Managing your "Gambling" Money Allocation

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allenmickers
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Managing your "Gambling" Money Allocation

Post by allenmickers » Mon Mar 17, 2008 4:15 pm

A lot of people on here claim to dedicate between 5 to 10% of their asset allocation towards "Gambling money" where they buy individual stocks or sector ETFs or weird crazy stuff that doesnt normally fit into a balanced AA>

I like this idea as it lets me play without getting deep in my head and so far has given me some positive returns in bad times.

My question is how do you manage that 5 to 10%?

Do you do constant day trading? Finding positions to hold for a day or two and then liquidating?

Do you pick specific stocks that you buy and hold for years and rebalance and buy more into it every so often?

Do you do this in your taxable or tax-sheltered account?

One interesting observation would be if you place your gambling money in your taxable account for "tax loss harvest" potential then you are betting against yourself because you feel that you will fail. If you put your gambling money in your tax sheltered IRA Brokerage account, then you are betting that you will be successful and pay less short term gains taxes this way.

I like the idea of splitting the difference. For example, half of my gambling money will likely be allocated towards day trading, and sitting in MMF cash for days or weeks until I see a great opportunity. The other half will likely be one time - long term holding blocks of single company stock.

I really like the idea of some weird crazy stuff like timber REITs (PCL , RYN) but I dont think it deserves a set part of my AA. So I might do a one time lump block purchase of 100 or 200 shares and sit on it... forever. Never buying more. If it really pays off, then it wont need rebalancing because the principal will be increasing compounded over tens of years. Then as my gambling money allocation increases as my total portfolio increases, then I pick something else crazy or weird - maybe a Private Equity company stock, buy 100 or 200 shares of that, and sit on that forever. Maybe one share of Berkshire Hathaway. Crazy stuff that doesnt fit in anywhere else but you feel is worthwhile.

I think keeping half of the gambling allocation as liquid cash and short time day trading is a good idea for those great deals you see every now and then. Or simply just buy into something like SPY / VEU for a few months if the market has been down.

If your short on tax sheltered space then perhaps split your gambling allocation so that your short time - half portion is sheltered (Short term cap gains) and your long term crazy stuff is taxable - however some of the crazy stuff I like is very tax inefficient like timber REITS and Private Equity.

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Taylor Larimore
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Gambling money?

Post by Taylor Larimore » Mon Mar 17, 2008 4:34 pm

A lot of people on here claim to dedicate between 5 to 10% of their asset allocation towards "Gambling money" where they buy individual stocks or sector ETFs or weird crazy stuff that doesnt normally fit into a balanced AA


The idea of using a portion of our savings for "gambling money" never made sense to me.

1. Investing to meet our goals is serious business. There is no reason to commingle investing and gambling. If the gambling is successful it is a temptation to expand beyond 5 to 10%. If unsuccessful, it is a loss of money and future compounding.

2. There are better ways to make money or seek enjoyment than gambling.

Best wishes.
Taylor

2.

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Re: Gambling money?

Post by allenmickers » Mon Mar 17, 2008 4:48 pm

Taylor Larimore wrote:
There are better ways to make money or seek enjoyment than gambling.
Isnt the idea of creating an ideal AA the same as gambling? After all you dont know what will happen. You dont know that stocks will have any profit over the next 40 years. You dont know if SV tilt will give positive earnings in the next 40 years. Everything in creating an AA is a form of gambling. Sure you can run backtesting and calculate sharpe ratios but its still statistically uncertain what will happen.

That being since, its based on practical theories. Being such, it means that most finance and math experts believe that a certain AA format will produce good results over the next 40 years. So I am going to put 90% of my money in that faith. I have my own ideas for what will do good over the next 40 years or possible in the next 40 minutes. Thats what my 10% allocation is for.

I believe my 10% is more speculative than the other 90% because its based only on my opinion and not on the opinions of hundreds of PhDs, however all 100% of my portfolio is essentially gambling and speculation.

