Mitigating investment risk Not investment advic
Post# of 1582
Not investment advice
Ever notice the odd trend in these boards of investors bragging that they own millions of shares and keep buying more and more on the dips? Isnt the point of investing to make profits and NOT buying these so called 'gift shares' at cheaper and cheaper prices? What's the point in owning a billion shares when they keep averaging down??
Instead of owning stock in one company and continually buying on the dips, spread out the risk.
After doing extensive DD and by only investing what you can afford to lose:
Note
All of the following numbers/prices are pure examples.
1. Purchase stock in a company with a share price of around .01 cent, which is current with their SEC filings, has had a recent PR, and has a product that FILLS A CURRENT NEED.
2. Purchase stock in a company with a share price of around .002 which is current with their SEC filings, has had a recent PR, and has a product that FILLS A CURRENT NEED.
3. Purchase stock in a company with a share price of around .0002 which is current with their SEC filings, has had a recent PR, and has a product that FILLS A CURRENT NEED.
By investing at .002 and .0002, you invest with minimal cash yet have the highest risk/reward potential. $100 gets you 50,000/ and 500,000 shares respectively.
Because we didnt invest more than we can afford to lose, if these stocks fail, oh well. No big deal. But if the .002 or.0002 stocks spikes in price, you can reinvest those earnings into the first company.
I call this method Pyramid Stacking. Company A is at the top. This is your serious, long term investment and will typically have the most expensive share price.
Companies B and C will be higher risk/reward with much lower share prices.
By using this menthod you spread out the risk. If company A fails, you still have B and C. If B fails, you still have A and C. If C fails, you still have A and B.
But if you instead invest in only one company and that one company fails... you automatically lose EVERYTHING all at once.
Example
Right now, my serious investment is SCIE. But I am pyramid stacking my serious investment with BSSP.
BSSP is extremely high risk/high potential (they are working on becoming current), but if this works out, I will be able to reinvest profits from BSSP into my serious, long term SCIE investment. Seeing I did not invest more than I can afford to lose, if both fail... oh well, no big deal.
Not investment advice. This is NOT investment advice.
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There is a VERY HIGH degree of RISK involved in trading and investing. Only invest what you can afford to lose.
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There is a VERY HIGH degree of RISK involved in trading and investing. Only invest what you can afford to lose.