Money is flowing in that I have no desire to spend now, so I'm going to put it away in an investment fund. I'll let it sit for many years, probably decades, before I touch it. I have 30 years until retirement. Retirement funds are already maxed.

I want the absolute highest return possible I can get. My tolerance for risk is extremely high. I could light on fire in 5 years all the money I will be putting into this fund and still not feel bad. I also have no desire to become super educated in investments to the point where I become an active trader. I'm just looking to buy into an ETF that selects from that class of investments that tend to offer the highest return yet still are mainstream and easily traded.
I don't care about liquidity or diversifying at this point. I'm just going to shove it all in one place.

I've been thinking small cap stock ETFs because supposedly there is a 1-2% premium on those relative to large cap stocks. Also thinking about emerging market stocks, but the ETFs for those I've looked at have had subpar performance the last 5 years. Suggestions?

http://www.insidermonkey.com/hedge-f...associates/72/

I noticed you mentioned emerging markets. This is a hedge fund guy. I noticed his top holding was VWO. Also, you can buy small cap funds with less than 1% fees. As for some others I like AUSE, as Australia has been the best performing stock market over the last 100 years. There is also a foreign tax credit on both of them.

Historically, small caps and value stocks have tended to offer higher returns over the long run due to a lack-of-liquidity premium. So put 100% into a smallcap value etf and dont touch it.

edit: Vangaurd offers a good product https://personal.vanguard.com/us/fun...FundIntExt=INT

Highest risk tolerance combined with a huge upside and no worries about loosing all...

sounds like Bitcoin is what you are looking for.

Agreed (though maybe not on Bitcoin). With this set of objectives you should be going for multi bagger IMO. I think a carefully picked small to very small cap tech stock is the way to go - or maybe several.

Other alternatives are an industry capturing 3D printing ETF, an emerging tech etf, etc. I'm not sure what's available, but these are the kinds of things that can make him wealthy without insane risk and likely positive expectation. If he couldn't care less about the money, then wealthy is the way to go.

Bitcoins might be decent when a Bitcoin etf comes out. Not a fan though.

imo SVXY or XIV. That's what I'd do if I just wanted to gambol. It's essentially just crazy leveraged SP500.

Those would be the absolute worst investments he could pick over a 30 year time horizon. He would be guaranteed to lose money

Bitcoin.

With VIX at current levels all you can really collect (over any reasonable time frame) is the futures convergence yield.

Looking 30+y into the future, investing like 5-10% of this money now into Bitcoin would probably be enough in the instance Bitcoin succeeds.

I'm not an expert but 90% in Vanguard 10% in Bitcoin would be what I'd do

Internalise the should part of the high risk high reward statement before you do anything.

How much $? Are you accredited? If yes the answer could change.

I'd go bitcoins as well.

Thanks for the replies. My problem with something like bitcoin is that it hasn't been around long enough to generate enough historical data to extrapolate a rate of return. I do know it's quite risky, but I don't have any idea what its potential yield is. So that's why I prefer a "maintstream" investment. I would prefer a whole class of investment that has a track record of high yielding performance with characteristics, such as illiquidity and/or volatility, that makes normal investors avoid it so that its high performance is not lowered by the investing community chasing yield, which is what I think has happened to junk bonds.

In theory, I would have to think emerging market stocks should be the ideal investment because of all the risks and volatility in investing in other countries with currency risk, less stable goverments, etc. in addition to the normal risks of owning stocks in companies. Yet there should be huge upside because these other countries have higher innate growth potential than developed countries. Yet all the emerging market market funds I seen have done poorly since whenever. It seems like people are buying into these funds to diversify while sacrificing yield, which is exactly the opposite of what I want to do.

I like the idea of small cap value etfs. I'm probably going to put all the money into the vanguard small cap U.S. value ETF.

Good choice, and good observation on emerging markets. Emerging markets suffer from corruption, instability, currency changes, fraud, nepotism, incompetence, competition from multinationals...

The best emerging markets bet to make is American companies. It's drop dead obvious and I don't know why some people can't understand it. For example, Apple is an emerging markets company, as is Facebook or 3M or a pharmaceutical company. The world leaders in a particular area of competence are the ones who will soak up emerging market money in the coming decades.

Rereading the post, I think there are a lot of long shot individual stocks you can make. That is where your risk tolerance seems to be, etfs are too safe. My favorite book on this would be 100:1 in the stock market. But it seems you are not interested in active investing.

