Being a Speculative Investor

Last week stock market review, It wasn't much of a week in term of trading for me. There was another .25% rate cut by the fed to an all time low 2 %. Bankruptcy filing jump 47.7% in the month of April from last year, and a 7% increase from March. While the U.S labor department report a number of 20,000 jobs lost in April which is far fewer from 81,000 in March, 83,000 in February, and 76,000 in January. In term of highly speculative news between the merger of Microsoft and Yahoo, it was reported that Microsoft up it bid another 5 billions from initial $31 a share to $33 a share. The bid was rejected and by the end of the week Microsoft decided to withdraw it offer to acquire Yahoo. I'm expecting Yahoo stock price will drop to between $17-$19 range this week. I'm not big fan shorting stock. I just don't feel like watching a company go down the drain as good karma. It would be a very speculative buying opportunity if yahoo drop below $15. Which could happen if people started to panic on Monday morning. Even tho yahoo has decline over the years, it still has the second best search Engine behind Google. There is no way the company is not going to get another buyer down the road. Maybe Jerry Yang come to his senses and call up Steve Ballmer to see if the 47 billions dollar bid is still on the table when he can't get a better offer. If you buying yahoo on Monday you'll be consider a speculative Investor. It's buying the company stock because you feel the value its stock will increase due to something big is happening. It has nothing to do with the fundamental, growth, and the successfulness of the company. I personally wouldn't recommend building a portfolio on speculative companies, but having one of these companies does make the joy of investing a lot more fun. It like that lottery ticket with better odds. Sometime it just give your portfolios a jolt just overnight. It is nice to slowly build your wealth with 5% here,10% or even 20% over a period of months and years, but nothing better then getting a 100%+ gain in one night. I always do recommend having one of these company once you got a nice chunk of capital in your account. If you have Less 50K to invest then I wouldn't recommend it. Why ? It very simple one word, “CAPITAL” . As investor that is a very important word, because you making money with money. There no time to waste putting money in a dead zone with speculative stock that just doesn't grow over time as comparing to stock that will increase over time. I felt that beginner tend to have a whole portfolio with speculative stocks that never growth. As a beginner in 2005, I have experiences this first hand. I could tell you why I did it too. When I started out, I didn't know where to start with. You basically looking at 10,000 + companies to invest in but you have enough money to pick what 2 or 3 stocks? All you do is read the newspapers!!!!!!!!!!. Everything in the news is speculative!!!!!! Technically not everything but most things in the newspapers are speculative. Second who would want to make 5% when you could make 100%. Then again I didn't know how to choose a stock that would increase 5%. Another thing is I think I know the price value of a stock , but I really didn't know. Looking back at those days, I would just smack myself in the head. I was lucky that I even came out of it on the positive side of thing. Then again it a learning experiences that I assumed most young investor go thru. If you reading this post and wanted to start investing, “ Go grab a couple books about investing”. All in All, don't be a speculative investor unless you got the money to play around with. It is definitely something that will give you a boost into investing and looking forward to the next big dream. I always will keep one of these stocks in my portfolios just for fun. Hoping it'll make my dream come true a little faster or help me increase my capital a little faster :).