Re: It\'s time for poker players to start putting their money to work.
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"After my other post to the $5k portfolio question, I went for a run and realized that I was giving advice I never followed myself. The real answer for a $5k portfolio is 2 buy 2 stocks, maybe 3. The problem is that most people with a $5k portfolio are not qualified to pick those stocks. If you have a rich uncle or something who is good in the market, that is the way to go."
Doesn't that have a very high risk of ruin? I mean even the best traders still pick bad stocks occasionally don't they? I agree with you if the 5K isnt that important enough that you don't mind busting it, but if someone only has 5K to play with and losing it would be a huge loss, wouldn't it be better to go the safer route? Personally I'm just starting at 5K this month and hope to be adding a few K each month so I would probably go for some individual stocks (assuming I feel comfortable picking some stocks and am confident in what I am doing, if not I will probably just hit some indexes like you said)
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Yeah...which is why I gave that advice and wasn't recinding it. Its good advice...kinda like telling someone to play TAG. But the best LAGs are better, no? The analogy is a little stretched...but it's MUCH MUCH better to buy individual stocks in a concentrated fashion if you know what you are doing. Of course you get some wrong...great investors are right maybe 60% of the time...but the good ones tend to have bigger indvidual gains than losses as well.
So that was my point. If you have any access to stock picking, given your age, etc, the higher risk but higher reward strategy is an individual stock strategy. The problem is that most people don't have the access....hence my original answer to you.
But here is the thing....if you are serious about adding $2k per month to a $5k portfolio, risking "ruin" ain't no big thang, now, is it?
You have to keep it in perspective with your overall financial picture.
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