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In 1981, I read a fascinating book that explored the question of why some countries were rich and others weren’t. The name of the book was Wealth and Poverty and its author’s name was George Gilder. For an economics book, it garnered a surprising amount of buzz. It was kind of the Capital in the Twenty-First Century of its day.
In 1984, George Gilder came out with another book called, The Spirit of Enterprise. Since I liked Wealth and Poverty, I jumped all over his newest offering.
Sadly, The Spirit of Enterprise was a bit of a let down. It was good, but it didn’t get my juices flowing like Wealth and Poverty. And the only reason I bring it up now is because it mentioned two obscure companies doing amazing things in electronics and computers. The names of the companies were Intel and Microsoft.
The Mind of an Investor
Back in 1984, I didn’t have the mind of an investor. I had the mind of a besotted frat boy. So the idea of foregoing a thousand bucks worth of beer and New York Islander tickets so I could take a flyer on either Intel or Microsoft never crossed my mind. What a pity. Here’s what Intel and Microsoft cost when I became aware of them.
Intel: Around $0.60 a share in late 1984.
Microsoft: Didn’t become publicly traded until in 1986. In May of that year, it was selling for $0.10 a share.
And here’s what $1,000 would have grown to if I had invested it in either of these stocks in the mid 80s and held onto that investment until I retired in 2016.
Intel: $121,362.
Microsoft: $546,996.
I don’t remember who coined the phrase “castle in the sky” in reference to stocks. It was either Benjamin Graham or Burton Malkiel. I’m pretty sure it was Graham, but I could be wrong. Anyway, a castle-in-the-sky is a stock that captures the imagination of the masses because the masses have come to believe that it, or the industry it represents, is the “next big thing.” And sometimes the masses are correct. Intel and Microsoft were very much integral to ushering in the digital age. But the trick is to get in on these castles before they’re a blip on the general public’s radar. Buy-and-hold investors who bought Microsoft at $0.10 a share made a hell of lot more money than buy-and-hold investors who bought Microsoft at $50 a share.
In 2012, I was a much more sophisticated investor than I was in 1984. I had a Roth IRA, a 401(k), and a brokerage account. I also had nine years of immersing myself in the fundamentals of personal finance. I knew all about compound interest, dollar-cost-averaging, and the need to be “greedy when others were fearful.” But more important than my investment accounts and my PF knowledge were three additional qualities that made me perfectly suited to castle-in-the-sky investing.
- I was curious. I was always poking around websites such as Real Clear Science, the MIT Technology Review, and DARPA. I was also reading anything I came across in my local library that was futuristic (e.g., Wired for War, Race Against the Machine, and Big Data). So I was always finding little-known companies that were doing interesting things.
- I had a sizable net worth. So I had some money to gamble with.
- I had a memory. I knew about Intel and Microsoft way before they became household names, and the sting of missing out on those castles hurt.
I’ll never forget our first castle-in-the-sky investments. I came across an article about 3D printing on Real Clear Science, and the article mentioned two obscure companies: 3D Systems and Stratasys. I then googled the companies and found that they were publicly traded. Next, I brought my “research” to the attention of Mrs. Groovy and she agreed that 1) 3D printing might be the “next big thing” and 2) both companies were worth a try. “Should we invest $2,500 in each?” I asked. “No,” said Mrs. Groovy. “Invest $5,000 in each.”
Mrs. Groovy has a lot of moxie.
The Groovy Track Record for Castle-in-the-Sky Investing
The Groovy castle-in-the-sky investing strategy basically lasted from 2012 to 2013. All told, we invested in six little-known companies that we felt would soon capture the imagination of the masses. We were right on five and a half of them. Here are the results.
