High-risk Investments

[Gecko10x]

As a thought experiment, what is the best high-reward gamble that has a decent likelihood of payoff and a low risk of ruin?
Obviously there's a spectrum here, and I'm not sure I have good definitions for "decent payoff" and "low risk of ruin", so let's leave that open to interpretation. But I'll say that lottery and Vegas odds probably don't qualify.

Let's say you want to make a wager in the hopes of earning a return of 4x+ within a 5 year timeframe (modify these as you wish, but the idea is significantly better than a standard boglehead investment). What's your asset of choice? Single stock? Options? Unmentionable asset? Leveraged stock or fund? Beanie Babies? Why that asset?

Simply a thought experiment. Let's try to avoid the "this is a sign of the top!" comments, please.

[jebmke]

high-reward gamble that has a decent likelihood of payoff and a low risk of ruin?

IMO one characteristic of gambling is a negative expected outcome.

[Gecko10x]

high-reward gamble that has a decent likelihood of payoff and a low risk of ruin?

IMO one characteristic of gambling is a negative expected outcome.

Ah, right. So I suppose I'm not talking about a gamble then.

[jebmke]

IMO one characteristic of gambling is a negative expected outcome.

Ah, right. So I suppose I'm not talking about a gamble then.

Any long equity investment that does not involve leverage has a floor of zero so the most you can lose is all your money. You won't lose any other assets you own.

[Thesaints]

It all depends on the definition of decent return and risk of ruin.
Essentially bets can be classified as symmetric (i.e. the probability of winning and losing are not much different) or asymmetric.
For instance one could say that betting on a single number at the roulette table is not really symmetric, but is definitely not strongly asymmetric (win/lose ratio is about 3/97). Whereas buying a lottery ticket is exceptionally asymmetric (1/200 millions).
Bets are also classified as “fair” and “unfair”. A fair bet is one where the payout is equal to the amount bet divided by the probability of winning.
From the two classifications above you can immediately see that in order to win very large amounts through a symmetric bet, you have to put a large amount of your money at risk. As such, if your requirement is “not ruin” you have to look at asymmetric bets, where you can cash in a large payout by putting a much smaller amount at risk. In that case, fair or unfair is of secondary importance since you still make a lot of money even if the payout is only a fraction of the fair amount. In fact, the more asymmetric bets available (lottery, hedge fund, VC) are all unfair.
Vice versa, symmetric bets that are not fair, or unfair to your advantage, are to be avoided like the plague.
In conclusion, to aspire to a large payoff, either you have to put a large amount at risk, or accept a high chance of being unsuccessful.

[typical.investor]

Let's say you want to make a wager in the hopes of earning a return of 4x+ within a 5 year timeframe (modify these as you wish, but the idea is significantly better than a standard boglehead investment). What's your asset of choice? Single stock? Options? Unmentionable asset? Leveraged stock or fund? Beanie Babies? Why that asset?

Simply a thought experiment. Let's try to avoid the "this is a sign of the top!" comments, please.

First, I think the general relationship is that the larger the potential return, the larger the potential variance of return.

Second, leverage will obviously boost that.

Third, whether it is a single stock, option, unmentionable, collectable, private investment or index; all assets go through feasts and famines and so when making a large bet, you have to get the timing correct.

As to which asset or asset class is poised now for good returns, I am not personally able to identify one I can be sure there will likely be large gains and only potential limited losses. Maybe you will have to buy on the rumor (of precious minerals in Greenland perhaps) and try to sell on the news, but rumors are numerous and unreliable so yeah, which one(s)?

[nisiprius]

One where you have solid inside information and no risk of getting caught.

The EMH (which is only an hypothesis) applies to investments of all degrees of riskiness. Barring inside information, the best high-risk investments will quickly become evident and will get bid up to the point where, to the best of collective judgement, it is on a par with all the rest.

