I am writing this in the hope that it might give some folks a little more insight into the Pot sector craze,
Wow, what a year, actually about 3 years if you knew about this stock sector when the start ups began going public. Other than the dotcom era and the money blown on most of the Y2K frenzy, I don’t think I have seen people who never bought a stock (not just investors) going all in for anything. Companies have been changing their names completely or adding the word Cannabis to it knowing that instantly the attention would raise their stock price. Lots of publicly traded mining companies were bought up (just for there position on a stock index) and the hype would begin.
Most of these public companies involved in the sector have next to no income or have a negative income, one would think nobody would invest in stocks like these, well you would be wrong. 3 of the top MJ stocks now have Market caps in the billions without making any real profits.
Many of the stock message boards on Yahoo Finance are filled with people from students to receptionists who have bet the farm on a stock and changed a $20,000 investment into millions as the stock increased 9200 % in less than a year. Try that with an investment in Amazon or Facebook.
Coffee shops, people standing around water coolers at work, the conversations are based on MJ stocks and how somebody’s brother or Mother has made a killing investing in these stocks. As institutional investors generally have stayed away from these stocks I would think because they can’t throw the pension fund money under there control into stocks without proven track records or profits. Most of the money is being made by regular folks or Noobies to the investing world. Lots of pro investors and seasoned amateur investors have stayed away from the sector because they only invest in companies with solid fundamentals. A quick way to lose your money is to invest using your heart instead of your calculator. But wouldn’t that extra $85000 help your retirement nest egg! going forward.
California is legal Jan 1st, Canada middle of 2018, many states to follow,
So here we are Jan 1st, 2018 right around the corner and thoughts around these stocks is the profits and frenzy have just begun anew, profits for the investors and the inside management who have been selling their stock along the way and becoming rich or richer. Well, there is an old saying (my Dad said this) generally if you get greedy the sky will fall before the check clears the bank. So my approach has been investing a small percentage of my portfolio (5-10%) at any given time in the sector and pull profits out of any stock after making 30% unless a stock gained 100% up in less than a day I would ride the wave and get out before it stopped (I hoped). So I am not a millionaire because I am to close to retirement to risk too much money. However it’s hard not to just go for it, I am sure the news will be full of that Mother or Sister who did go for it and lay down all their savings into a stock just before reality enters the sector and looses there retirement money.
Bernie Madoff is serving life in prison for building a Ponzi scheme, isn’t this the same were the people in early will gain and the late comers will loose there shirt. The interesting part is some of these stocks have had gains and dips of 50% to 100% many times over the past year, the consensus is it’s going to continue and some stocks will see steady gains as Cannabis becomes legal in Canada and the US.
I am currently on the fence about my timing in the sector, there is no lack of news about Cannabis in the news and how big the market will be, increases in demand are predicted to jump substantially over the next few years as edibles, oils, and vaporizers might bring new consumers to try Cannabis over alcohol. In California, companies are infusing wines, chocolate, and vitamins which will create new markets for folks who would never smoke it, not to mention the millions being pored into Medical research now as many people are finding relief from chronic pain, cancer, and even seizures. Well, most folks won’t remember around 1998 when the telecom sector opened up competition, new startup local phone companies raised and spend hundreds of millions on infrastructure and marketing. The end result was all of these companies going out of business or being bought for pennies on the dollar by Bell and Rogers (the big guys) I am thinking this will happen in the pot sector. My choice will be to invest in Pot related companies that are involved in sales of edibles, testing and extracting technology and companies with devices for police and companies to test employees for impairment. I am not a financial adviser and am not promoting any companies so invest at your own risk but these are my picks after spending about 100 hours of research on the sector.
Testing and extracting companies
ETF and Equity Investment companies
Thanks for reading and be careful out there 🙂 and any comments would be appreciated.