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Disclaimer: I'm not a financial advisor. Whenever I'm tempted to buy individual high performing tickers (e.g. NVDA, TSLA, AMD), I restrict the purchase to no m

Disclaimer: I'm not a financial advisor. Whenever I'm tempted to buy individual high performing tickers (e.g. NVDA, TSLA, AMD), I restrict the purchase to no more than 2% of my portfolio and I only allow myself to bet on 2-3 "race horses" at a time. I think this fulfills the desire to gamble a little and see 100-200% YoY returns. NVDA cracked 300% cost basis when I finally sold, which is wild. The reason I can do this is because the rest of my portfolio is a boring mix of low-fee ETFs that track major US and international indices. As a retail investor, it's good to remind myself that if I actually had the skills to invest professionally, someone would probably be paying me to do it for them.

khuey 2y ago
Every share of an S&P 500 index fund you hold is already 6-7% NVDA, so a lot of investors already have substantial bets on some of these "race horses".
- MobileVet 2y ago
  True but this misses the core point about agency. Some of us would like too think we know something more and ‘gamble’ on that knowledge. Having 5% to personally assign can scratch that itch without resulting in an overexposed or vulnerable position
  - ghaff 2y ago
    Yeah, if you have an itch to individually invest, set a budget and play without doing anything too stupid. I've actually done pretty well with that approach especially when I've avoided capital gain with a charitable trust with a few relative home runs I have hit.
- ghaff 2y ago
  Whenever I kick myself a little about not owning any/enough of the "race horses" I content myself that there's probably a lot scattered around my portfolio. So you missed out a bit but your index funds actually benefited.
MobileVet 2y ago
This is great advice. You follow the best rule of thumb for individuals, ETF w/ dca and set it and forget it, but allow a bit of fun to scratch the itch. I do something similar but honestly allow too much to go towards the latter. I need to pair back. I am thankful and lucky that my returns have been similar to index funds and not far below (thanks NVDA and NET)
gamepsys 2y ago
> As a retail investor, it's good to remind myself that if I actually had the skills to invest professionally, someone would probably be paying me to do it for them. Don't discount the knowledge you have from being deep into an industry. The higher quality of the CUDA toolkit compared to other SIMD languages, combined with it's increasing relevance in compute (gaming, followed by blockchain, followed by ML, followed by GPT) would have made this an NVDA an easy pick for anyone (of the increasing number of people) that worked in parallel computing from 2006-2023. Sometimes you can see a company is positioning itself for a great long term position before the entire wallstreet herd takes notice. That's when you add a single stock as part of your diverse portfolio. I keep up to 5% of my stock portfolio as these single stock picks, judged entirely on the product the company sells.
- Terr_ 2y ago
  > Don't discount the knowledge you have from being deep into an industry. [...] diverse portfolio It's worth emphasizing that investing in the same sector that you are employed-in is actually a kind of anti-diversification, and it won't usually show up using "rate my portfolio" tools. The archetypal example that comes to mind--unusually extreme but illustrative--would be all those Enron employees who invested their 401(k) funds straight into their own employer. Consider these three scenarios: 1. If your investments plummet but you keep getting wages from you job, you can try riding it out until they recover. 2. If you become long-term unemployed but your investments stay normal, you can sell a little to cover the gap. 3. But if you can't work and your investments plummet, you may be forced to "sell low" quite a lot to cover immediate expenses, and the long-term outcome is much worse.
  - gamepsys 2y ago
    1. It's normal in the tech industry to own a lot of stock in the company you work for. Investing in a vendor (in Nvidia's case) or another adjacent company is lower risk. You cannot avoid risk in investing, it's a natural part of the situation. 2. You can avoid the sell low situation by having 3-6 months of expenses saved in an emergency savings account. With all the layoffs in the last few years everyone should have gotten the message to do this. Even in a large downturn six months of expenses in a savings account is enough for you to re-skill and find new employment.
csomar 2y ago
> NVDA cracked 300% cost basis when I finally sold, which is wild. It's not if you consider the volatility of the stock. It appreciated x10 in less than 2 years and 20-30 times since the pandemic. Volatile stocks have high returns because they have high risks for losses.
throwaway2037 2y ago
This is totally reasonable and I support it. When (usually young) people are bored with my advice about index funds, I tell them that it ok to "gamble" with a tiny fraction of their portfolio, but be prepared to lose what you bet!
snarf21 2y ago
I also think that if you look at the regulatory environment in the last 20 years and the lack of monopoly oversight from the SEC and FTC, you can just ride the regulatory capture. I can't see anything beating S&P500 + N100 over any 5 year period unless new laws are passed.
_yb2s 2y ago
It’s not just a matter of skill but of time. Value investing a la Warren Buffet works extremely well, but choosing a single stock with the deep research required for that method is so much work it is a full time job. It’s not worth it unless it is in fact your full time job.
humansareok1 2y ago
I like this approach too. My primary investments in index funds continue to grow and I get just enough of a dopamine hit from smaller bets on Nvidia and Crypto that I don't get crushed by fomo and end up betting my mortgage on some far otm call options or some shitcoin.
deleted 2y ago
[deleted]
rybosworld 2y ago
> As a retail investor, it's good to remind myself that if I actually had the skills to invest professionally, someone would probably be paying me to do it for them. The majority of supposed "experts" are not beating the market. Its probable that the only difference between them and you is the belief/confidence in their skillset.
xenadu02 2y ago
Similar here. My $4k in TSLA's IPO was just a gamble that EVs would not die (per conventional wisdom) but were here to stay. A few years ago I sold $100k of TSLA and retained the other $100k which is worth more now. It was just a gamble. I'm not silly enough to think I can pick winners like that all the time.

khuey 2y ago

Every share of an S&P 500 index fund you hold is already 6-7% NVDA, so a lot of investors already have substantial bets on some of these "race horses".

