MILLBURN, N.J. (Stockpickr) -- When picking stocks, I will usually start by looking at one of more fundamental variables or by targeting a sector theme. While that may serve as my guide, another aspect to investment management is taking advantage of speculative opportunities. Sometimes it pays to take chances by allocating a small portion of your portfolio to high-risk, high-reward contrarian plays.
For example, during the financial crisis, shares of Ford (F) were being priced for bankruptcy, yet the company was not in the same sad state of affairs as General Motors (GM) and Chrysler. Ford common and preferred stock was extremely cheap, and I bought some into the abyss. Later, I sold that stock for hefty profits.
Casual dining chain Ruby Tuesday (RT) was also in disarray. Investors were pricing in the demise of the company. What I saw at Ruby Tuesday was a new management team that was going to turn the company around. I was able to buy shares for $2 or less, and once that new management team did indeed turn the company around, I wound up selling those same shares at $10 and higher.
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