TSME #024: High Risk Stocks

Tyrone Jackson has been teaching for almost 10 years and trading for over 20 years, and he always starts by teaching his students on and offline to write covered calls. This is a great place to start because it produces guaranteed residual income. We want to own stocks that pay dividends and that allow us to sell call options. 

There are always going to be people who like high risk stocks. They think if they buy these risky stocks for very cheap right before the stock sky rockets they will make quick money. The problem is this pattern rarely happens. You are better off going with the more established names with consistent top line revenue. 

Here are a few examples of high risk stocks that traders have been tempted to invest in for the past few years:

Tesla

A lot of people got excited about Tesla automobiles and recognized their opportunity to have a significant impact on the auto buying market. Had you bought the stock five years ago with a $1,000 investment, today your shares would be worth $8,600. Its not that the company is so great, it’s just that investors got very excited about what Tesla was doing. However this is a high risk stock because the company does not have a long track record, it does not pay a dividend, and it doesn’t have a history of top line revenue. The revenue hasn’t been there long enough for us to follow it as a disciplined investor.

Go Pro

You’ve seen the Go Pro cameras; they are very cool products to own and they capture beautiful video. However, we in the Wealthy Investor program, never purchase stocks from companies that only have one product. Yes they have different version of the same product, but Go Pro could easily be dominated by a bigger player. A company like Apple could come out with their version of this camera tomorrow and knock Go Pro out of the game, because Apple has a very loyal fan base. If you’ve noticed over the past few years the Go Pro shares has gone from a high of $90 per share down to $25 per share. 

Pandora

The problem with Pandora stock is, if Apple decided to launch a music service that rivaled them, Apple would take the market share. Pandora has gone from a high of $37 per share down to $13 per share.

If you are just starting out, you want to start by investing in lower risk companies. If you grow your account over time on the strength of these low risk companies, in the future you may be able to afford a little more risk. For now, your next step is to visit TheWealthyInvestor.net and download the free ebook Trading Stocks for Wealth. This ebook will introduce you to low risk strategies. There is no reason for you to take on more risk than necessary. Click HERE now.