Its just that the 90% of my portfolio is lower risk gambling and the other 10% is slightly higher risk gambling. But its all gambling.

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I am done with gambling

Post by hollowcave2 » Mon Mar 17, 2008 5:06 pm

I am going to come clean today just to cleanse my soul and perhaps someone else can learn from my experience.

I had a 5% allocation in a mad money account that had 5 individual stock holdings. Not a big amount of money to each holding, 1 to 2% each. I was doing pretty good. I was beating the market in this small account and getting some good gains. I was getting pretty confident. I wondered why I had 95% in my fund holdings.

Well, unfortunately, Bear Stearns was one of the holdings. I really hate to post this, but I guess I just need some therapy. I thought it offered a compelling buy last week when it traded around $50. So I actually got 100 shares.

Well, you know what happened. This evens out my gains from the rest of the year.

I have a very high risk tolerance, but this experience really rocks my emotions. It makes me rethink my entire investing life. I never experienced such a loss in a matter of 2 days. It is definitely the worst investing mistake of my life.

So I hope to learn from the experience, and one of the things to learn is single stock risk. I''ve always known the risk, in theory. But to really experience it is something else. Life is a good teacher.

I keep on telling myself that it was only 1% of my total portfolio. But I also know how much I could have used $5K. My therapy will now consist of unwinding the mad money account, appreciating the Boglehead philosophy, and setting up an automatic investment plan to my money market at Vanguard on a regular schedule until I make up the money that I so foolishly lost.

You know, when a company is in trouble, book value has no meaning, does it? I'll never deal with JPM either, for anything. All they did was steal the company.

So here's to my lesson and my cure from gambling in my investment account. The one thing I did correctly was to limit my exposure to any one stock to a small amount.

Thanks for listening and I hope this helps someone else keep from making the same mistake.

Steve

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Re: I am done with gambling

Post by SoonerSunDevil » Mon Mar 17, 2008 5:21 pm

hollowcave2 wrote:I keep on telling myself that it was only 1% of my total portfolio. But I also know how much I could have used $5K. My therapy will now consist of unwinding the mad money account, appreciating the Boglehead philosophy, and setting up an automatic investment plan to my money market at Vanguard on a regular schedule until I make up the money that I so foolishly lost.

You know, when a company is in trouble, book value has no meaning, does it? I'll never deal with JPM either, for anything. All they did was steal the company.Steve
Hi Steve,

I have some good news for you! The $5,000 loss can be used to offset your gains, assuming you have some this year. In addition, you can carry forward up to $3,000 in losses per year, and this $3,000 can be used to offset your earned income. In fact, the $5,000 loss is actually not a $5,000 loss thanks to our good friends at the IRS. Your $5,000 loss is worth $5,000 multiplied by your marginal tax rate. If your marginal tax rate is 40% (state and federal), your $5,000 loss is only a $3,000 loss, so cheer up!

hollowcave2 wrote: You know, when a company is in trouble, book value has no meaning, does it? I'll never deal with JPM either, for anything. All they did was steal the company.Steve
I don't know why you're so upset with JPMorgan. No one knows what the real book value of BSC is, and if they did, BSC would sell for at least their book value. The problem with BSC was their massive amount of leverage, and now they cannot get funds to operate. JPMorgan did the shareholders of BSC a favor; you get $0.00 in bankruptcy.

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Post by livesoft » Mon Mar 17, 2008 5:23 pm

I do what many people here call "market timing" with any amount of cash that I have sitting in my checking and brokerage account, including perhaps my emergency fund.

As I have written before, on big down days, I look for something to buy within about 15 minutes of the market close. That something to buy is generally an ETF that would fit my asset allocation. The investment should be down about 2.5% or more in that one day and the general market should be down at least 1.5%. Most recently I purchased VNQ on March 6th because it had lost so much by the end of that day. I have already sold this position in VNQ when it popped back up. A trick with this is that such opportunities only occur a few times a year.