| Company | Field | Discovered Via | When Purchased | Share Price | When Sold | Share Price | Profit/Loss |
|---|---|---|---|---|---|---|---|
| 3D Systems (DDD) | 3D Printing | The website Real Clear Science | Around March 2012 | Around $16 | Around November 2013 | Around $75 | 368% |
| Stratasys (SSYS) | 3D Printing | The website Real Clear Science | Around March 2012 | Around $36 | Around November 2013 | Around $117 | 225% |
| AeroVironment (AVAV) | Drones | The book Wired for War | Around February 2013 | Around $18 | Around March 2014 | Around $40 | 122% |
| iRobot | Robotics | The book Wired for War | Around February 2013 | Around $21 | Around March 2014 | Around $42 | 100% |
| Organovo (ONVO) Round One | 3D Bio-printing | The website Real Clear Science | Around October 2012 | Around $2 | Around November 2013 | Around $8 | 300% |
| Organovo (ONVO) Round Two | 3D Bio-printing | The website Real Clear Science | Around March 2015 | Around $5 | November 2017 | Around $1.50 | -70% |
| Lithium Americas (LACDF) | Lithium Mining | The website Real Clear Science | Bought numerous shares from early 2012 to January 2013 | Average share price was $1.71 | NA | Current share price is $8.91 | 420% thus far |
The Groovy Rules for Castle-in-the-Sky Investing
Castle-in-the-sky investing is incredibly risky. You’re not only trying to anticipate the “next big thing,” you’re trying to anticipate the companies that will be at the forefront of that “next big thing.” Crazy.
Our last remaining castle-in-the-sky stock is our lithium concern, Lithium Americas. Right now it’s up over 400%. And electric cars, which depend on lithium-ion batteries, are posed to be the “next big thing.” So we’re going to let our bet ride. Besides, Lithium Americas is a Canadian company that has teamed up with a Chilean company and a Chinese company to develop a lithium deposit in Argentina. What could possibly go wrong?
All in all, castle-in-the-sky investing has been very, very good to me and Mrs. Groovy. We made a lot of money and got out before the investing worm turned (3D Systems is currently trading at $9.36 a share, for example). So if you got a lot of Mrs. Groovy-like moxie, and you want to give castle-in-the-sky investing a try, here are three rules you absolutely need to follow.
- Be curious. Read a lot of books about technology, and frequent a lot of websites that focus on technology. That’s where you’ll find potential castles before anyone else.
- Bet only what you can afford to lose. If you have anything beyond 2% of your portfolio invested in castles, you’re a mental case.
- Hold for at least a year. If your castle has doubled in that time, sell it and take the long-term capital gain. If it hasn’t doubled, give it another year. If it hasn’t doubled after two years, sell it and take whatever profit/loss you have at that point. Your castle is probably not a castle.Quick aside: We’re not following this last rule for Lithium Americas because 1) it has the potential to be our winning lottery ticket, and 2) selling it now would mean foregoing our Obamacare subsidies for the year, which currently amount to over $25K.Another quick aside. To keep abreast of the lithium industry, we follow a guy named Joe Lowry on Twitter and Linkedin. Joe goes by the moniker Mr. Lithium and happens to be the father of someone very big in the FIRE community: Erin Lowry of Broke Millennial fame. Pretty neat.
Final Thoughts
Okay, groovy freedomist, that’s all I got. Are you curious about castle-in-the-sky investing? Do you think betting a small amount on a company that might be the next Amazon or Tesla might be a worthwhile strategy? Or do you think castle-in-the-sky investing is utterly insane? Let me know what you think when you have a chance.
Have a groovy weekend and enjoy part one of my trash talking with Claudia and Garrett from Two Cup House. Peace.
I find that I’m too risk-averse for this speculation. My version of castle-in-the-sky is rather boring: A small play fund in $MJX that is based only on three factors:
1. Even though I don’t use it, marijuana is probably in the top three mind-altering substances that people have chosen to use throughout history. It’s already a (substantially illegal) several billion dollar industry, and it’s not going anywhere unless these publicly traded companies are closed in relation to laws.
2. My expectation that prices are artificially low today due to Jeff Session’s revocation of the federal government’s previous non-enforcement position on marijuana laws.
3. My expectation that the United States and Canada will continue to march toward legalization despite Jeff Sessions, because there is already majority support in the US public and in Congress for changing the law (and it is growing fast) and because I guess apparently Canada’s right on the verge, but I don’t really know what I’m talking about there.
