What Is Mad Money?

High-risk speculative investments may have a place in a portfolio, but only in small amounts at the fringes - and make sure you can afford to lose this money

Morningstar Analysts 27 April, 2021 | 9:28AM
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There is much talk about GameStopTesla, and [enter your favourite speculative stock here] at the moment. But do these types of stocks really belong in your portfolio? Can you have a reliable portfolio that will allow you to reach your long-term goals while still investing in speculative names like these?

John Rekenthaler, Morningstar’s director of research, defines an investment as “an expenditure that can reasonably be determined to have a positive expected return", whereas speculation “occurs when the return is too uncertain to be estimated, or if the estimate can be made, but is negative".

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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