The underlying philosophy (besides the gambling philosophy) that goes with this is that if you miss the best 10, 20, 30, N-days in the stock market, you do poorly. But if the miss the worst 10, 20, 30, N-days in the stock market, then you do fantasticly. One can easily know when a day is a worst day just by paying attention around 15 minutes before the market closes. So any cash you put to work at 3:55 pm ET has missed a worst day. Many of the best days occur close in time to the worst days, so you just have to have the guts to buy on those worst days. You cannot tell whether a day is gonna be a best day or not until it is too late. That is not the case with worst days.

Edit to add: I was compelled to buy something today. Can you guess what it was?

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thanks

Post by hollowcave2 » Mon Mar 17, 2008 5:38 pm

Thanks OU John for trying to cheer me up.

Yes, I know I can offset my gains with this loss. But you know, I wanted the gains. All that work in the earlier part of the year getting gains that are now offset.

I am really learning something about myself. I have a bunch of funds and my other 4 stocks which are actually doing quite well. So what do I feel? The loss. I don't know what my other holdings did today. All I know was that I was glad to get $4.50 for a deal that is worth $2.00.

And yes, it is all emotion in me talking when I complain about JPM. But you know, so what if we get $2 back on $50, and for many others, much more. The market priced it at $30 Friday. I could have sold at $35. Why didn't I? Because I had some naive notion that book value meant something. That efficient markets meant something. That when a stock closes at $30 on Friday, someone can't just come in and get it for $2 at Monday's open.

They say that JPM is a savior, but it's no savior that steals a company. They just saw they could have a deal and they took it. Throw the shareholders anything, it's better than zero, they'll take it. Oh, BTW, we'll also take that Manhattan HQ skyscraper for a few pennies too.

It doesn't make any difference to me if I get $2 back or $0 back, or because of speculation and shorts covering, $4.5. That's so little, it's an insult. A price of $2 is so close to a BK price that it has no meaning to me.

The only people for which this is a good deal are the investment bankers and the employees, if they are able to keep their jobs.

So yes, I am so upset at this deal that I will never do any business with any entitity involving themselves with JPM, period. Irrational? yes. But what the market did over the weekend in this stock was also irrational.

Thanks for listening. I'm starting my recovery program today by depositing my first $200 into my money market to build up the lost resources.

Steve

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Post by mikenz » Mon Mar 17, 2008 5:39 pm

Edit to add: I was compelled to buy something today. Can you guess what it was?
VWO

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Re: thanks

Post by SoonerSunDevil » Mon Mar 17, 2008 5:45 pm

hollowcave2 wrote:Thanks OU John for trying to cheer me up.
You're welcome. Now go crack a couple of cold beers and laugh because you still have $500,000+ :sharebeer
hollowcave2 wrote:Yes, I know I can offset my gains with this loss. But you know, I wanted the gains. All that work in the earlier part of the year getting gains that are now offset.


I'd kill for some tax-free gains :D

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yeah, that's right

Post by hollowcave2 » Mon Mar 17, 2008 6:06 pm

You're welcome. Now go crack a couple of cold beers and laugh because you still have $500,000+
You're right. It's interesting how this loss aversion works.

And you know how I got to the half million? Not through my mad money account.

I got there through investing regularly, primarily in IRAs and 401ks, in good funds, half passive and half active, nearly all at vanguard.

Well, I think I'll get back on the horse again tomorrow by adding to my position in MGC, that new Vanguard Mega cap 300 fund, which is really sort of a concentrated S&P 500 fund.

You know what I like about that ETF? MGC?

I know that if I buy it tomorrow at $44/share, when Monday comes, it is very likely that it will be worth more than $2/share.

That's what I like about that ETF.

Steve

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Post by United » Mon Mar 17, 2008 6:23 pm

Gambling allocations make no sense to me.

