An asymmetric scenario is the key to my billion dollar bets
Find a theme. If the last 18+ months have taught me anything, it’s find a theme.
Find a theme that resonates with you as an investor and learn it both forward and backward. Don’t blindly invest or fall in love, but find the theme (s) that you think will move technology or society forward or even society backward (hello online gaming).
There are a ton of things to choose from out there. I focused on psychedelics and cannabis (alternative life sciences), iGaming, esports, cryptocurrencies and NFTs, green tech, biotech, and private offerings. At least for the most part.
This is not an exhaustive list as I still play a lot in the tech space, especially on the business side, but when it comes to trying to find the next big thing or names with an asymmetric reward compared to at risk, these are some of the areas I’m looking for. Really, I could add small and micro caps to the list that is an asset class more than a theme.
While it hasn’t been my forte in the past, I’m adding miners to the list, including gold, silver, copper, lithium, and oil sands. Again, I want little names, nothing on the Wall Street radar yet. There is simply too much competition to have an edge over the big names outside of some scalp traders. Of course, buying and holding works well, and I’m in favor of that, but it won’t offer asymmetric risk-return scenarios.
What do I mean by asymmetric risk versus reward? I’m going to give you an example. I play in the eSports plus NFT space. It’s a new space, a new business, so I immediately know that any risk is 100%. Sure we say for everything, but in few worlds your risk with something like Disney (DIS) or Apple (AAPL) will be 100% unless you put your head in the sand and you never watch them for a few decades or the world completely collapses. So while 100% is technically accurate with companies like this, it’s not very realistic. Instead, you get a risk-reward type two up, one down, of course oversimplified.
But if we come back to the idea of ââNFT eSports we will call it “NFTPlay Corp”, we can realistically say that our capital is 100% at risk. There is a very real chance that something like this could go to zero and do it quickly. Weeks. Days. Maybe hours. But if my potential is 10x or 20x my initial risk, and even moderate success would provide that potential, then I have an asymmetric bet.
These, I want them.
If I can create a portfolio of 10 names that fit this category, I only need to be right on one to be profitable. If I hit more than one, then I crush it. And if I hit three, then we’ll go to Sizzler … every day.
That’s the whole idea behind the idea of ââbillion dollar betting. Hope to have a few more as soon as I dig into a few smaller names. I’ve certainly had a few hiccups in the group so far.
Genprex (GNPX) was a bit slower, but with data coming in towards the end of the year, there are still catalysts here.
Draganfly (DFLYF) should have some uplist news coming soon. I guess it’s July. It should be a great catalyst.
Juva Life (JUVAF) was the biggest disappointment, but they should have data coming this year, so I’m not ready to give up just yet.
CurrencyWorks (CWRK) wiped out what was almost a triple-digit payout.
GT Biopharma (GTBP) peaked at around 300%. I removed a little, but far from the 300% level.
Cybin (CLXPF) is approaching 100%.
Alkaline Water Company (WTER) almost added 50% to its earnings and now has Shaq on board.
Going forward, I should probably take the approach of removing something like a third from a position once it doubles, although this changes my need for success of two names from one. I’m confident enough that at least two of the names will go 5x and the other 8 won’t be a complete losers, especially once I have three more names here.
Keep your eyes peeled because I’m hoping to get number eight as soon as possible, but not only has the story got to be fair, the risk-reward has to be skewed for us.
(Alkaline Water and Juva Life are part of TheStreet’s under $ 10 equity portfolio. Click here to learn more about this portfolio, trading ideas and the market commentary product.)
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