, or even going 10x on $500 doesn't remind me of fun.
I'm with you. I'm looking for something that would be more than 10x of $500. Think investing in the very early days of Apple, Amazon... Of course, this is all gamble so chances of being able to pick something like that, that early on would be very minimal...
It depends on the person. A lot people enjoy the thrill of gambling. It is not always about the money, but the winning. It is can be thought as being a hobby.

stimulacra
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Re: Individual stocks for fun

Post by stimulacra » Fri Aug 11, 2017 9:35 am

Question for the group:

How much fun money do you shore up before buying an individual stock?

A few hundred dollars and it seems like fees and transaction costs would be a drag… 

For me somewhere around $3k – $5k seems to be the area where you can buy a meaningful block of shares, transaction costs are negligible, and 5X or 10X returns can change the curve quite a bit.

The flip side is that after a few positions this can move past the “fun money” phase, individual stock selection will veer more towards the conservative (large cap, dividends, etc… ) in which case indexing starts becoming more obvious again.

bloom2708
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Re: Individual stocks for fun

Post by bloom2708 » Fri Aug 11, 2017 9:39 am

Another area where you just need to outsmart yourself.

Have an extra $500 of "fun money"? Buy more of what you have. $500 VTSAX, $500 VTIAX.

More is not more. More is less. Buy more of the things you already have. Trick yourself. :wink:
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

Fallible
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Re: Individual stocks for fun

Post by Fallible » Fri Aug 11, 2017 10:42 am

workingovertime wrote:I pretty much invest the "boglehead" way but I'm considering gambling a bit just for fun. It would be money that I could lose all and not feel guilty about.
...
Again, just doing it for fun... just like if I were to go spend this money going out with my wife for the weekend so don't care too lose. Thanks
Some gambling may be just fun, but depending on how deeply you dive into studying companies and how often you tend to your stock picks, it will also take time, valuable time that might be better spent elsewhere. And it will take discipline to not spend too much time, to keep the costs low, to quit if you lose the play money. And if your gamble begins to pay off, it may take more discipline than ever to not bring in more play money.

Just some things to think about.
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aristotelian
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Re: Individual stocks for fun

Post by aristotelian » Fri Aug 11, 2017 10:50 am

stimulacra wrote:Question for the group:

How much fun money do you shore up before buying an individual stock?

A few hundred dollars and it seems like fees and transaction costs would be a drag… 

For me somewhere around $3k – $5k seems to be the area where you can buy a meaningful block of shares, transaction costs are negligible, and 5X or 10X returns can change the curve quite a bit.

The flip side is that after a few positions this can move past the “fun money” phase, individual stock selection will veer more towards the conservative (large cap, dividends, etc… ) in which case indexing starts becoming more obvious again.
I have a long term plan of building a stock portfolio for TLH purposes. The plan is 20+ stocks at $5,000 each to make it worthwhile. Ideally that would be $10,000 each. Unfortunately that would be too much of my portfolio so I am not pulling the trigger any time soon.

macman_65
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Re: Individual stocks for fun

Post by macman_65 » Fri Aug 11, 2017 12:03 pm

Buy enough different stocks and you have an index fund with 0% ER. Isn't that the BH way?

bloom2708
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Re: Individual stocks for fun

Post by bloom2708 » Fri Aug 11, 2017 12:10 pm

macman_65 wrote:Buy enough different stocks and you have an index fund with 0% ER. Isn't that the BH way?
Sure. Then just spend 3-4 hours per day analyzing the market weights of each of your stocks. Figure out how to buy/sell/exchange to keep the market weight and ratios of Large/Medium/Small/Growth/Value.

Tax loss harvest routinely. If you get too big of gains in a stock, you won't want to sell because of the tax hit.