I couldn’t stomach trying to choose the winners out of thousands of potential businesses that might profit (weed companies, pharmaceutical companies, fertilizer companies, distribution companies….) so I went with the closest thing I could buy to a broad index of those companies. Enter: $MJX, which happily began public trading right at the time I was searching! Hopefully I’ll look back in five years and say “Glad I bought this at ~$37/share, since it’s now $3,700/share!”
The Vigilante recently posted…Net Worth 4Q 2017: A Blessing is Looming!
I view–rightly or wrongly–drug laws through the lens of a coalition of “Baptists and bootleggers.”
I was in court recently to file paperwork. On a lark I sat in on some hearings. Every one of the unhappy people entangled with the legal system had alcohol involved. The Baptist in me wishes I could wave a magic wand and make it go away. That way lies Prohibition.
The second constituency for the current drug regime are bootleggers. Milton Friedman said “illegal drugs are expensive drugs” and this means huge profit margins for purveyors of illegal drugs. The last thing a bootlegger wants is legalization. Watch the movie Key Largo sometime.
If Federales think they need to interfere with the sovereign states’ legalization moves, I don’t think it is because Mr. Trump has become a Baptist. This worries me.
In any event, this introduces uncertainty into the market for marijuana and marijuana-related products. Uncertainty is for speculators, not investors.
You pretty much hit the nail on the head that uncertainty in the future of the industry dominates,. Exactly why I said it’s my version of speculation!
The Vigilante recently posted…Net Worth 4Q 2017: A Blessing is Looming!
Haha! I love the playful banter between you and Steve. Can I call you guys the Doobie Brothers?
i have just the theme song:
…don’t bogart that joint my friend
pass it over to me…
https://www.youtube.com/watch?v=J-ifjIAoleI
LOL! Fraternity of Man. Made my weekend, Steve. Did anyone ever tell you you have an exquisite mind?
I was sitting in a microbrew in Chicago back in the ’80s and I said something clever. I responded to praise by saying, “If I’m so smart how come I’m not rich?” At this point, the vice president of sales for the company i was working for at the time matter-of-factly stated, “Because you don’t have to be.”
Keep this in mind while working toward FI.
Steve: How can you doubt a stock based on the inspiration for our theme song?
The Vigilante recently posted…Net Worth 4Q 2017: A Blessing is Looming!
Oh, damn, Steve. When I saw “baptists and bootleggers,” I thought you were going to serve up a good H.L. Mencken quote. Not that I’m terribly disappointed you didn’t. Your comment was superlative as always. But a little Mencken wryness would have been fun. Cheers, my friend.
Agreed. Marijuana is becoming mainstreamed, and a marijuana based stock fund is a good bet. I love the cut of your jib, IV.
Mainstreamed, indeed. Excited to see the upswing when investors follow me after learning (A) that Sessions doesn’t personally enforce this law, and most of his local US Attorneys come out (as many have) saying it is foolish to waste resources enforcing it, and (B) Congress or several more states legalize. I’m not holding my breath for Congress, but there has been some hopeful bipartisan criticism of Sessions based on his little anti-weed escapades.
The Vigilante recently posted…Net Worth 4Q 2017: A Blessing is Looming!
We like to play with less than 10% of our portfolio. Whenever we find interesting stocks showing high potential we play around a bit. So far, it’s been very profitable.
Xyz from Our Financial Path recently posted…So, What is Your Plan?
I love it, Xyz. As long as you’re playing with your head and not over it, castle-in-the-sky investing is good, clean fun.
It’s more speculation (gambling) than investing really. And I’ve done it too, so I’m not judging. 🙂 I used to play with options and bet on some single stocks. My best “bet” was Tesla at $39 and sold it just over $300. I haven’t bought an individual stock (or option) since then though – I’m all about index funds now. And it’s working pretty well for me. 🙂
Brad – MaximizeYourMoney.com recently posted…Highest Paying Jobs Without A College Degree
Agreed, Brad. Castle-in-the-sky investing is nothing by gambling. I woke up quickly and basically got out of it before I got burned. I only have one castle left, my lithium concern. But we’re holding on to that because 1) China, Europe, and the United States are pushing electric cars, 2) gigafactories are being built all over the world, and 3) current lithium producers can’t ramp up supply overnight. It’s a perfect storm of supply and demand, and my lithium concern is in a perfect position to take advantage of that. That’s the hype, anyway. Thanks for stopping by, my friend.