The most straightforward answer to your question is to pick a boring old normal investment, like the total market or S&P 500, and leverage it up to the Kelly criterion optimum... except for these problems:

• there's no way to actually calculate the Kelly criterion for the stock market;
• Guesstimates of the optimum leverage for the stock market range from 1.17X (in the paper authored by Kelly and Rotondo in 1992) to 1.4X, 1.6X, 2.2X.
• 4x in 5 years = about 32% annualized. If we assume an average stock market return of 10% year, that requires about 3.2X leverage, well above the Kelly estimates. That implies that enough leverage to quadruple your money in four years is enough leverage to incur a meaningful risk of ruin.
• In other words, 4x in 5 years without a meaningful risk of ruin is probably unattainable.

It's unlikely, barring inside information, that any other investment is much better than just leveraging up the stock market.

[Rocinante Rider]

High reward, likelihood of payoff, and low risk? Is Bernie Madoff taking new investors?

[cheese_breath]

High risk investment with low risk of ruin?

I suppose it depends on how much of your portfolio is in it.

[Nicolas]

As Frank Cappiello used to joke on Wall $treet Week: “Russian war bonds”. Or maybe Iraqi dinars

[CommitmentDevice]

Investing in your human capital and relationships has historically been the highest risk-adjusted returning asset class.

[ge1]

You need to have a) a specific insight / opportunity and b) needs to employ high leverage.

I invest in select real estate single deal private funds where I understand the fundamentals very well. One of them will double the investment within a year when realized in Q1. That's very much the exception though but doubling your money in one year sets you up well to achieve 4x in several years. Not available to investing public though.

[Gecko10x]

It all depends on the definition of decent return and risk of ruin.
Essentially bets can be classified as symmetric (i.e. the probability of winning and losing are not much different) or asymmetric.
For instance one could say that betting on a single number at the roulette table is not really symmetric, but is definitely not strongly asymmetric (win/lose ratio is about 3/97). Whereas buying a lottery ticket is exceptionally asymmetric (1/200 millions).
Bets are also classified as “fair” and “unfair”. A fair bet is one where the payout is equal to the amount bet divided by the probability of winning.
From the two classifications above you can immediately see that in order to win very large amounts through a symmetric bet, you have to put a large amount of your money at risk. As such, if your requirement is “not ruin” you have to look at asymmetric bets, where you can cash in a large payout by putting a much smaller amount at risk. In that case, fair or unfair is of secondary importance since you still make a lot of money even if the payout is only half of the fair amount. In fact, the more asymmetric bets available (lottery, hedge fund, VC) are all unfair.
Vice versa, fair bets that are not fair, or unfair to your advantage, are to be avoided like the plague.
In conclusion, to aspire to a large payoff, either you have to put a large amount at risk, or accept a high chance of being unsuccessful.

Thanks for the framework. You make the roulette table seem like a reasonable option

[cheese_breath]

As Frank Capiello used to joke on Wall $treet Week: “Russian war bonds”. Or maybe Iraqi dinars

Indian Rupees?

The rupee ... fell 2.8% in 2024 to post a seventh consecutive annual decline.

https://www.reuters.com/markets/currenc ... %20decline.


Nowhere to go but up???

[KlangFool]

As a thought experiment, what is the best high-reward gamble that has a decent likelihood of payoff and a low risk of ruin?

Let's say you want to make a wager in the hopes of earning a return of 4x+ within a 5 year timeframe (modify these as you wish, but the idea is significantly better than a standard boglehead investment). What's your asset of choice? Single stock? Options? Unmentionable asset? Leveraged stock or fund? Beanie Babies? Why that asset?

A) $2 Lottery ticket.

B) Some kind of public listed company with capitalization less than 1 billion (100 to 200 millions) with special technology that could push the stock price 20X to 40X within 5 years. I would not put more than $10,000 in total gambling on those kind of stocks.

KlangFool

[Gecko10x]

One where you have solid inside information and no risk of getting caught.

You need to have a) a specific insight / opportunity and b) needs to employ high leverage.

I invest in select real estate single deal private funds where I understand the fundamentals very well. One of them will double the investment within a year when realized in Q1. That's very much the exception though but doubling your money in one year sets you up well to achieve 4x in several years. Not available to investing public though.

So, inside info! Private real estate is one area where this seems to reasonably exist.

[J295]

Select private investments. Ones I’ve seen with success are ownership interests in banks, surgery centers, retail malls, franchised restaurants.

[Thesaints]

Thanks for the framework. You make the roulette table seem like a reasonable option

You only make 35x. Not a whole lot, if you want 10M.

