How To Be a Smart Speculator

Before I get into the how’s, I think it’s pretty darn necessary to FIRST understand the WHY. Like most pursuits in life, if you don’t quite resonate or see value in the end objective, then there’s no reason to play.

If you’re new to our community here, you may not know that it’s the off-the-beaten-path, somewhat esoteric, opportunities that we specialize in.

Over the years, I’ve been asked multiple times:

“Why not just do what most financial publishers do, and spit out buy-hold-sell stock advisories?”

I gave a more detailed answer here, but the simple answer is:

Because, as an investor in the trenches for ourselves first, we like to allocate a portion of our discretionary funds to beyond-beta returns. We’ve personally been on the quest, with our own money, for extreme-alpha for years.

We don’t apologize for that self-interest FIRST approach. ‘Cause, in the end, the best way we feel that we can help the collective (our members) is for us to not just “coach from the sidelines.”

 Editor’s Note: If you want to hear a deeper explanation of the two terms bolded above, and how they’re mutually-inclusive to alternative investing pursuits, be sure to listen to Barry banter with Brad in his recent ‘Bear Talk’ titled:  How to Stay Out Of The “American Greed” Sand Trap.

The very title itself may sound counter to what he’s proposing here, which is to be okay with taking BIGGER risks. But, read on and you’ll see the correlation….

First, let me make something crystal clear:

I have been actively-invested in equities since 1995. And, without select premium newsletters, my own research and time spent on finding unique growth or value plays would be inefficient.

I appreciate and subscribe to certain traditional stock advisory newsletters who have a solid track-record with their picks.

Especially those that have a knack for macro (big-picture) thinking. These people understand that regardless of political incompetence, and ill-advised moves on Capitol Hill — or across any other major world economy — the business cycle doesn’t stop.

We humans, as long as we’re around, WANT and NEED new and improved “stuff.” And somebody — a business — has to make it. So, as an investor, it’s my job to ensure I have access to quality research that is stripped away from ideology and/or any type of “the sky is falling” bias.

While most editor’s who put out a portfolio (or listing of stock picks to BUY | HOLD |SELL) can’t be ‘in the game’ with you — i.e., they’re usually not allowed to be invested in the very companies they list — at least you’ll have ideas to consider.

In other words, just because they can’t or don’t have their money in an recommendation, doesn’t mean you shouldn’t.

It takes a team, a go-to crew of specialty researchers and market analysts, to find the next industry disruptor.  In Idea #7 (of my M4 Insider series, 18 Ideas & Tools For More Money In 2018) I give thorough commentary and a boat load of resources to help you find the next cash-rich brand with mass market appeal.

Think about companies like Exxon Mobile, Apple, Wal-Mart, NetFlix, Facebook, Amazon, Nike, etc.

Meaning, those human-capital empowered companies where the fuel is problem-solving, ambition, and the quest for disruption. The result, over time (more likely than not), is major appreciation in their stock price.

I picked up shares of Amazon way back when  I saw a company literally re-writing e-commerce… And… the way we can satisfy our need for instant-gratification.

Do I wish I was old enough back in 1981, where my forward-thinking brain was fully-developed to be able to predict Home Depot’s major rise to stardom? Where $5000 invested in Home Depot would be worth $30 million today?

I answer that in this quick screencast:

Okay, I’ve gotten ahead of myself a bit.

Back to the WHY of speculation:

As I’ve mentioned above, you can allocate some of your funds to more stable and proven companies, or you can take “flyers” (i.e., educated chances) on companies that are higher-risk.

Or, you can do both. I recommend both (more on that under the HOW section below).

But, still for the context of what I’d consider a speculation, I tend to put the term under more “alternative” asset classes, irrespective of whether they’re bought on a regulated exchange (through a stock or fund), or off Wall Street.

There’s a wealth of immense opportunity, major ROI possibility, outside the mainstream. Much of it, you won’t even  know about unless you’re tied into an ‘alternative investments’ research company like M4 (Brad tells you why in a 5-minute talk here…).

But, as to WHY you should speculate (i.e., put a small portion of your money to work on higher-risk, therefore higher reward, investment vehicles)…

…I think the best explanation I’ve seen recently resides in the WHAT, taken from Speculation 101, by Lobo Tiggre (aka Louis James) who I have been following for years:

What Is Speculation?

A successful speculator is not a wild gambler. Nor are we “safe” investors, obviously.

We are rational, disciplined, independent-minded people analyzing trends, doing everything possible to put the odds in our favor, and then committing capital to an idea that, we believe, has a high chance of delivering an outsized return.

Why take the risk?

To make money, of course. A lot of money.

Legendary speculators like Doug Casey and Rick Rule didn’t make their fortunes working hard at a regular job. They did it by seeing the difference between price and value in various markets.