Excuse my Bogle-bigotry, but I think that someone like you or me doesn’t do Castle-in-the-sky investing, we do Castle-in-the-sky SPECULATING. We don’t have the inside track. At this point, the only sane way to INVEST is through an index mutual fund. Individual stocks constitute too much risk for someone who isn’t a securities analyst. Sure, we can grok trends and you’re justified to get excited about stuff you see in https://www.nextbigfuture.com/ But the way we should be INVESTING in cool stuff like this is to tilt a portfolio toward a tech-centric index.
If you want to know what kind of Castle-in-the-sky SPECULATION to jump into right now (imagine your Dustin Hoffman about to be seduced by Anne Bancroft) one word, “blockchain.”
Haha! I can see a cartoon now of Anne Bancroft’s thigh with the word Bitcoin affixed to it. What a great analogy. And you’re absolutely right, my friend. Castles-in-the-sky is total speculation. The word investing should never, ever be associated with castles. Thanks for injecting a heavy dose of reality, Steve. Bogle-bigotry is always welcome here. Cheers.
This is the first time I’m hearing of the castle-in-the-sky investing. It reminds me of paying attention to current consumer trends. Similar to what happened recently with fidget spinners and slime. 5 wins out of 6 on the portfolio is amazing.
Hey, KP. I got very, very lucky. But my real luck was in realizing that I wasn’t the next Warren Buffett. I got out castles before Mr. Market taught me a great lesson on humility. Thanks for stopping by, my friend.
Love your rules for castle-in-the-sky investing. I also know I won’t be doing it anytime soon!
When I was getting all of my credentials processed for teaching, it looked like I was going to come up short for an endorsement so I took another consumer ed/intro to econ course at our community college. The mock stock I picked? Apple. In 2007.
Extra fun fact? I didn’t even need the course. The state just goofed on the paperwork.
Penny @ She Picks Up Pennies recently posted…Frugally Awesome…or Awkward: Holiday Edition
Wow. Just looked up Apple and saw that its stock was trading at $13 a share in 2007. A thousand dollars invested in Apple back then would be $13,500 today (and that’s not accounting for any splits). Not too shabby. Thanks for stopping by, Penny.
P.S. I love the state of Illinois. It never fails to justify my lack of faith in government and politicians.
Interesting! I’ve always been burned whenever I’ve tried ‘castle-in-the-sky’ investing. I think part of the problem was that it was based on someone’s recommendation + some basic Google gaming i.e. not in depth. Like the fact that you included rule #3 which is where a lot of people trip up.
Haha! Nothing ever good comes from a stock tip from your barber or your friend. You’re better off finding your castles yourself. And rule #3 is critical. If you don’t have a clear exit strategy, you’re not ready for castle investing. Thanks for stopping by, WO. Always a pleasure.
Ah, what a great idea. I don’t think I’m at the financial maturity to be able to do this yet but it makes sense to start reading the various resources you recommended so that in a year or two I could possibly get into castle-in-the-sky investing too.
@luxthrift recently posted…2017 review | A bit rubbish at frugality but equally rubbish at being spendthrift
Exactly. Be curious, read, and a keep a list of potential castles. And then when you’re more financially secure and a castle goes public, give a that castle a whirl. When played right, the downside is very small and the upside is very large. Thanks for stopping by, Luxthrift. I really appreciate it.
Ooh I like this – too bad you missed out on a fortune with Intel or MSFT though! I remember making a ton of money on MSFT playing a Stock Market Simulation game throughout grade school. We ranked 13th in the state for all teams thanks to that and a few other good picks.
Definitely be willing to lose what you bet though, that’s great advice. You’ve made some solid picks it looks like and seems like you made a good call on when to call it quits. 🙂
If only everybody who ‘invested’ in cryptocurrencies followed this advice, too!
Dave @ Married with Money recently posted…The Three Bag Compromise
Damn, I wish they would have taught us about stocks back in junior high and high school! Maybe I would have developed an investor’s mindset in my 20s rather than my 50s. I got very lucky with my castles. Funny, though, I never even considered “investing” in cryptocurrencies. Talk about castles-in-the-sky. Thanks for stopping by, Dave. I always love hearing what you have to say. Cheers.