[firebirdparts]

As a thought experiment, what is the best high-reward gamble that has a decent likelihood of payoff and a low risk of ruin?

Employment seems to me like the best by far. Can't think of anything in the same class. A lot of people hate it, but I think that's pretty delusional.
Starting your own business or ownership in a business is much much worse, but certainly "decent" and, if you don't borrow much "low".
I would very much call these "high reward" or maybe 'extreme reward"

Investments are all much worse than that. A simple investment that kinda jumps off the page here is UPRO.

I am not sure whether to count owning a building as a business or an investment, but it's solid. Maybe not "high reward".

[nisiprius]

As Frank Capiello used to joke on Wall $treet Week: “Russian war bonds”. Or maybe Iraqi dinars

Indian Rupees?

The rupee ... fell 2.8% in 2024 to post a seventh consecutive annual decline.

https://www.reuters.com/markets/currenc ... %20decline.


Nowhere to go but up???

Reminds me of this posting:
Why don't Bogleheads invest in CD's from Emerging Markets?

I have recently read on some threads/forums, that there are banks in India giving out 8-10% rates on CD's.

If that is true, why don't I see any Boglehead suggestions to invest in those CD's? Certainly the Total Bond Market and Total Stock Market (both US and International) cannot consistently beat that rate. And also the 8-10% is a guaranteed return.

What am I missing here?

[snowday2022]

Investing in your human capital and relationships has historically been the highest risk-adjusted returning asset class.

Data?

[learntoinvest123]

The only real life example I have seen is a fella who bet it all on Tesla LEAPS when the pandemic hit. Another one is trying through TQQQ (doing well because 2024 was all about tech, but not 4x).

The best way is to wait for a large market crash (about 30%) and bet it all on some leveraged investment. But that assumes you have large capital on the sidelines and the right intuition to find the lows, but that may not happen for a decade or more sometimes while you are waiting and missing out on market returns.

[Valuethinker]

Indian Rupees?

The rupee ... fell 2.8% in 2024 to post a seventh consecutive annual decline.

https://www.reuters.com/markets/currenc ... %20decline.


Nowhere to go but up???

Reminds me of this posting:
Why don't Bogleheads invest in CD's from Emerging Markets?

I have recently read on some threads/forums, that there are banks in India giving out 8-10% rates on CD's.

If that is true, why don't I see any Boglehead suggestions to invest in those CD's? Certainly the Total Bond Market and Total Stock Market (both US and International) cannot consistently beat that rate. And also the 8-10% is a guaranteed return.

What am I missing here?

Those Indian deposits are interesting.

I believe they are in USD and so proof against devaluation (in theory).

I believe also you need to have an Indian connection - perhaps citizenship - and reside abroad to be able to take advantage of them.

If India has a banking or foreign exchange crisis, then I would imagine they would turn out not to be safe. They are certainly not as safe as an FDIC insured deposit at a US financial institution.

[er999]

You can see some past ideas on here and decide for yourself how they worked out 4 years later:

viewtopic.php?t=329720

viewtopic.php?t=323646

There will be an individual stock that will 5x in the next 5 years but hard to identify in advance and most will fail to beat the index. However whoever posts about their individual stocks successes will likely be the winners so you’ll have a skewed view.

Other options mentioned on here are single stock options (even tougher) or leverage with a broad based index, and the asset that must not be named. I don’t think sector funds would 4x in 5 years as even a successful retrospective pick like vanguard information technology is only up 1.4x in the past 5 years. Might need more like 10 years for a 4x with a broad index.

How much money? If it’s under $100k might be easier to just earn the money in your job. That’s what I did when my speculative dreams failed (upro, tmf, single stock speculation with virgin galactic). I found earning an extra $50k / year much easier than trying to do a speculative win.

I’d also look about optimizing your tax situation since that’s something under your control. If you move from a high tax state to a zero income tax state that could be something like 50% of your 1 year income back over 5 years. That’s assuming you save most of your money and don’t end up paying otherwise with a high property tax bill or high sale taxes.

[jjj_22]

Micro or small cap biotech stocks. They will almost always go somewhere between “nowhere” and “to zero” but every now and then one will hit a treatment that works and skyrocket.

