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    At which point did you stop speculating and start with a consistent diversified strategy?

    Hi all, i see many posts of people on Reddit investing in single stopcs, hyper sector concentrated etfs etc. And that makes me wonder, at what stage of life or net worth amount do you/do these people stop making stock/sector bets and instead use broad market indexing founds for peace kf mind while focusing on life, high savings rate and consistency of investing?

    What i mean os, I could understand whi had 5k to invest only and wants to make a bet to make it big or loose it but those with 500k/1m+ why not just invest in the broad market and do the compounding and consistency of investing do the work without that extra risk and stress?

    I know people have different goals, some have a gambler spirit, others a low risk tolerance, but to me it sounds crazy that someone with 1m for example would choose to risk it rather thab see the fruits of compounding and diversification do the work.

    Curious to see from those of you in here who has been a "gambler" and then later a diversified passive investor and what took you to get there.

    At which point did you stop speculating and start with a consistent diversified strategy?
    byu/Helpful-Staff9562 ininvesting



    Posted by Helpful-Staff9562

    8 Comments

    1. monodactyl on

      For a while I tried to be outperform with things like overallocating to a sector or stock, shorting vol through theta strats, but in the long run, any out performance wasn’t meaningful or just beta.

      The increased mental energy didn’t seem to add value with public equities. I just ended up with distraction and stress for when I was wrong or when the market moved against.

      I’m reallocating that mental energy to my business and that feels a lot more rewarding and I feel like my efforts translate more to value.

      I still am not fully passive / boglehead and do make cheeky little punts, but I definitely spend far less time watching the market and analyzing my portfolio. These bets are also too small to mean anything. Even if they 3x that might translate to a + 3% to my actual portfolio.

      Edit: I got automoded for misspelling boglehead with two “g”s. My b.

    2. Playful-Elk-7274 on

      Well, they say that when you have won, you should stop playing the game. So, once you have enough for a comfortable retirement, you should start taking less risk. I haven’t gone full passive yet, but I did spend years making mostly stupid bets and I’ve given that up. I’m mostly in index funds now. I still have side bets but I have a limit on how big they can be.

    3. ShortHabit606 on

      I read a Random Walk Down Wall street in college. Years later when I started investing I started with vanguard index funds. Only later when I had a non-trivial portfolio I started adding some leans towards tech companies I believed in. Then later I added small cap value ETFs to balance the big tech bets that out grew their weight. Finally a few years ago I added some other small speculative bets (eVTOLs, Space stocks, self driving trucks… That kind of thing). In total, the small speculative bets never exceed 5% of my portfolio.

      (Mant people buying and promoting individual stocks on reddit are 🤡 who rush in at peak hype.)

    5. sunnbeta on

      For me, late thirties. Luckily most of my retirement savings was in a 401k that I didn’t mess with a lot, but then having a taxable brokerage account I spent too long fiddling with stock picks (especially around Covid time) until it finally clicked. 

    6. Shiblskki on

      I don’t dabble in SPY for the fact that it’s not diversified at all. I just hodl stock of the same companies at my risk tolerance. Then I manage the port % when some go up and some go down. They’re all profitable megacap companies anyway. This was until I had to pay off my renovation for my matrimonial house and that blew up my whole port of ~$150k.

      Starting from scratch I’m 100% in LEAPS and very profitable but everyone is a genius in a bull market. I will start to close my biggest winners and hold stock this week. ~$20k now.

    7. Moist-Meringue-1913 on

      Even if you are only investing in the broad market that’s still speculating. Diversification means diversifying across different asset *classes*. If you are 100% anything then you are not diversified.

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