Speculating: LBTT.PK = LBTN.PK

If you know my strategy, you know I like broad market exposure as cheap as possible through index investing and diversifying through metals and REITs (or other high dividend stocks). I also like to speculate – just a little. It’s more fun to blog about speculative stocks than passive investing.

I recently wrote that I wouldn’t be a buyer of NUS (Nuskin Enterprises). A speculative stock has to have trmendous potential and that potential comes with extermely high risk.

For example, LBTN.PK (formerly LBTT.PK) recently shot up from 18 cents a share to 24 cents a share, 33.3%. Now that’s exciting. But I’ve been scared plenty of times too.

For example there were the declines that led to the 1:150 reverse split on 10-24-2004. But what do you look for in a speculative stock? Not share increases and declines – lots of bad speculative stocks have those.

You have to look at the products, their current position in the market, and the possibility of better market position in the future. For exmaple Lifeline Biotechnologies maain business is in Cancer detection, including breast cancer detection. Lifeline products are just starting to hit the market. If they can do well in this market the company will do quite well and so will the stock.

Now there are many many “if” sentences here. By definition speculative stocks are not safe investments. They are investments with the potential for big returns. Are you willing to take a risk that this potential will never be realized? If you are, find a company with good products that has a chance to find a market niche.

One Response to “Speculating: LBTT.PK = LBTN.PK”

  1. Heather Kruis says:

    I agree with you on the criteria for speculative stocks. I suggested some in mydadsadvice.com. It just takes a couple of winners to offset loseres – providing you cut the losers off at a negative 10%. However, I do not think that is a hard rule – because they do jump around a lot. My favorite this year is SIRIUS Satellite radio. Once they pass the break-even point, it is all profit. If you listen to radio much in, it is half commercials. One would have to wait for a pull back at this point. It has gone from $2.00 to over $5.25 in the past few months. However, long term potential is tremondous.