My dad used to gamble on these. He hit some big winners but lost a lot on most, so at best it was a wash. Considering the opportunity cost, he definitely came out behind, but he did it for fun.

[like2read]

I like the framework of symmetric versus asymmetric bets. See The Big Short and CDOs, for example.

[KneePartsPro]

A niche small business startup in your area of expertise?

[Valuethinker]

As a thought experiment, what is the best high-reward gamble that has a decent likelihood of payoff and a low risk of ruin?
Obviously there's a spectrum here, and I'm not sure I have good definitions for "decent payoff" and "low risk of ruin", so let's leave that open to interpretation. But I'll say that lottery and Vegas odds probably don't qualify.

Let's say you want to make a wager in the hopes of earning a return of 4x+ within a 5 year timeframe (modify these as you wish, but the idea is significantly better than a standard boglehead investment). What's your asset of choice? Single stock? Options? Unmentionable asset? Leveraged stock or fund? Beanie Babies? Why that asset?

Simply a thought experiment. Let's try to avoid the "this is a sign of the top!" comments, please.

1. Be there early. I had a friend who manufactured (crypto product prohibited topic here) a unit for about $400. If he still owned it ...

Conversely beware of something that has gone up 100x, and someone tells you it can easily go up another 10x. Make sure that final valuation is indeed credible - will that put its market cap above that of major listed companies? Are forecasts assuming perfect execution for the next 10 years?

So you have to jump on these things when they are very new. Tesla at IPO, etc. Venture Capital is full of these right-skew bets. The median return will be less than cash. But if you hit the 100x, or 1000x bagger ...

As with John Bunyon's Pilgrim's Progress, Satan will sorely tempt you on the way to heaven. You are going to have to back your convictions against the doubters.

2. Go against the consensus. I knew someone here (who eventually stopped posting due to educational plans but also disagreement with moderators and posters) who bought call options against many of the leading financial stocks in the months post Lehman. I am sure they did very well.

If we really round on an idea here, really criticize it, you can bet that it's well outside the consensus of investment opinion (of the very Business School & financial theory type).

3. Be sure the odds are not entirely with the house. I wouldn't gamble online, for example. I know too much about why Contracts For Difference spread betting firms (assuming you have these in America?) are always advertising for new clients - their clients are by their nature "short volatility" on financial assets, and the betting firms are long volatility. So their clients get wiped out.

There's quite a lot of research on sports odds. I think that home games there tends to be excessive optimism on the part of the local punters? If you can find a way to trade against that... Anyways there's a rich academic literature, and it's worth considering.

4. Leverage. Don't leverage a bet in a way that can be called-- so use home mortgage not stockbroker margin. Because you are going to have to hold the line, even when the thing goes down. And if it does, and you can be margin called, then you are out...

5. Understand what you are doing. I cringe when I see posters talking about some options-based strategy, and then it becomes clear they don't really understand how options work. That's not investing. That's just throwing darts at a dart board, whilst blindfolded, in a pitch-black room.

6. be especially careful about investments whose basic case is "someone will buy this from me, at a higher valuation". Where there's no underlying cash flow or business model discernible. You can make money on these, but there's always a risk that in this particular poker game... you are, in fact, the mug.

So yes, these things are out there. And we posters here will almost inevitably be too sceptical ...

[JustGotScammed]

International only, small-cap value index fund.

[Carol88888]

I would pick something that has done very poorly for a long time and bet on some regression to mean. My pick might be emerging market stocks.

They soared leading up to 2008 and have performed dismally since. So I would just buy emerging index. At worst you'll just collect the dividends and it won't go to zero.

[Everlast311]

Investing in your human capital and relationships has historically been the highest risk-adjusted returning asset class.

+1 for this response. Otherwise, a 4x in 5 years implies a little more than 30%/year. Currently, the 5-year treasury yields about 4.5% Gonna take some significant risk to square that circle.

[JackoC]

As a thought experiment, what is the best high-reward gamble that has a decent likelihood of payoff and a low risk of ruin?
Obviously there's a spectrum here, and I'm not sure I have good definitions for "decent payoff" and "low risk of ruin", so let's leave that open to interpretation. But I'll say that lottery and Vegas odds probably don't qualify.

