Shuttering The Short Stack: There Are Better Risks To Take

Shuttering the Short Stack

Blast it all!

This week I have some bad news for you. You know those articles that absolutely nobody read about my highly speculative stock picks for my little micro-portfolio called The Short Stack? Yeah… I’m closing it down.

You can read all about the reasons I originally set up the portfolio right here (maybe squeeze a couple more clicks out of that puppy). But I won’t dwell too much on The Short Stack and the pile of burning cash sitting next to it.

I’ve got good things to talk about too. This article will also be about my most recent revelation… I’ve got better things to risk my money on than niche camera companies with poor management.

But first, I’ve got some explaining to do…

You had one rule!

I do still think The Short Stack is a valid strategy (if you just can’t help speculating in the stock market with highly risky individual stocks). But I’ve proven that I couldn’t stick to the rules. As a matter of fact, I broke the one rule that formed the base of The Short Stack. The rule it was named after.

I chased Short Stack stocks with money outside the portfolio. Significant money. Instead of scratching my itch to speculate with fun money only, I pulled other, more serious parts of our portfolio into the vortex.

It worked in the case of Etsy (ETSY) and I admitted it… because it worked. But I also allowed myself to shrug it off.

“I didn’t really just break the cardinal rule of The Short Stackbecause it worked.” I told myself.

I exited ETSY with significant gains, and that set the stage for the dumpster fire to come.

ETSY gave me an excuse to do the same thing with GoPro (GPRO). I was eager for a big win after a bumpy ride with The Container Store (TCS). And GPRO seemed set up for just that. I added thousands of dollars to the stack.

In fact, I still think GPRO was the right bet for The Short Stack risk/reward wise. It was the right bet for my much smaller, initial investment. I estimated the risk was about 30-40 percent to the downside versus the potential reward of a quick doubling of the stock. If the company could just follow through on the turnaround story it started, that is.

It couldn’t. January was a train-wreck for GPRO. The worst-case scenario happened with this one. It turns out there may really be a boob at the helm. Class-action lawyers are circling. And instead of a much more acceptable $77 loss constrained to The Short Stack, I’m left licking my wounds on a much more painful $1,500 loss to our greater stash.

I got a big head. I got greedy.

Even though it hurts, I have an extremely forgiving wife (who takes her anger out on small trees, not me) and we’re fortunate to be able to absorb a $1,500 loss pretty easily now. It’s money we could technically afford to lose, because it’s money we hadn’t planned on using right now or in the foreseeable future. And, though I haven’t exactly run the numbers, I believe I’ve at least broken even trading individual stocks over the years.

This one was by far my biggest one-time self-inflicted wound, though. To our portfolio and to my ego. And because of it, I had a revelation when I was deciding whether or not to lock in losses in GPRO or let it the money ride on some misguided hope for a miracle recovery. I decided…

This is crazy. I need to risk more money on me and my family!

So, here’s where my speculative dollars will now all go instead…

Betting On The Blog And Beyond

I’ll start with the obvious. This blog could use some love. It may never become the beating heart of an actual business. It’s still a little bit of a mess in search of its true audience. But this blog has at least some fans, and could become much more if I actually put some resources behind it.

Even something as simple and lazy as buying Facebook ads to get the word out would be a better use for some of the thousands of dollars I’ve otherwise put at risk in the market. Of course, I want to get readers organically, but if I can reach one or two I wouldn’t have otherwise reached through a targeted Facebook ad, that money isn’t wasted.

What about the website itself? Right now, I’m using a free WordPress theme I happen to like the look of. But I’m a little bit frustrated I can’t customize certain things. I could upgrade there. I could make things look a little more professional. Maybe have a custom theme done just for me.

What if I paid freelance writers to beef up the content? I like to write myself. But I don’t have time and energy to research and type up everything I want to discuss. And there are better writers than me (hard to believe). What if I treated this less like a blog and more like a magazine, hiring out some of the creative content while I did work as a managing editor.

I’m not saying that’s where I’m headed. My point is, for the money I was willing to risk in the stock market, I could blow this thing up! I could at least give it a real shot at being something more than just a hobby blog.

And then there are the ideas born from these humble posts that could actually become something on their own. For example, the t-shirt thing. It doesn’t seem to be gaining any traction, but, then again, I haven’t really invested anything into it.