This sounds right up my alley. Lots of reading, industry analysis, and a bit of gambling. I like picking individual stocks and have been pretty decent at it thus far. I’ve even gotten the timing down pretty good. I’m not on your level yet, but would def risk a few hundred just to see what happens.
When I was living in New York there was an ad campaign for Off-Track Betting that end with this admonition.
“Bet with your head not over it.”
I think this admonition is works perfectly for castle investing too. As long as you bet a very small amount, it’s harmless fun. Thanks for stopping by, OMGF. I really appreciate it.
I’m not adverse to using such a strategy on small portions of a portfolio to otherwise help you stay the course on index investing. But over the long run I still believe it’s largely an average losing strategy beyond the psychological benefits.
Without a doubt. You can’t beat Vegas and you can’t beat Mr. Market. Speculation is a fool’s game.
I don’t remember reading about the term “castle-in-the-sky” when I read Intelligent Investor by Graham…I guess it’s time to revisit the book. LOL. I like the idea in general and would categorize it as probably part of the 10% or so of my portfolio that I could allocate to speculative investments or other highly risky investments. The Real Clear Science is an interesting website and I have just added it to my RSS feed.
Cheers!
Enoch@SavvyNewCanadians recently posted…Understanding Cryptocurrencies: Bitcoin, Ethereum, Ripple, and Others
Same here, my friend. It’s definitely time to check the origin of that term again. It might have come from Malkiel, and the phrase might actually be “castles in the air.” Damn, this blogging stuff is hard! Thanks for stopping by, Enoch. I really appreciate it.
P.S. Glad you added Real Clear Science to your RSS feed. It’s a great clearinghouse for articles that pertain to technology and the future. There’s a lot of interesting things going on out there, and it’s fun to read about them.
Great article Mr. Groovy, as always. I agree that castle-in-the-sky investing has a small place in a portfolio. I’ve never been able to do it with stocks, though (I’ve always bought and sold at the wrong times).
But these days, I think cryptocurrencies may be that “next big thing”. Take an example (credit Ameer Rosic on YouTube):
You want to sell a car. Today, you have to agree on a price with a buyer. Then, they may have to get a manager’s check to pay you, and you have to go through the DMV to transfer the registration. You also must wait for the money to clear into your account.
With a blockchain smart contract, the price and title are already on the blockchain. The buyer pays with crypto, and title is transferred instantly. Less paperwork, less delay.
Like with all castles in the sky, it may or may not succeed. But I think that when technology like this exists, it eventually finds widespread adoption.
Cheers,
Miguel
Agreed. If I were on the hunt for another castle, I would be looking in two areas: blockchain technology and graphene. And thanks for the Ameer Rosic tip. Just checking him out on YouTube. Very interesting, my friend.
Mr. Groovy, This is very cool to me. I think you know I’m just a boring dividend growth stock investor. It is a slow and steady wins the race strategy. Your strategy takes a different sort of research, vision and risk taking. I admire you for it and thank you for writing about it. The strategy’s not for me, but I like investing and like reading about how other folks go about it. Well done. Have a great weekend. Tom
Tom from Dividends Diversify recently posted…6 Steps to Create Your Passive Income Machine (Part 2)
Thank you, Tom. I couldn’t agree more. I’m definitely a slow-and-steady-wins-the-race-strategy guy too. One’s investment portfolio should never be “exciting.” And once we sell Lithium Americas–when it hits $50 a share in 2020–our castle investing career will be officially over.
Looks like your castles have done phenomenally. Congrats on a well-tuned system. While I’ve been tempted to do some castle in the sky investing, I’ve never pulled the trigger. Maybe one of these days I’ll put a little play money into action.
Gary @ Super Saving Tips recently posted…21 Really Weird and Wacky Ways to Earn Extra Money
Haha! I look like a freakin’ genius. But we know we totally lucked out. For whatever reason the financial gods were smiling on us. I suppose I’ll always be a castle hunter. I come from a long line of degenerate horse gamblers. So betting is my DNA. But it will only be one castle at a time, and the amount of my wager will always be very small relative to my portfolio. Thanks for stopping by, my friend.
