Tuesday, December 20, 2011

When investing is gambling ... penny stocks

I love to gamble. But very rarely do so because I hate losing money. And of all the times at the craps and black jack tables in my life I've only had one big score (craps table in Atlantic City years and years ago). All other times I lost a little. Or won a little. Or broke even. I never want to experience the 4th outcome: losing big. This being the case I rarely gamble when given the opportunity.

But I do gamble in another way. With risky investments. Or as some say, penny stocks. I only use money that could be lost and not missed. And I don't do this very often. This past week I plunked down about $400 for 10,000 shares of my target company. At .04 a share there isn't much further down this stock can go. Of course it can go to $0, in which case I won't cry over the loss.

But looking at the upside... This stock I bought has had two price peaks in the past 15 years that I look at as a potential. Most recently it had a pre-recession share price of about $2.50. Wow. That would make my 10,000 shares worth $25,000! Not too shabby for a $400 gamble. An over 6000% increase.

Wait, it gets better. This stock had a pre-dot com bust share price of just over $5. Another wow, doubling my above numbers. $50,000 in value. 12,000% increase! All these hypothetical numbers are crazy. And are likely to never happen. But if they do .... I figure it's worth the $400 chance to go for it. It won't make us any poorer. But it could make us a lot more richer.

Do you ever gamble with investments? Do you ever speculate with money?

1 comment:

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