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Are Investors Interested in “Speculative’’ Investment Opportunities?

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Are Investors Interested in “Speculative’’ Investment Opportunities?

Written by: Catherine McBreen | Spectrem Group

Occcasionally, a new company comes along that promises an innovative product or service, and investing in that company becomes all the rage among investors who like to take a chance on a start-up company.

Interest in New Investments

On Oct. 28, Virgin Galactic experienced its first day on the New York Stock Exchange, and ended that day down by about four cents at $11.75. Virgin Galactic is the company owned by Richard Branson which plans to provide tourist trips to outer space by sometimes in 2020. It issued an IPO and went public in late summer of 2019.

As part of its monthly research with investors, Spectrem adds questions to its surveys that deal with new trends or topics that might be of interest to wealthy investors. In July, investors were asked if they have any interest in investing in companies that are involved in space exploration or tourism.

The answer, generally, was no. But that doesn’t mean they don’t want to know about such opportunities.

Of the more than 800 investors surveyed, 23 percent showed some level of interest in investing in space exploration and tourism, but the percentage of those with strong interest was only 4 percent. The remainder (78 percent) said they had no interest in such investment opportunities.

Those results are not surprising. “Speculative’’ investment opportunities are an acquired taste, and there are hundreds of horror stories of investors allocating large sums to surprising new products which don’t work out.

But there is always going to be some investors who are looking to the future and have an eye for knowing when something that starts out as speculative has a solid footing in the interests or needs of the consumer.

The Spectrem survey in July asked investors if they want their advisors providing information on such emerging companies or industries, telling them to place their level of interest on a 100-point scale. Among all investors, the level of interest in being presented with such opportunities was listed at 25.47, but among those investors who are self-described as aggressive investors, the interest level climbed to 34.99, which is still not demonstrably high. Millennials, who are by definition a bit riskier with their asset allocations, rated their interest in such information at 44.14, which is nearing the midpoint.

Going one step further, 54 percent of investors said they will listen to their advisor about such types of speculative investment options, including investing in an IPO, and 27 percent said they seek advisor input regarding those types of investment opportunities.

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