Have You Ever Invested A Large Lump Sum In One Stock?

[Fishindude77]

There are some pretty well run public companies out there that one could do quite well in long term. One I've watched is John Deere, wish I'd have bought a bunch of that 5 years ago.

[TexasHusker]

I don't think that's the same at all. First, you were investing in two entirely different businesses: vacation rentals and hair salons. Second, you weren't just passively buying into an existing business as a shareholder with no input or control. You were running the show.

Still a risky move but a very different kind of risk than if you had taken that same money and bought shares of a single publicly traded company.

OK then, putting all eggs in two baskets. Still risky.

But with a publicly traded company, such should be less risky: Publicly-traded companies should be run by executives with years of administrative and managerial experience, and should be overseen by a hopefully-capable board of directors.

[rennigade]

Nope...never have. I always figured id have a better chance of not losing all of my money if I spread it out between lots of companies...all within a single fund.

But then again with my approach...its a make money slowly kind of play. With individual stocks you can get rich much quicker...or lose your shirt. Risk/reward.

[disneysteve]

With individual stocks you can get rich much quicker...or lose your shirt. Risk/reward.

Losing your shirt is pretty unlikely unless you're investing in penny stocks and highly speculative stuff, and ignoring your investment as well. If you take a big chance on a well-established company and keep track of it, you certainly could lose money but except for the rare exception where a company pretty much implodes overnight (i.e. Enron), you can avoid the "lose your shirt" scenario. You could simply set a stop loss order when you buy in that would automatically sell if the stock drops below a certain level.

That's not to say that I promote taking a huge risk on a single stock. I'm with you on the get rich slowly path primarily using mutual funds. I just think sometimes the actual risk of individual stocks is a little overblown.

[safari]

I bought 1,000 shares of NVDA in January 2016 when the share price was $29.96, so I had about $30K in a single stock. That was about 5% of my total portfolio. It started climbing and gained over 100% in a few months. Normally, I would have sold it by then, but I didn't want it to be taxed at the ordinary income rate, so I wanted to hold it for at least a year to be classified as a long term investment and be eligible for the 15% rate. So I held onto it. In January 2017 I sold 300 shares at $107.30 per share for 258% gain, totaling $32,190. I got my original investment back (and more) and decided to ride the remaining 700 shares, as the future of the company looked very bright. The stock kept going up and up, so I decided to cash in by selling 300 more shares in September 2017 at $181.00 per share for 503% gain, totaling $54,300. I still own 400 shares of NVDA today, and the share price is currently $262.58 (775% gain). I got around $105K in a single stock, which is highly disproportionate, but I feel like there is room for more growth, so I am going to hold it for now. I've been investing since 2006, and this is by far my best investment to date. I took a risk of putting a lot of money in a single stock and it paid off big time.

[JBinKC]

My current set limit is 20% for a stock but I had moments in my early investing career where a stock (Iomega) was around 80% of my portfolio's value after a huge percentage gain over a relatively short period of time during the mid 1990s (and this included selling out of my cost in the stock). I will admit that investment was mainly luck and bought it because I used their products in business.