Furthermore, keeping it to 5% of your portfolio will not shield your portfolio from losses. If 5% of your portfolio goes to $0, then your entire portfolio has gone to $0. A fixed dollar amount seems better than a fixed percentage to me.

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Post by livesoft » Mon Mar 17, 2008 6:53 pm

mikenz wrote:
Edit to add: I was compelled to buy something today. Can you guess what it was?
VWO
We have a winner!

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Post by leonard » Mon Mar 17, 2008 7:23 pm

allenmickers wrote:
A lot of people on here claim to dedicate between 5 to 10% of their asset allocation towards "Gambling money" where they buy individual stocks or sector ETFs or weird crazy stuff that doesnt normally fit into a balanced AA>
In this example, it is clear that gambling refers to the 5%, 7% :) , or 10% set aside for "crazy stuff that doesn't normally fit in to a balanced AA.

But, then allenmickers wrote:
Isnt the idea of creating an ideal AA the same as gambling?
Where it is claimed that the entire portfolio is gambling. You have presented 2 different definitions of the term gambling in your posts.

Seems we need to iron out the terminology or this will just turn in to a semantic argument. I vote for the "10%" being the speculative, gambling portion of the portfolio.
Leonard | | Market Timing: Do you seriously think you can predict the future? What else do the voices tell you? | | If employees weren't taking jobs with bad 401k's, bad 401k's wouldn't exist.

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Post by allenmickers » Mon Mar 17, 2008 8:32 pm

United wrote:Gambling allocations make no sense to me.

Furthermore, keeping it to 5% of your portfolio will not shield your portfolio from losses. If 5% of your portfolio goes to $0, then your entire portfolio has gone to $0. A fixed dollar amount seems better than a fixed percentage to me.
Sure but lets say I have $100k and 5% is my gambling money.

I lose all $5k it goes to $0. I picked the one in 5000 NYSE stocks that once every 5 years goes bankrupt and put all 5% of my gambling allocation in that.

Now I have $95k total and then reallocate 5% to gambling. Thats $4750. Now I make another stupid mistake and somehow that $4750 goes to zero. Now I am left with $90k and take 5% of that for gambling money. I would have to go through this process at least 50 times to get anywhere near zero.

How many Bear Stearns are there really? Are more than 5 large cap NYSE stocks going to BK this year? More than 10?

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50 times

Post by hollowcave2 » Mon Mar 17, 2008 9:03 pm

And hopefully, the other 95% is actually doing OK.

And by the 10th time, I think, you would become so discouraged that you would quit the mad money account after several BK companies or $2 buyouts for those with $80 book value.

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Re: 50 times

Post by allenmickers » Mon Mar 17, 2008 9:34 pm

hollowcave2 wrote:And hopefully, the other 95% is actually doing OK.

And by the 10th time, I think, you would become so discouraged that you would quit the mad money account after several BK companies or $2 buyouts for those with $80 book value.
If the other 95% wasnt doing OK then it wouldnt matter if it was 100% of my assets I would be doing worse.

I cant think of 10 companies on the NYSE that went BK in the last 10 years. I can think of 4 or 5. Pretty good odds out of 5000 stocks that I wont pick the 1 in 5000 that goes BK that year.

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Post by market timer » Mon Mar 17, 2008 9:38 pm

Alternatively, it only takes one BK with constant rebalancing for your portfolio to become worthless.

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Post by wshang » Mon Mar 17, 2008 9:52 pm

While I agree that investing has nothing to do with betting, there's no reason why entertainment doesn't have to exclude betting!

I love the excitement of the craps table, but my odds are much better with the options or stock market and I can do it in the comfort of my home.

To answer the question, I allocate about 0.1% of my portfolio for mad money and have been burned enough with individual stocks that I only play ETF's or options on ETF's.

