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My Investment Strategy: Sniper Theory

My Investment Strategy: Sniper Theory
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Investing in the stock market carries risks, and investors must be willing to accept these risks. In this post, we will discuss a strategy called the "Sniper Theory," where investors concentrate their allocation in a few assets to make massive returns.

Concentrated Investment

The Sniper Theory is like a sniper who has only five rounds to shoot for the rest of their life. Each shot (use as an analogy for an investment) has to be analyzed and calculated with an end-game, with no room for error. The goal is to take only shots that have a 10x investment return, i.e., an upside of 900%. Risk-reward ratio is crucial, and investors should seek around 30-50% downside risk for a >900% return.

Long-Term Time Horizon

An investment should be medium to long-term, 3-7 years, to ensure high rewards. Investors should concentrate their capital on entities with tremendous upside at near all-time low prices, with a clear exit strategy. Then wait patiently, while monitoring the fundamentals of the company. This theory works even better in a low-interest-rate environment where liquidity is ample in the market.

Contrarian Mindset

Learn to be contrarian by having a mindset that is comfortable with uncertainty. Investors should search for companies that have inefficient prices and are not widely talked about in the market. This effectively takes you searching for undervalued opportunities. This strategy has also been used by a young Warren Buffet, Bill Ackman, and Ken Tan (@pakpakchicken).

Risk-Reward Ratio

The risk-reward ratio is a measure of potential profit to potential loss for a given investment or project. A higher risk-reward ratio is generally preferable. An appropriate risk-reward ratio tends to be anything greater than 1:3.

Concentrated Calculated Bet

Most financial advisors advocate for a 10-20% YoY growth. However, the Sniper Theory suggests taking a concentrated calculated bet and seeking to have a 10x on each of your investment.

Conclusion

In conclusion, investors should consider the Sniper Theory when investing in the stock market. This strategy requires a long-term mindset, a contrarian approach, and a willingness to accept risks. By following this strategy, investors can potentially make massive returns on their investments. In my next post, I will reveal my current portfolio allocation. Stay safe while investing 🙏