This is the type of investing that I am always tempted by and never have the guts to actually try. I think the key is your second point: bet only what you can afford to lose. Recognize that this is more gambling than investing.
I should set a small amount aside and give this a try if only to satiate the craving to go for it.
Matt @ Optimize Your Life recently posted…Who Do You Want to Be?
“Recognize that this is more gambling than investing.”
Truer words have never been spoken, my friend. It’s definitely harmless fun as long as you tread very, very lightly. $500 or $1000 bet now on some obscure blockchain or graphene company could pay for Baby Optimize’s bachelor’s and graduate degrees. Although I wouldn’t skip the 529 plan. Thanks for stopping by, Matt. Always a pleasure hearing from you.
Isn’t there always the next best thing? I like your approach, to castle-in-the-sky investing, research, money to lose, and an accountability partner. I’m not sure we were ever in the position to take advantage of an opportunity like this, so we have stuck to the index fund strategy.
Looking forward to part two with Claudia and Garrett.
Brian recently posted…Financial Steps to Take Before Divorce
Agreed, Brian. Castle investing is strictly gambling. And because of that, I’m basically done with it. It’s much easier to sleep at night when 99% of your portfolio is invested in low-cost index funds. Thanks for stopping by, my friend. Should have parts 2 and 3 served up on Friday. You’ll love them. Claudia and Garrett are wonderful sports. And great pickers too!
Go Groovies! John is going to love this post as he’s been wanting to invest in Lithium. Looks like we should’ve done that 5 years ago though!
Lithium Americas is poised to go from OTC to NYSE stock exchange, opening a whole new world of potential investors. Not too late.
And if they can ever produce some battery-grade lithium, they’ll be really big.
Perhaps. If you ever want to give it a whirl, though, follow Joe Lowry on Twitter. The man has encyclopedic knowledge of the lithium industry. But if you think you’ve missed the boat on lithium, here’s one for you. Graphene. It’s supposed to be a wonder material–lighter than a feather and stronger than steel. But apparently it’s very hard to make. If I were still in the castle game, I would look for a company that is making progress on the graphene production front. But remember to bet small. Talk about a castle-in-the-sky.
“…besotted frat boy.” ROFL here!! I was a besotted cosmetology student myself, so I totally get your frustration with your ignorance during those years. Go Cubbies and quarter beers!! Now THAT is an investment plan – not!! Luckily you had Mrs. Groovy and her moxie to pull you out! 🙂
Haha! We’re definitely kindred spirits, Laurie. However, I prefer Mets and quarter beers to Cubbies and quarter beers.
Well done Groovies! Doing your research and taking a risk with an amount you could afford to lose is very smart, aggressive, growth investing. Sure you can get burned – ever heard of a company called Datawave? No? Didn’t think so, because I lost 5Gs on that moon shot 😩 – but hey, others have panned out and kept me in the game, always willing to take a chance on a winner with a little extra investment money😎
Dataware! I love it, Kat. Way back in 1984, my friend got a job with Wang Computers after he graduated from college. I remember him showing me this new thing called a floppy disk. And I remember how I thought Wang Computers was going to be big. My friend even suggested that I invest in Wang. But I thought buying stocks was only for rich people and scoffed at the idea. Besides, back then I barely had enough money for beer, never mind a computer upstart going against IBM. Good thing I was a drunken loser. Wang soon began to flounder and eventually went bankrupt in 1992.
Man that is awesome.i have never had enough money or been brave enough to do individual purchases. Maybe in the near future…maybe. for now index funds it is.
You are right though. Reading and understanding new fields is the way to find the castle…
Hey, DDD. Total agree with you. Castle investing is like going to Vegas or the race track. As long as do it very infrequently and strictly limit your gambling money, it’s rather innocuous. If you ever think you’re going to make a killing, you’re doomed.
Benjamin Graham is turning over in his grave! No margin of safety analysis on either the buy or the sell? Definitely speculation rather than investing.
I’m guessing you for more of a contrarian investor. Buying the dogs out there for dividends or something. Sort of like picking up trash!
“I’m guessing you for more of a contrarian investor. Buying the dogs out there for dividends or something. Sort of like picking up trash!”
