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 - Get Report) were being priced for bankruptcy, yet the company was not in the same sad state of affairs as General Motors (GM - Get Report) 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.