What is your risk tolerance?

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?

I would only gamble my savings on myself by starting a business in which I control the outcome.

^ or the illusion of control?

Funny you ask, I just put all my money in SUNE…

Is it a binary outcome? 80% chance of 300% gains or it goes to 0? Even still…80% chance…that’s tough. Not sure. 90%, yeah, I’d do it.

Maybe when my portfolio was small compared to my salary and I think I could build it back up quickly if I am wrong but at this point, I can’t do it.

Also depends on margin of safety and what’s the most I could lose.

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.

Looks like you’re buying SUNE?

I would not.

I would take that all day.

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.

id gamble 20-30% of my monies on an 80% outcome

.

be smart, position sizing and risk management.

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.

^um his whole point is u gotta let the money ride so there would be no stop losses

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.

My motto is if you can’t sleep at night, you put in too much. And you tend to make bad emotional decisions along the way.

Why does it have to be all or nothing?

but thats not his question. you cant fit your trading style into his proposal. its yes or no

Ever see the gambler?

I wouldn’t call it gambling at 80-90% confidence level. I would still only participate with 30% of savings at a maximum