Recently, I've been playing cyclical FXP which I sold too soon and a straddle on IWN which so far has been profitable too. Don't feel bad, several years ago, my wife had reason for being mad at me for losing ~$10k on IBM options. Add Global Crossing to my long-term course load and my investing education has been nearly complete!

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Post by unclemick » Mon Mar 17, 2008 10:20 pm

I think I peaked at around 50 dividend stocks in DRIP plans (Moneypaper, Mergent's) - down to around 14 left with the rest in Vanguard brokerage - about 34 total.

At one point in early retirement dividend stocks provided 40% of my income. Now much less.

I do what I gotta do tax wise. But I don't rebalance, track performance or any of that stuff. Two went private this year - so I will pay some big cap gains I didn't plan on but these things happen.

heh heh heh - a little hormone driven hobby. :wink:

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Post by G12 » Tue Mar 18, 2008 12:48 pm

And hopefully, the other 95% is actually doing OK.

And by the 10th time, I think, you would become so discouraged that you would quit the mad money account after several BK companies or $2 buyouts for those with $80 book value.
I could agree with this. After buying KBE after the crap had been beat out of it and having good fortune with it I kept looking at WB and BAC. Did my research and bought both but began to have increasing concerns about the credit crunch and WB's mortgage exposure and integration of GW mortgage. Went from being up about 5% to down about 16% and when the market popped up I sold with a small loss, greater concern was the banks having negative earnings in the future. KBE is down 3.2% since buying it on 1/11. 5 of the other 8 individual stocks I have owned longer term are up, EMR has performed well the last 18 months. Compared to the performance of mid cap value and small value it is great.

Still have 92% of the portfolio in funds and etf's with portfolio decline of 4.6% overall YTD. I am sitting on the sidelines as my equity allocation with the buys in 1Q have kept within 2% of equity allocation and I prefer to hold devalued dollars in cash. Would strongly look at adding to mid cap value and small cap value if my equity allocation drops significantly.

The people I have concerns for are the investors beginning to look at global bond funds and FX funds, how much lower can the US $ go? The PIMCO global bond had negative returns over 9% in 2005. Yes, it had a great year in 2007, but the 3 year return is only 2.32%. The majority of the damage has most likely been done and this area seems high risk to enter at this time to me.

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Post by livesoft » Tue Mar 18, 2008 12:52 pm

livesoft wrote:...
The underlying philosophy (besides the gambling philosophy) that goes with this is that if you miss the best 10, 20, 30, N-days in the stock market, you do poorly. But if the miss the worst 10, 20, 30, N-days in the stock market, then you do fantasticly. One can easily know when a day is a worst day just by paying attention around 15 minutes before the market closes. So any cash you put to work at 3:55 pm ET has missed a worst day. Many of the best days occur close in time to the worst days, so you just have to have the guts to buy on those worst days. You cannot tell whether a day is gonna be a best day or not until it is too late. That is not the case with worst days.

Edit to add: I was compelled to buy something today. Can you guess what it was?
Today and yesterday have been one of the best examples of this best/worst phenomenom. Whether today holds up as a 'best' day or not remains to be seen. See also:
http://www.fpanet.org/journal/BetweenTh ... 50105A.cfm

[VWO purchased yesterday up 4.87% so far.]

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Post by leonard » Tue Mar 18, 2008 1:16 pm

allenmickers wrote:
Sure but lets say I have $100k and 5% is my gambling money.

I lose all $5k it goes to $0. I picked the one in 5000 NYSE stocks that once every 5 years goes bankrupt and put all 5% of my gambling allocation in that.

Now I have $95k total and then reallocate 5% to gambling. Thats $4750. Now I make another stupid mistake and somehow that $4750 goes to zero. Now I am left with $90k and take 5% of that for gambling money. I would have to go through this process at least 50 times to get anywhere near zero.

