The Barbell Strategy: Balancing Risk, Reward and Roaring Kitty

Shares of GameStop surged to USD 46.55 on June 6 when investor-influencer Keith Gill teased an upcoming livestream. If you’re unfamiliar with Gill, he’s the same investor who ignited the meme stock mania in 2021.

During the stream, 650,000 people watched as Gill’s shares and options were down by over USD 200 million. The GME stock finished the day 40% lower – after GameStop announced a surprise stock offer of up to 75 million shares. According to Fortune, Gill could have become a paper billionaire had things gone his way.

Some might say that this is a classic story of Icarus flying too close to the sun.

 

The BIG question is: Is all risk bad? Should investors avoid it?

Investing can sometimes feel like a monotonous journey. We follow the conventional wisdom: dollar-cost averaging into low-cost ETFs, investing in blue-chip stocks, and setting and forgetting our portfolios. But what if there’s a way to spice things up without compromising our financial security?

At Javelin, we believe in investing the right way—without losing sleep—through a balanced portfolio.

One of the many ways to do this is with the investment portfolio strategy, “barbell” investing, which divides the portfolio between assets that are either safe with low returns or riskier with higher rewards.

Enter the Barbell Strategy. This contrarian approach flips traditional investing on its head. Instead of aiming for moderate gains in the middle of the risk spectrum, the Barbell Strategy advocates allocating your portfolio to both ends: super low risk and super high risk.

 

Let’s break it down:

Left Side of the Barbell (Zero Risk, Low Returns)

Fixed Deposits: These are as safe as it gets. Your money is parked in a bank, earning minimal interest.

Blue-Chip Stocks: Reliable companies with decent dividends. They won’t make you rich overnight, but they’re steady.

 

Middle of the Barbell: (Moderate Risk, Moderate Returns)

 This is where traditional investing lives—ETFs, mutual funds, and diversified portfolios. It’s the safe, sensible choice.

 

Right Side of the Barbell: (High Risk, High Returns)

Cryptocurrencies: Volatile, speculative, and potentially explosive.

Meme Stocks (like GameStop): These are the wild cards—the rollercoasters of the stock market.

Starting a Business: Entrepreneurship is risky but can yield incredible rewards.

Day Trading: High adrenaline, high stakes.

 

Why the Barbell?

The Barbell Strategy acknowledges that once-in-a-lifetime opportunities exist on both ends of the risk spectrum. By allocating most of your portfolio (80-90%) to zero-risk investments and a small portion (10-20%) to high-risk assets, you strike a balance. You protect the majority of your wealth while leaving room for potential windfalls.

 

Example: GameStop vs. Balanced Portfolio

 

Conclusion

The Barbell Strategy isn’t for everyone. It’s unconventional, and some might call it wacko. But it allows you to participate in exciting opportunities without jeopardizing your financial stability. Remember, it’s not about abandoning the middle ground—it’s about embracing both ends.

So, next time you’re tempted by a meme stock or intrigued by crypto, consider the Barbell Strategy. Who knows? Maybe you’ll strike gold while keeping your nest egg intact.

Where does Javelin come in? We handle the middle bar, but understand through experience how critical the ‘psychology’ of investing is when it comes to pulling the trigger on getting things done.

If this is what it takes for some people, then we will build the bar for you.

Happy investing! 🚀💰

SHARE THIS ARTICLE

Past Insights

Investments Wealth Management

The Barbell Strategy: Balancing Risk, Reward and Roaring Kitty

Financial Planning Video Insights

Video Insight #1: Burgernomics

Financial Planning Investments

Simple Wealth #1: Compounding

Family Office Wealth Management

Protecting Wealth While Ensuring Integrity

20 Conversations Wealth Management

20 Conversations: Private Wealth in India


NOTICE TO VISITORS TO OUR WEBSITE: Javelin Wealth Management is aware of a recent instance of our website being fraudulently duplicated (“cloned”) and used to promote property investment products in Germany. Javelin Wealth Management has notified the relevant authorities of this, and would like to emphasize that Javelin Wealth Management has no connection with any such products, or with the company calling itself “Wing-wealth”. Our website is not used to promote specific investment products and does not carry any customer data. Investors should always confirm that they are dealing with properly licensed and regulated individuals and entities, and should check with their local regulatory body in the event of any doubt.

Disclaimer

By entering this site, you agree to be bound by the following Terms and Conditions of Use.

 

Javelin Wealth Management Ptd Ltd, holder of Capital Markets Services Licence, is licensed by the Monetary Authority of Singapore to provide Fund Management Services to individuals who are Accredited Investors.

 

Accredited & Professional Investors

By using this site you represent and warrant that you are an accredited and professional investor as defined in Section 4A(1)(a) of the Securities and Futures Act with personal net assets in excess of S$2 million, income in the preceding 12 months of not less than S$300,000, or company net assets in excess of S$10m. In using this site the user represents that they are an accredited and/or professional investor and use this site for their own information purposes only.

 

Information Purposes Only

The information published on this site is for informational purposes only and shall not be construed as an offer or solicitation to subscribe in the funds or products referred herewith. This site does not constitute investment advice or counsel or solicitation for investment in any fund.

 

Any offer or solicitation will be made only upon execution of completed information memorandum, subscription application and relevant documentation, all of which must be read in their entirety. No offer to subscribe in shares will be made or accepted prior to receipt by the offeree of these documents and the completion of all appropriate documentation. Access to information about the funds is limited to investors who qualify as accredited investors only.

 

Any projections or forward looking statements are not necessarily indicative of future or likely performance. Past performance is no guarantee of future performance of a fund.

 

Conditions of Use

I have read and accept the terms and condition of use.

 

I AcceptI Decline

error: Content is protected !!