I'm relatively new to investing, and was reading the other day about VCs and how they can afford to throw millions of dollars at startups that will almost all fail, because if even one is successful the VC's ROI is insane.
Why does this investment strategy not apply to low-cap stock funds?
Lets say I bought 1,000 shares of 20 companies at 2$ each (for the sake of simplicity) for $40,000. In a few years, even if every other company literally tanked and hit 0$, if just four managed to pull it together and be worth 10$/share you would "break even" so to speak. If five were worth 10$/share, you would have a 25% ROI.
Am I overestimating the likelihood of an outcome like this? Obviously one would choose stocks that had a decent business plan and weren't in highly volatile markets like biotech.
Submitted July 20, 2017 at 09:54AM by Damson12 http://ift.tt/2ucvvvr