0% ER is not free. :annoyed
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

bigred77
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Re: Individual stocks for fun

Post by bigred77 » Fri Aug 11, 2017 12:27 pm

If I wanted to speculate over the next number of years I would look at distressed oil companies as a bet on recovering commodity prices and a bet that some of them can manage their over leveraged capital structures. Pretty big fat tails on those potential return distributions in my opinion.

go140point6
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Re: Individual stocks for fun

Post by go140point6 » Fri Aug 11, 2017 12:34 pm

For me, mostly my fun money investing has been using StartEngine to invest, basically a step up from participating in a Kickstarter. Honestly, it's probably similar to throwing money away on a lottery ticket (which I do on occasion, like TT, to dream of what might be). I don't really expect to ever make money on my "investments" but the minimums are typically very modest (in the couple of hundred dollar range typically) and it's fun to pretend to be getting in on the ground floor of a startup. Like Kickstarter, the companies generally provide ongoing updates to how they are doing and progressing. To date I have 5 companies I've invested in (all at the minimum) and it scratches that itch I get every once in a while. That reminds me, I should probably go get a lottery ticket today... :wink:

lernd
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Re: Individual stocks for fun

Post by lernd » Sat Aug 12, 2017 7:10 am

I dabble in small-cap/micro-cap biotech stocks. It's in my field and Phase 2b and 3 trials are usually published in journals that I can easily access. I look for companies in late stage drug trials that I believe have a chance of success, or companies with drugs pending FDA approval that I think are likely to be approved. I figure these companies are small enough to fly under most large investors' radars. I've hit some homeruns (3-6x my investment) and struck out swinging as well (lost upwards of 75%). When I add up all my realized gains and losses to this point, I'm slightly above what a TSM index fund would have done over that time (I realize that's comparing apples to oranges but I figure it's where I would have put the money instead). That's before taxes, which are LTG for my individual stocks. The most I've ever put into a single stock is $2500 and I hold between 4-6 at any given time.

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CyclingDuo
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Re: Individual stocks for fun

Post by CyclingDuo » Sat Aug 12, 2017 7:32 am

workingovertime wrote:I pretty much invest the "boglehead" way but I'm considering gambling a bit just for fun. It would be money that I could lose all and not feel guilty about. It would be few hundreds at most. If you were to do this, which stock would you invest in? I'm thinking of ones you speculate would be a huge winner.... like Apple, Amazon, Bitcoins, etc 10-20 years ago. I wouldn't really buy anything that is too established as it has already been known in the market too long.

I thought about doing this Jan, 2017 with the company Mobileye (makes autonomous driving sensor type things) because I thought there was autonomous driving could only flourish in the future but I decided not to at the end. I could have doubled my money (or could have lost it all, I know). I want to find out about something bigger though. A company that is maybe even less known but has huge potential.

Again, just doing it for fun... just like if I were to go spend this money going out with my wife for the weekend so don't care too lose. Thanks
Seems like an odd way to spend money. If you are going to invest, pick an excellent company with profits/dividends/growth - take your pick - and invest for the long haul using buy & hold. Reinvest the dividends - if applicable - using a brokerage DRIP program and enjoy the returns.

If you want to speculate on what you think has potential to be the "next winner" (good luck with that), dive deep into the venture capital world to see what companies they are supporting, trends, and once a company that meets your criteria goes public - consider a speculation.

We'd still suggest an investment approach over the speculation approach. Many BH's own individual stocks in addition to index funds.

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Watty
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Re: Individual stocks for fun

Post by Watty » Sat Aug 12, 2017 7:45 am

workingovertime wrote:It would be money that I could lose all and not feel guilty about. It would be few hundreds at most.
You need to be very careful with this since oddly enough your biggest risk isn't that the stocks will do badly and you will lose money, it is that you will do well have a significant gain.

The problem is that if you are do well then you will tend to increase the amount of money you are buying stocks with. If you do well for a couple of years you could end up with way too much invested in individual stocks when your luck runs out.

Just by random chance there is about a 50% chance that you will beat the market.

Another common problem with people that invest with stocks like this is that they don't accurately track their performance. They might get excited since the small cap stocks they bought are up 20% when a total stock market fund is only up 10%. The problem is that they should have been comparing their performance to a small cap index fund that was up 25%.

With taxes, dividends, trading costs, and future contributions the math for tracking your stock picking performance can quickly become fiendishly difficult. If you decide to do this then have a plan on how you will track your performance before you start and then keep your performance tracking up to date. Tracking your performance is critical since you will tend to get excited about the stock you pick that is up 400% even when your overall portfolio is down.

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F150HD
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Re: Individual stocks for fun

Post by F150HD » Sat Aug 12, 2017 8:54 am

Why picking stocks is only slightly better than playing the lottery
Published: July 29, 2017 11:26 a.m. ET


I recently learned of a new academic study entitled "Do stocks outperform Treasury Bills?" by Hendrik Bessembinder, a finance professor at Arizona State University.

