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Various Levels of Speculation, from Wild to Risk-averse

Tuesday February 23, 2021

Since there is a lot of idle talk about investing or trading being “gambling,” I thought I’d speculate on a sort of gambling-gradient which could be useful for normal people.

  1. Wild speculation, throwing a significant percentage of one’s holdings into turbulent, ephemeral opportunities or ventures, having taken little interest in fundamentals or technical factors
  2. Wild speculation, throwing a significant but more easily renewable percentage of one’s holdings into temporary opportunities or ventures, having taken little interest in fundamentals or technical factors
  3. Wild speculation, but for entertainment purposes and with a reasonable percentage of holdings, i.e. play money
  4. Speculation based on little insight or information, but only risking one’s non-critical resources, e.g. helping a friend guess the answer on a game show (possible small amount of reputation on the line)
  5. Speculation, but for entertainment purposes and in a regulated environment
  6. Speculation, but following group / citizen tradition with a general intuitive sense for the odds
  7. Speculation, but parallelling expert or institutional interest, with technical and fundamental factors widely available for research
  8. Speculation, but diversified across markets and assets, in an educated fashion
  9. Risk-averse Speculation, widely diversified across markets and assets, with expert advisement, with risk spread over multiple time frames
  10. Risk-averse Speculation, as a drastically reduced percentage of the overall portfolio, e.g. 0.1% to 10% of total holdings
  11. Risk-averse Speculation, at a drastically reduced percentage of the overall portfolio, and only during specific life periods, e.g. when young and healthy

How do you speculate, and where does it fall on the list?

Do you feel pressured to pick one method, or do you see why multiple methods may help you reach your goals faster, or in a more interesting or entertaining way?

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