Let's say you want to make a wager in the hopes of earning a return of 4x+ within a 5 year timeframe (modify these as you wish, but the idea is significantly better than a standard boglehead investment). What's your asset of choice? Single stock? Options? Unmentionable asset? Leveraged stock or fund? Beanie Babies? Why that asset?

"high-reward gamble that has a decent likelihood of payoff and a low risk of ruin" As others pointed out those attributes can't exist together in one financial asset whose characteristics/prospects are public information. And we don't expect to find profitable non-public info on a web forum.

But not a worthless thought experiment modifying it to the idea of a very high risk/return asset for a small % of portfolio and virtual zero risk asset for a large % (say 90/10 though it doesn't have to that). As opposed to say 60% in a medium-high risk asset (broad stock index) and 40% in a low risk asset, treasuries. This is (was) Nassim Talib's barbel idea (he's mentioned here much less often now than I recall as a lurker when the 2008-9 crash hadn't receded from memory).

The goal is not to break through to a new dimension of 'free lunch'. It's thinking about whether one might prefer to achieve significantly better than the riskless return with almost no risk of big long term losses. As opposed to 60/40 where big long term losses are unlikely but definitely possible.

What might be the 10%? One candidate would be short position in VIX futures for a margin amount <10% of portfolio. That has very high ratio of expected profit divided by margin amount. If one were tempted to say 'no that's all wrong, think of what happens when the VIX spikes 10's of points (as it sometimes does)!', that's in fact the reason the *expected return* on the margin must be high if the market is efficient. The VIX futures price IOW must be significantly higher than expected value of the VIX at futures maturity (and higher than the spot VIX in normal condition, IOW those futures are usually in contango) to induce anyone to bear the skewed risk of being short the VIX. Whether this is attractive depends on relative preference for wipe out of a small % of portfolio in margin not so rarely v avoiding the much less common outcome of long term negative stock return on a big % of portfolio. If it does appeal in theory there are still issues of mechanics, if not those aren't worth discussing.

What might be the 90%? AFAIK Talib himself cooled on this idea mainly because of doubt the obvious candidate, treasuries, is really suitable. From here on, a significant proportion of big downside scenarios might involve a US debt crisis. We can reasonably assume the combined probability of all very bad scenarios put together is small or the market wouldn't be priced as it is. But if among very bad scenarios treasury crisis/default is prominent, it's not as effective to avoid those by crowding more into treasuries. Alternatives have been suggested like world diversified direct land/real estate ownership but that isn't feasible for normal scale investors and anyway it's more volatile than T's in normal conditions. Gold is easy to own but much more volatile than T's in normal conditions. Finding the 90% asset might be as challenging as finding the 10% asset.

[moneyflowin]

QQQ

The Nasdaq-100 quadrupled from Jan 1998 to March 2000 (QQQ didn't exist in 1998, so I use NDX as its proxy). The risk of ruin is nil since a major index in practice can't go to zero (or else we'd have bigger things to worry about).

The likelihood of QQQ quadrupling in 5 years is low, but definitively possible because it has done it before. I think if we had a major recession and a crash, I could see it going up 4x in 5 years from the bottom if the economy rebounded quickly and the planets lined up just right.

Other people mentioned individual stocks and a forbidden investment, but those have a risk of ruin. I can think of conceivable scenarios where they could go to $0.

[breakfastinbed]

There is one clear answer to this: ProShares UltraPro QQQ (TQQQ) was released in 2010. Since then it has generated an annualized return of 41.9%.

If you are looking for high-risk/high-return investments, offerings from companies like Direxion and ProShares are a good bet.

If you told me to pick a lottery ticket EFT that isn't leveraged, I'd be looking at offerings from Grayscale.

[blortchplop]

As a thought experiment, what is the best high-reward gamble that has a decent likelihood of payoff and a low risk of ruin?
Obviously there's a spectrum here, and I'm not sure I have good definitions for "decent payoff" and "low risk of ruin", so let's leave that open to interpretation. But I'll say that lottery and Vegas odds probably don't qualify.

Vegas odds absolutely have a decent expected payoff and low risk of ruin... if you're the house.