The study evaluated every one-month return of every U.S. common stock traded on the New York and American stock exchanges and the Nasdaq NDAQ, -0.55% all since 1926.


...So while the stock market created about $32 trillion in lifetime wealth over this approximately 90 years, more than half of that came from only 86 top-performing stocks (out of nearly 26,000).

Not surprisingly, later in the article...

By the way, I recently visited with John Bogle (he likes to be called Jack, in case you get to meet him), the inventor of index funds. He hadn't heard about this study, and when I showed it to him he immediately asked his assistant to make a copy for him.

The Wizard
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Re: Individual stocks for fun

Post by The Wizard » Sat Aug 12, 2017 10:24 am

macman_65 wrote:
Fri Aug 11, 2017 12:03 pm
Buy enough different stocks and you have an index fund with 0% ER. Isn't that the BH way?
Sort of.
I'm thinking of doing this with blue chip dividend stocks, certainly not newfangled growth stocks.
I'd buy $7000 of JNJ to start. The $7 trade fee is 0.1% which is comparable to one year's ER in a mutual fund.
I would then buy similar holdings in other quality companies as funds permit.
These would be long term retirement holdings, bought with RMD proceeds for instance, with no real intent to sell.
I would also keep funds in VTSAX, also in taxable, which would be available for certain larger expenses...
Attempted new signature...

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nedsaid
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Re: Individual stocks for fun

Post by nedsaid » Sat Aug 12, 2017 10:38 am

Fallible wrote:
Fri Aug 11, 2017 10:42 am
workingovertime wrote:I pretty much invest the "boglehead" way but I'm considering gambling a bit just for fun. It would be money that I could lose all and not feel guilty about.
...
Again, just doing it for fun... just like if I were to go spend this money going out with my wife for the weekend so don't care too lose. Thanks
Some gambling may be just fun, but depending on how deeply you dive into studying companies and how often you tend to your stock picks, it will also take time, valuable time that might be better spent elsewhere. And it will take discipline to not spend too much time, to keep the costs low, to quit if you lose the play money. And if your gamble begins to pay off, it may take more discipline than ever to not bring in more play money.

Just some things to think about.
I will say that owning individual stocks has been a good education for me. It is a good point about the value of your time spent doing security analysis. I found that managing my own individual stock portfolio does give me an appreciation for portfolio managers who do this for a living. It also gives me an appreciation for how difficult beating the market really is. Most of my money is invested in mutual funds and ETFs, and a good portion of that is indexed.

I took owning individual stocks seriously and made a conscientious effort to buy at reasonable prices and to diversify across industry groups. I also work with an independent broker and have a Morningstar subscription. They are about 12.5% of my retirement portfolio.

For fun money, five stocks across industry groups is good enough. Even here, try to buy good companies at reasonable prices. Don't gamble. Give yourself a shot at winning. I do not encourage speculation with even your fun money. Make it a learning experience.

If you are serious, you need probably a minimum of 15 stocks. 20 is probably optimal and 25 probably the maximum. That is about all an individual can reasonably follow. 30 at the outside. Again, diversify across industry sectors.

If you want fun money, 5% of your portfolio is about as much as you want to do. Put some effort into it. Don't do the lottery ticket thing.
A fool and his money are good for business.

ny_rn
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Re: Individual stocks for fun

Post by ny_rn » Sun Aug 13, 2017 7:56 am

workingovertime wrote:
Fri Aug 11, 2017 9:05 am
ny_rn wrote:I trade cryptocurrency (bitcoin and ethereum) for fun. I'm sure it'll meet all of your speculative needs.
Feel like it is too late to jump on it though. Only if I could have near the beginning of it.. ONLY IF! is the key word :D

The hedge fund contest seems like a good place to look though. Thanks
Bitcoin is up ~ $1500 since last month.

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topper1296
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Re: Individual stocks for fun

Post by topper1296 » Sun Aug 13, 2017 9:27 am

I'm mainly indexed, however I also invest in individual stocks as a supplement. Currently, I have 14 and have set a limit at 20 and I rarely trade. It has been fun and educational for me and beating the S&P over the past 1, 3 and 5 year periods without owning any tech stocks is an added bonus.

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