How many Bear Stearns are there really? Are more than 5 large cap NYSE stocks going to BK this year? More than 10?
So, you are essentially saying that if you don't follow the 5% rule, it won't go to zero. But, the 5% of portfolio rule was the premise that you started with. Can't be both ways.

So, if you strictly follow a 5% rule and rebalance in to it, United is correct.
Leonard | | Market Timing: Do you seriously think you can predict the future? What else do the voices tell you? | | If employees weren't taking jobs with bad 401k's, bad 401k's wouldn't exist.

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Re: I am done with gambling

Post by ddb » Tue Mar 18, 2008 1:23 pm

hollowcave2 wrote:I have a very high risk tolerance, but this experience really rocks my emotions. It makes me rethink my entire investing life. I never experienced such a loss in a matter of 2 days. It is definitely the worst investing mistake of my life.
Was it a mistake because the stock went down, or was it a mistake beacuse you bought an individual stock in the first place (regardless of what happened)?

The risk inherent in a concentrated portfolio of individual stocks simply isn't justified because you don't have higher expected returns compared to the broad market. Justifying such a strategy by saying it is only 5% of your portfolio doesn't really make it any "smarter" of a move.

Personally, a portfolio of stocks that you day-trade is no more a part of a portfolio than a plasma TV that you just bought. While I have absolutely no problem with gambling, I do have a problem when people consider gambling money part of their portfolio.

- DDB
"We have to encourage a return to traditional moral values. Most importantly, we have to promote general social concern, and less materialism in young people." - PB

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Re: I am done with gambling

Post by moneyman11 » Tue Mar 18, 2008 1:31 pm

ddb wrote: Personally, a portfolio of stocks that you day-trade is no more a part of a portfolio than a plasma TV that you just bought. While I have absolutely no problem with gambling, I do have a problem when people consider gambling money part of their portfolio.
This is my view as well.

My "gambling" money comes from the money I won playing on line poker over the last several years, before our nanny state government decided that was too risky an endeavor for me to participate in.

So, with a few clicks of a mouse, I transfered my online poker bankroll to a government-sanctioned online casino: a stock option trading account.

Of course, they don't call it gambling money here. It's called "risk capital".

Not only is this form of gambling OK with our government, but if i can build my derivative trading account big enough, they might even bail me out if I have a bad year, lest I damage the economy.

Let's GAMBOOOOOOOOOL!!!!

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thanks DDB

Post by hollowcave2 » Tue Mar 18, 2008 1:32 pm

Thanks DDB, the mistake was buying an individual issue in the first place.

But just for the record, I did not day trade. The experience goes something like this:

At a hearing, the 2nd officer of the Titanic was asked when he left the ship. He replied, "I didn't leave the ship".

And that was my experience with Bear Stearns.

Thanks for support. I am over it now. I've vented my say and I've already joined the class action law suit.

They're not going to get any more of my life than a little bit of money. I have a choice as to how to react. And I'm just going to be over it and move forward. I feel a lot more fortunate than others who just can't get over it that easily, so I feel grateful.

Steve

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Re: Gambling money?

Post by woof755 » Tue Mar 18, 2008 1:39 pm

allenmickers wrote:
Taylor Larimore wrote:
There are better ways to make money or seek enjoyment than gambling.
Isnt the idea of creating an ideal AA the same as gambling? After all you dont know what will happen. You dont know that stocks will have any profit over the next 40 years. You dont know if SV tilt will give positive earnings in the next 40 years. Everything in creating an AA is a form of gambling. Sure you can run backtesting and calculate sharpe ratios but its still statistically uncertain what will happen.

That being since, its based on practical theories. Being such, it means that most finance and math experts believe that a certain AA format will produce good results over the next 40 years. So I am going to put 90% of my money in that faith. I have my own ideas for what will do good over the next 40 years or possible in the next 40 minutes. Thats what my 10% allocation is for.