What if instead of passively posting my designs on a novelty t-shirt website (here’s a link), I got serious and actually bought professional equipment myself and taught myself how to screen-print out of my garage? What if I tinkered with the designs until I got them just so, the way my customers really want it? What if I taught myself some real world business along the way?

Yeah it’s more money. Yes, it’s more work. But it could be a much more rewarding risk for my money.

Speaking of significant investment. Introducing… MY APP! Head to the App Store to get Half Hour Hank. Soon to be your favorite productivity app. Click the button below…

0. App Icon

Supporting My Wife’s Side Stuff

My wife doesn’t think she’s very creative. I disagree, of course.

It’s just, instead of drawing silly drawings and writing lackluster content on a third-rate blog, she spends time creating organizational plans for our family that actually keep things humming. And she can pump out spreadsheets with mad flava! I’m sure there’s a way to throw money at her organizational talent.

And then there’s the untapped potential of her more “artistic” interests. She’s way more musical than me, and she’s got an eye for photography. We’ve only just recently started investing in those hobbies. More money definitely needs to be directed that way. Even if she decides she doesn’t want to turn a hobby into a side hustle to scratch a little cash out of her talent, it’s more than worth the investment.

It just makes me happy to hear her play the piano (We probably should finally buy her a bench for her keyboard). We could invest in sheet music for all the songs I like (I’m selfish). Maybe some classes on how to compose her own music? Does something like that exist? She could end up being the jingle queen of Richfield!

As far as photography, she and I both share the interest. Maybe she’ll be willing to pass on some nuggets of knowledge when she becomes a pro. It’ll be another excuse to take a break from the day-to-day and spend time with each other. At minimum, it’ll be an investment in the strength of our relationship. What’s more important than that?

Speculating On My Son

Then there’s my son. Let’s be honest. He’s the least speculative and most important investment we could possibly make. He’ll also give the greatest return.

In a past post, I talked at length about all the ideas I had on spending money on him now to “smartify” him for later. It’s worth reviewing them here. Especially since it’s painfully obvious from the first part of this post that we could be spending much more on his development and early education.

  1. Spending on educational books, project packs and toys: We buy educational books through Usborne and subscribe to a monthly educational package called a Koala Crate through KiwiCo. We also spend freely on toys like legos. Anything that inspires creativity (that doesn’t take up a huge amount of space).
  2. Family field trips: We spend on membership packages to the Minnesota Zoo and Minnesota Children’s museum. But we should be taking him out to explore the world even more. Obviously, time is a constraint, but our wallet shouldn’t necessarily be. Maybe we should start thinking bigger on the family field trips?
  3. Dead-end hobbies: This is more for his future, when he’s really trying to discover himself. This post is the perfect reminder that it’s worth “wasting” money to speculate on all his “dead-end” hobbies. So, he can clear all the clutter away as quickly as possible and find his true self.
  4. Bankrolling a real business: Entrepreneurship will be more important than ever when my son grows up. Maybe there’s a “dead-end” hobby that’s worth taking to the next level. Nowadays, kids can easily set up much more than a simple Kool-aid stand business. And I can’t think of a CEO I’d rather speculate on than my son.
  5. Buy back some free time: It’s ultimately what my wife and I are trying to do with the Seven Year Plan To A Runway Retirement. We’re trying to buy back as much time as possible to spend on pursuing our ideal life. It’s worth the reminder that buying that time back is an investment in our son as much as it is in ourselves.

Then There’s The Chance To Harvest Asteroids (literally)

And if I absolutely have to speculate on someone else’s dream. If I absolutely have to actively invest outside my family. I’m going to do it through equity crowdfunding and angel investing where I can almost literally shoot the moon.

I just don’t know anywhere else you can get in on the launchpad of a satellite company that has long-term plans to harvest asteroids and manufacture in space. Just sayin’.

I am a very small investor in SpaceFab and other private companies through the crowdfunding portal, And I do still have a small stake in GPRO, but I may exit the rest of my position in that company within the next 30 days. I no longer have positions in ETSY or TCS.

Definitely do your own research when deciding where to invest your money. I am not an investment advisor. But go ahead and invest in yourself and your loved ones.

What’s the dumbest investment decision you’ve ever made? How do you invest in yourself and your family? I always love to hear your comments!

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