They placed their bets and stuck with them as long as the value proposition remained intact, and cut their losses when it didn’t.

The first thing these gentlemen taught me is that you have to be willing to lose money to make money as a speculator. No one wins them all. But the wins are often so much greater than the losses, they more than make up for them.

So, you ask, “What about the HOW?”

The quest in learning HOW to do something right (i.e., executed in a “smart” way) can often be found by:

• Learning about what NOT to do,
• Through hard-won lessons from those more experienced or who have “been there, done that.”

Before I drop some links for you to wise-up through, let me pass along a nifty fun Jedi mind technique that Lobo Tiggre uses:

My personal “trick” is to mentally categorize money placed in speculative investments as spent. It’s gone. I’ve speculated, so I know I may never see a dime back.

With this expectation set, anything better than a catastrophic loss of capital is a positive outcome. And the actual wins, when they come, are cause for well-deserved celebration.

Brad and I cover that mindset, via the first link below. But, just know that a BIG part of the art of successful speculation IS being prepared for worst case scenarios ahead of time.

Okay, let’s get on with your…

ACTION PLAN

1) Listen to my 40-minute talk with Brad, M4’s Co-founder

You’ll hear us banter back ‘n forth about how to not be a scammers “sucker;” gullibility, prudent speculation practices, responsible mindsets, the trap of greed, plus much more…

2) Read Lobo’s ‘5 Tips for Starting Out’ post

Lobo (aka Louis James) is a long-time protégé of of legendary resource / mining speculator Doug Casey. Lobo’s contacts and boots-on-the-ground experience is, of course, in that sector. But, through his Independent Speculator newsletter, you’ll get actionable ideas throughout any sector, any market, in any country that is ripe for a potential 5x, 10x, and even 20x or more on your money. The above post is a good basic starting point if you’re just getting your feet wet with alternative speculations.

3) Read Speculator (High Ground Series Book 1)

Speaking of Doug Casey… in collaboration with John Hunt, he wrote a pulse-pounding, mind-expanding 4 1/2 star reviewed novel (over 220 reviews) that takes you on a journey across continents. Casey’s protagonist, Charles Knight, in the quest to strike it rich is faced with conflict, not only via the outer kind (deception, violence, and romance), but through introspection that’ll make him a better man for all to learn from. As Dr. Ron Paul put it, “Speculator uses the cover of a thrilling tale of international intrigue to provide an economic and moral defense of the much-maligned speculator and an economic and moral condemnation of those who profit via force and fraud. Doug Casey and John Hunt have provided an invaluable service to those looking for unique ways to spread the ideas of liberty.”

4) Read ‘Painful Lessons From Millions Lost’

“If you’re spending any amount of your time or money participating in speculative, higher-risk investing vehicles (the kind, ya know, where your return is solely based off the price movement of a tradable asset, and not so much on the sustained long-term value of the asset), you’d better have eyes wide open.” That is an excerpt from the beginning of our 2012-published article linked above.

FINAL WORD

Just as much as the HOW, the ‘WHERE to…’ is, of course, vital as well.

But, not at the expense of the HOW.

Just as I would never advocate you expending any ounce of mental effort in knowing how… until you FIRST know WHY (this part I covered enough above).

The HOW will be spelled out, in multiple ways, via the links above.

But, even then… you having that prerequisite background-wisdom doesn’t mean you should dive, head first, into the world of alternative money-making opportunities and high-risk / high-reward speculative-investing.

Sure, since 2009, we’ve been fleshing out viable places WHERE you can put your non-milk money capital; WHERE you can take discretionary money you have and take educated bets on all kinds of unique things:

From auto-traded currency accounts… to… equity crowdfunded opportunities… to… rare, investment-grade stamps… to… royalty-income through intellectual property… to… forestry land… to… buying & selling art… plus, many, many more avenues. It’s all part of M4 Insider.

Buuuut…

If you haven’t got the basics down — such as having a savings fortress built-up or if you’re struggling on the MAKE side of the money-equation (i.e., active-income generation) — trying to play catch-up, or speed-up your net-worth, through Speculations will be a losing proposition from the start.

We’re not here to sell you on being a Speculator.

However, if you are going to engage, in the immortal words of Yoda: Do or Do Not, there is  no try.

Trying implies flying by the seat of your pants, coming at this like a curious and short-term hobby, or worse…. hoping that a risky-play will 10x your portfolio.

Whatever you decide to DO… again, simply be a Jedi at it. In other words, BE “smart” about it. And, “good” at it.

We’re here to help.

And, if this post and the links it in has helped you and/or if you have any thoughts of your own, be sure to comment below…

Barry Goss Managing Editor, M4 Insider

Barry is also the Co-Founder & Publisher of M4 Research.