Think something that is really undervalued now (that no one is talking about) that will or could be big in the future.

I like that a poker player, using correct understanding or risk/volatility and reward, is able to out think the bitcoin people in this thread who probably fancy themselves financially savy but really only show their ignorance by promoting it at every opportunity they get even in situations such as this where it doesnt apply.

Obviously you know more than me ahnuld, but looking for a high risk high reward over 10-30 years, is spending a few % of your funds on Bitcoin so terrible?

I like GVAL -- Mebane Faber's Global Value ETF. Nearly all American asset classes are above their long-term average valuations. Stocks for example are at a 10-year PE of 26, vs. a mean of 16.5 over the last century. Historically, starting from that level, annual returns have ranged around 2-5%. But assets in other countries like Greece and Russia are substantially below average valuation.

GVAL identifies the most undervalued countries using quantitative metrics, and then buys undervalued large-caps within those countries. You end up with a portfolio that's diversified geographically and by industry. Assets get rebalanced monthly to buy whatever is most undervalued.

It's a historically validated approach that should give annual returns in the low double digits, with substantial volatility.
http://www.starcapital.de/docs/2014_...et_Returns.pdf

I believe so, it's more about the mentality of investing in something that you don't understand that emphasizes the risk to the point where you will likely just outright lose it rather than ever profit.

I know two poker players who had some CFA selling them stocks who said "make it risky" only to be left with pennies on the dollar. Even if you're seeking high returns without expertise you should avoid things like Bitcoins because they're only going to be worthwhile to specialists who understand them deeply. It leaves the door open to recommendations like buying precious metals in the last couple years as an investment, don't do it unless you're a genuine expert in the niche.

The real answer to questions like this is Magic Formula by Joel Greenblatt, look it up, there's a book explaining it, it's completely mechanical, there's even an ETF I believe.

Have you looked at FYLD and SYLD? Also based on Faber's research.

Well he didn't answer if he was accredited or not. You open the field to some interesting things besides just an ETF if you are. I met a guy yesterday who is a senior level guy at a fund in Chicago that purely focuses on investing in hedge funds. The obvious question I asked was why they didn't just pluck hedge fund talent from the ones they invest in themselves and create their own fund of funds and his response was pretty simple: Almost all hedge funds don't beat the market over any significant length of time, (after all their job is to hedge) but by analyzing and meeting all kinds of funds they can move in and out of the right ones (barring the lock up period) during specific market conditions, thus generating returns greater than any individual fund on average.

its the same as investing in an individual stock in terms of risk. why would you put all your money into one stock, like some here suggested all into bitcoins, or buy etfs but then one single stock on top such as you suggested. it makes no sense. Worse, bitcoins dont generate cashflow like a normal stock would so actually its a bit worse than what I described above

Show me a stock that could plausibly hit a ten thousand bagger in 3.5 years? Bitcoin has achieved that already (in fact, greater). Not that I think it will do anywhere near that again (the mechanics of what could take it so high just don't exist with anywhere near the same probability in the future, making it probably -EV), but to say investing in Bitcoin is the same as a regular stock in terms of risk is just wrong. It's a plausible, if low probability enough to be -EV, 10-100 bagger.

Of course it does. It's a simple utility equation. If you care about 80% of your money but couldn't care less about the last 20%, it makes lots of sense to put some of it on something that could plausibly make you millions. OP doesn't care about this money much at all. Presumably he doesn't care about 2x this money, which is what you likely get having this thing sit in the market for a couple of decades. Presumably 20x this money would change his life quite a bit.

I think in the EV equation of a 10,000 bagger, you can ignore 0.03 bagger dividends.

Be honest ahnuld. If someone had suggested putting $1K in bitcoins 3.5 years ago, you would have rubbished the idea, right? Yet they'd be sitting on $10mil.

But normal stocks don't increase 1000000x over 5years like bitcoin has. Imo if you really want a diverse high risk portfolio today and also want to hedge against one pretty big potential black swan every smart investor should at least have a few hundred bucks in bitcoins.

Bitcoins, openbazaar etc have the potential to disrupt so much of our economy, a lot of rich people might see their safe investments actually reach their fair value of 0 and regret that they didn't hedge against cryptos at least a little.

Today ~$620/BTC. If it fails ~$1/BTC(collector value), if it succeeds ~$4.7M/BTC(in todays dollar, infinite in that time's dollar) various scenarios in between. The problem with not investing in bitcoins is that we have no data on that either.