I believe my 10% is more speculative than the other 90% because its based only on my opinion and not on the opinions of hundreds of PhDs, however all 100% of my portfolio is essentially gambling and speculation.

Its just that the 90% of my portfolio is lower risk gambling and the other 10% is slightly higher risk gambling. But its all gambling.
No. Asset allocation is not like gambling. Gambling is something done for excitement, to risk a little to make a lot. One of the common themes I've read in this forum is that investing should not be fun, and should certainly not be exciting. It should be boring. Index funds are boring. Wonderfully, dependably, gloriously boring. What did my core fund do? I dunno--whatever the Wilshire 5000 did, minus a touch.

If you want to gamble, watch NCAA basketball, go play online poker, or bet whether the coin toss will be heads or tails before the Superbowl. If you want to pick stocks, why don't you just send a nice fat check to your favorite charity--better they have the money than some joker on Wall Street.
"By singing in harmony from the same page of the same investing hymnal, the Diehards drown out market noise." | | --Jason Zweig, quoted in The Bogleheads' Guide to Investing

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Re: thanks DDB

Post by moneyman11 » Tue Mar 18, 2008 1:43 pm

hollowcave2 wrote: Thanks for support. I am over it now. I've vented my say and I've already joined the class action law suit.
This is another great advantage to gambling in the government sanctioned stock market casino.

At the poker table, if I make a bad decision and lose, I have no one but myself to blame.

At the government sanctioned stock market casino, if I make a bad decision and lose, I can blame someone else for "misleading" me, and I can SUE them!!

Let's GAMBOOOOOOL!!!!

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I agree

Post by hollowcave2 » Tue Mar 18, 2008 1:47 pm

I agree that I am responsible for my actions. But if there is a lawsuit, I'll join it as part of the process. No reason not to try to get back as much as I can, and there is some remedial value to this lawsuit.

:x

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Post by moneyman11 » Wed Mar 19, 2008 12:06 pm

livesoft wrote: [VWO purchased yesterday up 4.87% so far.]

Did you dump it, or have you given it all back today?

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Post by livesoft » Wed Mar 19, 2008 12:10 pm

moneyman11 wrote:
livesoft wrote: [VWO purchased yesterday up 4.87% so far.]

Did you dump it, or have you given it all back today?
I did dump it yesterday ... up 5.7% from my purchase price. Also sold all my VEU. I will buy VEA and VWO sometime today to get my asset allocation back to normal.

moneyman11
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Post by moneyman11 » Wed Mar 19, 2008 12:16 pm

livesoft wrote:
moneyman11 wrote:
livesoft wrote: [VWO purchased yesterday up 4.87% so far.]

Did you dump it, or have you given it all back today?
I did dump it yesterday ... up 5.7% from my purchase price. Also sold all my VEU. I will buy VEA and VWO sometime today to get my asset allocation back to normal.
Well done. Congrats.

livesoft
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Post by livesoft » Wed Mar 19, 2008 2:53 pm

moneyman11 wrote:Well done. Congrats.
I was compelled to buy some VWO a moment ago as well. Somehow I think I will lose everything made yesterday by the time the market opens tomorrow. :)

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Diver
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Post by Diver » Thu Mar 20, 2008 10:40 am

I was thinking about this topic when I saw it yesterday. The risk of having fixed % for gambling money is
that due to rebalancing it could suck the entire portfolio in. No rebalancing would be not as dangerous but
will leave some benefits on the table. So I was thinking that rebalancing into gambling money allocation
could be either restricted or banned completely and rebalancing out would follow whatever rebalancing
rules you might have.

So anything extra you get out of your gambling allocation will go back to portfolio, but if it tanks it will not
affect the rest of the portfolio.

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tadamsmar
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Post by tadamsmar » Thu Mar 20, 2008 10:49 am

Before anyone allocates some "gambling" money, go try a play betting market:

www.ideosphere.com

You do that for free, and I think you will figure out its not a good idea to do it with real money.

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