[Benjamin Buffett]

As a thought experiment, what is the best high-reward gamble that has a decent likelihood of payoff and a low risk of ruin?
Obviously there's a spectrum here, and I'm not sure I have good definitions for "decent payoff" and "low risk of ruin", so let's leave that open to interpretation. But I'll say that lottery and Vegas odds probably don't qualify.

Let's say you want to make a wager in the hopes of earning a return of 4x+ within a 5 year timeframe (modify these as you wish, but the idea is significantly better than a standard boglehead investment). What's your asset of choice? Single stock? Options? Unmentionable asset? Leveraged stock or fund? Beanie Babies? Why that asset?

Simply a thought experiment. Let's try to avoid the "this is a sign of the top!" comments, please.

Some risky and morally questionable high risk and return investments:

1 Leveraged real estate
2 Very leveraged equity index fund, HELOC or mortgage loan. To get more risk pick a single stock, tech or biotech company that you think will be profitable.
3 Start a business, a small business startup has a 90% chance of being bankrupt in five years, if it can be scaled and does well you could retire early. Your risk of capital loss and wasted time and effort are very high.
4 Choose careers that are very high risk for higher pay, invest the income in a risk appropriate investment. High tension line repair men, people fighting on the front lines of some conflicts, certain police and prison jobs, certain hazmat and industrial jobs pay well to compensate potential exposure. There are people that clean out chemical vats, and disposal units, and they get paid a decent amount for their risk. Usually the more dangerous and the more unpleasant the better the pay. Miners, oil rig workers, etc etc.
5 If you think you wont get caught and are ethically challenged, legally questionable activities can be high risk and high reward, but once you are caught the government will take it all, and you. Chemistry skills: breaking bad. Access to Insider information: insider trading, heavily insure a person or property.....if something bad happens to that insured thing it is profit. I do not recommend breaking the law, unless you like wearing prison khaki/orange.


Personally I choose to work a relatively unpleasant and high risk job and invest the excess income into a reasonable portfolio of three index funds. People in my line of work have a relatively short shelf life, and so if medical technology does not get better, my longevity risk may be partially handled by my career choice. It is one way of increasing risk and returns, while at the same time reducing the number of years I have to fund retirement.

If medical technology gets better, or my body holds up, I might work just a couple years longer to pad out my retirement account. Each additional year you work improves your chances of covering your retirement by two years: one year is spent working and does not need to be funded and that year gives you a chance to grow your portfolio, probably by enough to cover another year or more. Your risk here is that you become disabled or die before you can enjoy your retirement. A different kind of risk. The other direction is to retire earlier, and risk running out of money.

[ScubaHogg]

Modestly leveraged worldwide equity holdings in an accumulating portfolio?

[oldcomputerguy]

A couple of posts that tried to bring crypto into the discussion were removed. Discussion of investing in cryptocurrencies is against forum policy. See: Greater Fool Investing Strategies

Discussions of investment strategies based on securities or physical assets that have no underlying value or negative expected long term returns are prohibited. Examples include: cryptocurrencies; lottery tickets; tulip bulbs; Ponzi, pyramid, and multi-level marketing schemes; affinity frauds; and market manipulation schemes.

[secondopinion]

Personally I choose to work a relatively unpleasant and high risk job and invest the excess income into a reasonable portfolio of three index funds. People in my line of work have a relatively short shelf life, and so if medical technology does not get better, my longevity risk may be partially handled by my career choice. It is one way of increasing risk and returns, while at the same time reducing the number of years I have to fund retirement.

I am high risk as it is with health, and such jobs would likely kill me sooner than a risky investment will. I can choose to live longer by taking a safer job, and it might save on medical bills as well. I could survive on solely SS and be happy.

[Lawrence of Suburbia]

About as risky as I'm even remotely tempted to go these days might be a few $k in the Vanguard Information Technology fund (sorry, don't recall the ticker). Or maybe the QQQ.

But since I'm a pretty conservative investor and in retirement, I'm more of a fan of lower-risk stuff like Wellesley.

Anyway, I'm kind of like J.P. Morgan's shoeshine boy -- by the time I start thinking about it, it's over (see also: recent performance of the asset-that-cannot-be-named).