LOL! Nice, Susan. And for a while, I was heading in that direction. But fortunately I got a hold of my hubris and I stopped flying close to the sun. I basically stopped castle-in-the-sky investing in 2013. I only have the lithium concern left and I’m keeping it because the downside is very small and the upside is extremely large. Got very lucky with this one.
You’ve got more balls than I do Groovester, I’m not sure I have the stomach for that. But your track record looks pretty damn good. Maybe you could start your own brokerage company, “Groovy-Traders” or something like that 🙂
LOL! Mrs. Groovy is the one with balls. She’s the Warren Buffett of the household. She can invest in an individual stock and not look at for 10 years. I looked at our castles every day (I’m doing better with Lithium Americas, however). And I like where you’re going with “Groovy Traders.” I joked during my castle run that I should have started a hedge fund. But thankfully I came to the realization that I was just a lucky boob. Glad I got out without losing any money.
Way to go Mrs. Groovy!
Congratulations on those castles that are touching the sky! This is actually a really cool way to break down stocks that you believe are currently extremely undervalued, and you believe they have the potential to take off.
The best point you make though is “If you have anything beyond 2% of your portfolio invested in castles, you’re a mental case.” You discussed how the first step is to essentially assure that your main investments are in safer investments AND are built up to where they hold a significant weight of your portfolio before you do any type of “castle” investing.
Great post!
Hey, Sean. Thank you. Couldn’t agree more. Castle-in-the-sky investing/speculation is no different than going to Vegas. As long as you realize it’s for fun and the odds are high that you’re not going to win, then it’s perfectly okay once in a blue moon.
Yes!!!! New talking trash!!!!
Interesting ideas about investing. I just don’t think I’m that interested in trying to find them.
On a side note, this is exactly why all those people say that active investing is dying are wrong. People will always do something like this.
I think its good to do. Good for the world. These companies have to get off the ground and change the world, and ty need investment to make it happen.
Good to do in moderation… I should state.
MrWow recently posted…To Side Hustle or Not To Side Hustle… Or Maybe to Beside Hustle?
Absolutely!
Hey, Mr. WoW. You are so right, my friend. Active investing will never die because human beings have gambling in their DNA.
I’m not sure if my husband’s hoarding of Amazon and Google counts… those are already in outerspace.
For play money, I hold onto a few individual stocks I pick for one year and see who the winners and losers are. If they are in the red, I sell them off just before the year is up. If they’re up I sell after one year.
Haha! I love it, Lily. I’m a total index fund investor, but I always feel the urge to be a little more daring. Gambling on individual stocks, providing it’s done infrequently and only in amounts you can afford to lose, is a harmless way to bring some excitement to your investing life. “Play money” is a very apt description. Perhaps you can do a round up every year on how your individual stocks did. I think that would be a lot of fun.
I think most would be interested in castle-in-the-sky investing but it is one of those things that if you aren’t doing your due diligence you WILL get burned and burned hard. I think I will be in the keep it simple phase for a while longer (read: Index funds ftw).
Who knows when/if I will get the confidence to do anything beyond index funds but when I do I’ll be researching the crap out of it. Of course, hind-sight is 20/20 and I wish I had gotten into some of those stocks like Tesla. Maybe then I could use those gains to buy a Tesla :D.
Budget On a Stick recently posted…Simply Put Recipes: Chili
Agreed, BOAS. This strategy is total speculation and should be avoided with extreme prejudice. Mrs. Groovy and I did for a very brief while and where extremely lucky. We’re down to one castle, and once we sell that, we’re done. Thanks for stopping by, my friend.
You seem to have a knack for it so go for it. I’ve tried a few before and it never worked out for me. I don’t have the eye for those kind of companies.
Now, I invest in conservative companies and just focus on investing as much as I can.
Good luck!
Thanks, Joe. But I’m walking away from castle-in-the-sky investing with my net worth and pride intact. I know my fabulous run was all about dumb luck and I no longer want to tempt the financial gods. I’ll let Lithium Americas run its course (it’s on target for actually producing some battery-grade lithium in 2019) and stick with VTSAX and VBTLX. Cheers, my friend.