MobileVet 2y ago
True but this misses the core point about agency. Some of us would like too think we know something more and ‘gamble’ on that knowledge. Having 5% to personally assign can scratch that itch without resulting in an overexposed or vulnerable position
- ghaff 2y ago
  Yeah, if you have an itch to individually invest, set a budget and play without doing anything too stupid. I've actually done pretty well with that approach especially when I've avoided capital gain with a charitable trust with a few relative home runs I have hit.
ghaff 2y ago
Whenever I kick myself a little about not owning any/enough of the "race horses" I content myself that there's probably a lot scattered around my portfolio. So you missed out a bit but your index funds actually benefited.

MobileVet 2y ago

This is great advice. You follow the best rule of thumb for individuals, ETF w/ dca and set it and forget it, but allow a bit of fun to scratch the itch. I do something similar but honestly allow too much to go towards the latter. I need to pair back. I am thankful and lucky that my returns have been similar to index funds and not far below (thanks NVDA and NET)

gamepsys 2y ago

> As a retail investor, it's good to remind myself that if I actually had the skills to invest professionally, someone would probably be paying me to do it for them. Don't discount the knowledge you have from being deep into an industry. The higher quality of the CUDA toolkit compared to other SIMD languages, combined with it's increasing relevance in compute (gaming, followed by blockchain, followed by ML, followed by GPT) would have made this an NVDA an easy pick for anyone (of the increasing number of people) that worked in parallel computing from 2006-2023. Sometimes you can see a company is positioning itself for a great long term position before the entire wallstreet herd takes notice. That's when you add a single stock as part of your diverse portfolio. I keep up to 5% of my stock portfolio as these single stock picks, judged entirely on the product the company sells.

Terr_ 2y ago
> Don't discount the knowledge you have from being deep into an industry. [...] diverse portfolio It's worth emphasizing that investing in the same sector that you are employed-in is actually a kind of anti-diversification, and it won't usually show up using "rate my portfolio" tools. The archetypal example that comes to mind--unusually extreme but illustrative--would be all those Enron employees who invested their 401(k) funds straight into their own employer. Consider these three scenarios: 1. If your investments plummet but you keep getting wages from you job, you can try riding it out until they recover. 2. If you become long-term unemployed but your investments stay normal, you can sell a little to cover the gap. 3. But if you can't work and your investments plummet, you may be forced to "sell low" quite a lot to cover immediate expenses, and the long-term outcome is much worse.
- gamepsys 2y ago
  1. It's normal in the tech industry to own a lot of stock in the company you work for. Investing in a vendor (in Nvidia's case) or another adjacent company is lower risk. You cannot avoid risk in investing, it's a natural part of the situation. 2. You can avoid the sell low situation by having 3-6 months of expenses saved in an emergency savings account. With all the layoffs in the last few years everyone should have gotten the message to do this. Even in a large downturn six months of expenses in a savings account is enough for you to re-skill and find new employment.

csomar 2y ago

> NVDA cracked 300% cost basis when I finally sold, which is wild. It's not if you consider the volatility of the stock. It appreciated x10 in less than 2 years and 20-30 times since the pandemic. Volatile stocks have high returns because they have high risks for losses.

throwaway2037 2y ago

This is totally reasonable and I support it. When (usually young) people are bored with my advice about index funds, I tell them that it ok to "gamble" with a tiny fraction of their portfolio, but be prepared to lose what you bet!

snarf21 2y ago

I also think that if you look at the regulatory environment in the last 20 years and the lack of monopoly oversight from the SEC and FTC, you can just ride the regulatory capture. I can't see anything beating S&P500 + N100 over any 5 year period unless new laws are passed.

_yb2s 2y ago

It’s not just a matter of skill but of time. Value investing a la Warren Buffet works extremely well, but choosing a single stock with the deep research required for that method is so much work it is a full time job. It’s not worth it unless it is in fact your full time job.

humansareok1 2y ago

I like this approach too. My primary investments in index funds continue to grow and I get just enough of a dopamine hit from smaller bets on Nvidia and Crypto that I don't get crushed by fomo and end up betting my mortgage on some far otm call options or some shitcoin.

deleted 2y ago

[deleted]

rybosworld 2y ago

> As a retail investor, it's good to remind myself that if I actually had the skills to invest professionally, someone would probably be paying me to do it for them. The majority of supposed "experts" are not beating the market. Its probable that the only difference between them and you is the belief/confidence in their skillset.

xenadu02 2y ago

Similar here. My $4k in TSLA's IPO was just a gamble that EVs would not die (per conventional wisdom) but were here to stay. A few years ago I sold $100k of TSLA and retained the other $100k which is worth more now. It was just a gamble. I'm not silly enough to think I can pick winners like that all the time.