[Benjamin Buffett]

Personally I choose to work a relatively unpleasant and high risk job and invest the excess income into a reasonable portfolio of three index funds. People in my line of work have a relatively short shelf life, and so if medical technology does not get better, my longevity risk may be partially handled by my career choice. It is one way of increasing risk and returns, while at the same time reducing the number of years I have to fund retirement.

I am high risk as it is with health, and such jobs would likely kill me sooner than a risky investment will. I can choose to live longer by taking a safer job, and it might save on medical bills as well. I could survive on solely SS and be happy.

When I find that S.S. and my pension will cover my basic needs I will probably tone down my risk substantially.

[Benjamin Buffett]

About as risky as I'm even remotely tempted to go these days might be a few $k in the Vanguard Information Technology fund (sorry, don't recall the ticker). Or maybe the QQQ.

But since I'm a pretty conservative investor and in retirement, I'm more of a fan of lower-risk stuff like Wellesley.

Anyway, I'm kind of like J.P. Morgan's shoeshine boy -- by the time I start thinking about it, it's over (see also: recent performance of the asset-that-cannot-be-named).

While it is nearly impossible to time the market, the technology sector is at substantially elevated PE ratios and Social Media companies are slowing down, and the AI sector will probably hit a limit at some point. Any Large Cap growth fund will likely contain a lot of technology companies, but with just a little more diversification. I am uneasy about sector concentrated investments, as it tends to introduce uncompensated risk. However, if AI keeps on its upward tear, it could be very very profitable. At one point Trains and industrial were the tech sector of their day, and they reached the top and collapsed, so I would be careful with Technology.

[Lawrence of Suburbia]

About as risky as I'm even remotely tempted to go these days might be a few $k in the Vanguard Information Technology fund (sorry, don't recall the ticker). Or maybe the QQQ.

But since I'm a pretty conservative investor and in retirement, I'm more of a fan of lower-risk stuff like Wellesley.

Anyway, I'm kind of like J.P. Morgan's shoeshine boy -- by the time I start thinking about it, it's over (see also: recent performance of the asset-that-cannot-be-named).

While it is nearly impossible to time the market, the technology sector is at substantially elevated PE ratios and Social Media companies are slowing down, and the AI sector will probably hit a limit at some point. Any Large Cap growth fund will likely contain a lot of technology companies, but with just a little more diversification. I am uneasy about sector concentrated investments, as it tends to introduce uncompensated risk. However, if AI keeps on its upward tear, it could be very very profitable. At one point Trains and industrial were the tech sector of their day, and they reached the top and collapsed, so I would be careful with Technology.

If I moved more than a couple thou into any sort of sector tilt, it would immediately collapse. I don't want that on my conscience.

Seriously, whatever's in the index funds I already own is enough for me. Although I get tempted, I think I've finally internalized the wisdom of Jack, Taylor and all the other people here regarding how to invest.

[babystep]

As a thought experiment, what is the best high-reward gamble that has a decent likelihood of payoff and a low risk of ruin?
Obviously there's a spectrum here, and I'm not sure I have good definitions for "decent payoff" and "low risk of ruin", so let's leave that open to interpretation. But I'll say that lottery and Vegas odds probably don't qualify.

Let's say you want to make a wager in the hopes of earning a return of 4x+ within a 5 year timeframe (modify these as you wish, but the idea is significantly better than a standard boglehead investment). What's your asset of choice? Single stock? Options? Unmentionable asset? Leveraged stock or fund? Beanie Babies? Why that asset?

Simply a thought experiment. Let's try to avoid the "this is a sign of the top!" comments, please.

S&P 500 leaps.

[Kbg]

Interesting comment on LEAPS.

Actually, if one has the stomach for it (I don't) you can substantially beat the S&P 500 or Nasdaq 100 by buying far OTM calls which then return several X more than the index on a really good year. The downside is you have to continually plow money into several losing years in a row (call wise).

[firebirdparts]

I think it's an error to demand that a job be high risk in an effort to answer the question correctly. Every job is going to take your life. It's enough.

Anyway, I think a career is the #1 answer here by a mile. There's no reason to demand is has to be 'high risk' career.