Would you gamble all your savings (except for emergency money) on a small cap stock idea where you are 80-90% confident it’ll be a triple in the next couple years?
going all in at one time for a 3 year payoff is a tough sell on something you have no control over. have you qantified the downside? if your honest worst case scenario is acceptable, then maybe but I would also be highly skeptical of your 80%+ estimate of chance of success.
I’d much rather take incremental risk with high upside and solid basis for thinking your downside is limited. That’s why I love the optionality of real estate. Generally if you buy a good location (and you’re reasonably sure you’re not buying an environmentally contaminated property) then your downside > 0. Real estate has a bunch of optionality and a lot of times only 1 out of X potential good things has to happen for you to do well. Maybe that’s true in other asset classes, but i wouldn’t know.
I would invest perhaps 30% of my savings in such a strategy. My savings are sort of ok at the moment, so the possibility of losing all is not so appealing.
i would easily take that bet. in theory, you do this twice with half of your savings and your NPV is through the roof, with a very high probability of success. i have made the trade you’re proposing on several occasions with much lower probabilities and with more than my net worth (i.e. borrowings).
when i invest in equities, i usually only look at 100-500% plays and my assigned probabilities are probably only 60%-70% chance or so. the only footnote is that i put in a 10-20% on-stop so i don’t lose everything and my time horizon is never over a year, usually 3 months. welcome to trading.
I can promise you that you’re overestimating your odds of success if you are picking doubles with 70% chances of success. There is no free lunch. Risk can be mispriced, but not that much. If your expected IRR >50%, then you’re thinking about the question wrong.
but that’s how idiots trade. i’m saying yes do it because your NPV is super positive but that there are better ways to go about it in real life.
point of note: all common stocks that i’ve made 100%+ on in the past 7 years are now all down 90-100% from my initial purchase price. do not buy and hold ever, unless you’re buying JNJ, WFC, or ED.