What is Speculate to Accumulate?
Updated: Jan 7
Before you can learn how to speculate to accumulate, you need to understand the meaning of the term.
Speculate to accumulate (or simply S2A) refers to an investment strategy that involves identifying promising startups and then investing in them aggressively in order to maximize your returns before the business goes public or gets acquired by another company.
This strategy isn’t for everyone—it’s aggressive and risky by nature—but if you follow it correctly, it can generate massive returns over time.
What does Speculate to Accumulate mean
It means investing or betting a sum of money on something, in order to get more money back.
Traders oftentimes use this theory when they think their going to make money, even if their prediction or speculation isn't spot-on.
It's based on numbers: 100% - (1 + x) = 99% Certainty of profit; x is your acceptable risk level.
For example, if you think a $10 investment will grow by more than 1% every month, then you're speculating but not accumulating.
If you can accept a 10% chance of losing that investment and still break even, then it’s speculation with accumulation potential because you'll eventually get most of your initial $10 back even if things don't go exactly as planned.
How does Speculating help you get rich?
Trading stocks and options requires a lot of research. However, there are many reasons you should engage in stock trading:
First, by engaging in short-term trades based on speculation and accumulation, you can increase your likelihood of getting rich quickly.
However, if you decide that a more passive approach might suit your interests better, creating an investment strategy with long-term goals will still allow you to become financially stable over time.
It all comes down to what’s important for your specific lifestyle and desires—short term or long term financial stability.
The Difference Between Investing and Gambling
If you're just starting out as an investor, it's important to know what distinguishes investing from gambling. The quick answer: There's no such thing as a sure bet in investing.
It takes discipline and work, but being willing to sit through market ups and downs will ultimately pay off for serious investors.
Since neither investments nor stock picking is easy, investors will often want a few guidelines for making good investment decisions that won't set them up for failure or lose their money.
Most of these strategies are very basic (and some may seem obvious), but they can help eliminate common mistakes that rookies make when getting started with investing. Here are some tips on speculating to accumulate
How do you Speculate correctly?
Speculate with a small amount of capital. This way, if things go wrong, it won’t be much of a big deal.
How do I know if I am Speculating correctly?
Here’s a good way to tell: if you lose money, you are not doing it correctly. You can’t accurately predict how markets will move and therefore should never bet on a price movement.
Instead, you need to be in control of your own risk by only investing in assets that you believe will be worth something long-term (and not just for a short period of time). If your speculation turns out to be correct, that is when you can make really good returns.
Real Life Examples of Speculation
Those who speculate to accumulate generally take a long-term approach to investing. Rather than day trading or even holding onto individual stocks, they diversify their portfolios among various market sectors and asset classes.
They see profit not just in short-term gains but also in less volatile long-term investments that could bring them far more wealth over time.
Most people would agree that it takes guts and grit to be an entrepreneur, but few realize how much mental fortitude you need until you're truly on your own.
Whether you're facing cash flow issues, hiring challenges or competing with larger companies, it can take a serious amount of resolve and drive to get things done every day—especially when there are no guarantees about success.
Where Can I Learn More About Speculating Correctly?
There are two major resources I recommend on speculating correctly, both of which are great reads even if you’re not an investor.
The first, What I Learned Losing a Million Dollars by Jim Paul, covers his financial mistakes and how they helped him learn how to speculate correctly.
The second is Super Trader by Mark Minervini, who details his stories of successful speculation and how he was able to do it.
Both books are hard-hitting eye-openers that teach you what risk management looks like in action. Get your hands on them; they’re well worth your time.
Speculate to Accumulate - The Bottom Line
Speculate to accumulate is a trading philosophy used by professional traders and investors. In short, it teaches us to speculate with smaller amounts of money while we wait for larger profits (or losses) so that we can accumulate bigger chunks of cash in our accounts.
The reason why we do not use large amounts of money on a single trade or investment is because if things go wrong (losses) then it may take time before we are able to recover those losses.
It helps if you have an additional source of income outside trading so that your living expenses will not be affected when you are facing such situations.