lundi 9 septembre 2019

Is it OK to gamble a bit with your portfolio?

Is it OK to gamble a bit with your portfolio?

Well, some people gamble ALL THE TIME with their portfolio. So, if you search just a bit, you'll surely find people who see the stock market as a casino. You're probably wiser than these people because you wouldn't read my blog if you were interested in diamond mines.

In my opinion, everything is a question of proportions. For instance, if you have a portfolio of 5000, 10 000 or 20 000$, you shouldn't gamble at all with it.

If you have a bigger portfolio, let's say 100 000$, you may gamble a bit. Like 5000$ for instance (5% of your portfolio).

But what is gambling? I don't know the exact definition. Because, in a way, investing is always a bit of gambling. But reasonable gambling is what we usually call "investing".

I'd say that buying stocks of a company that doesn't make money is not gambling, it's worse.

Gambling, to me, is the acceptable limit of investing: it's buying very expensive stocks that grow a lot and are making tons of money. You have many examples out there: Shopify, Amazon, The Trade Desk, Adobe, etc. These are all great companies, but very expensive companies.

Today, I bought some TTD shares for a very slight proportion of my portfolio.

I'm not saying I'm right. But I control the risk. That's the point of that post.

I don't see at all that stock as going to zero, but even if it would happen, I would just lose 1% of my portfolio.

Like many other things, it's only a question of balance. I'd never buy loads of shares of that stock given it's current price. And that kind of buy is something I wouldn't recommend at all for any new investor.

Instead, I would recommend to play safe, build something bigger, then take some very small risks, once in a while.

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