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A whole pile of investors refuse to ever own mining shares at any time for any reason, including our good friend AltaRed. I think this recent action is very telling.
I've had one motion sickness trip with each of POT and TCK.B in the past 10+ years. IIRC, I escaped without damage on both (made some money both times I think), but I learned my lesson and keep my roller coaster rides to amusement parks. No more of those sectors for me.
 

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If you drink this Holly GR "ALE" to much you will get sick and puke in toilet many times, if you stay to long your eyes will turn yellow and your liver will harden.

The good/smart investors will pick some fruit and invest in utilities, bonds, reit.

This smart/good invest invested his fruit in banks. Still dabbling and picking fruit.

Real investor analyses will correct this sector at some point.
 

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My 2 cents:

I do own a bit of HMMJ and Canopy.

I bought in real early around later 2014 in this sector but the HMMJ index was early 2017 when it started trading. I am an accountant, so you may find my analysis (will try to keep it more macro focused) a bit too technical but based on my experience working corporate running the business I believe its best to look at each stock or industry as a big business. Hence, I modeled this industry based on the liquor and tobacco industry.

Here is my basis for buying into this craze:

1. Like the liquor industry there will always be demand its that simple, the question is how big is this demand?
2. Constellation brand (one of the largest manufacturer of liquor) bought 10% stake in Canopy means they see opportunity in this sector
3. This is a new market with allot of growth opportunity if you can raise the capital and talent to capture market share
4. There is political support as the governments want to take back the weed market just like the alcohol market after prohibition thus we can expect favorable support in the first few years until the market stabilizes.
5. Cost of production for players such as Canopy is very promising compared to the black market and hence they can compete
6. The world is only starting to legalize while Canadian producers are well ahead of competition and should be able to consolidate to capture the global market
7. Younger generation is pro weed like what tobacco was to the baby boomers


I used the above assumptions and did a model (yes, its an estimate but from a macro perspective this industry is here to stay and will grow)

what we can expect is like the web industry.... initially you will have speculation such as what happened to Yahoo but eventually the industry will mature and produce players such as Google, Amazon, and Facebook. Every industry goes through this cycle (industry curve), right now the weed industry is in introduction/growth phase hence lots of players competing and growing but not profitable. This will change to maturity phase where you will see the good businesses buy out the weaker ones and consolidate while making hefty profits.

Right now, its very expensive to buy into these companies and you would only do so based on assuming they will be very profitable in the future. This means you intend to hold log term.

there are 2 ways to buy into this industry:

1) buy in before legalization and ride the hist-aria and excitement and cash out once legalized --> this should make you a good return given that you pull out right before legalization
2) buy in for log-term with the big players or ETF --> this should also be very profitable if the weed market repeats the tobacco trend. This means the players that capture the market will make very sweet profits until society comes around the negative health affects which will take many years but don’t be naive, weed is bad for you just like alcohol or tobacco and there will be negative sentiment in the log term.

I know some people think its a bad idea to invest into this emerging industry and promote utilities/banks and so forth. Most of these people tend to be older (baby boomers) and that’s my point, weed doesn’t resonate with this generation as much as the younger generation. Obviously, there are risks but if you plan to invest for the long term in this industry (5+) years you should do well given that you buy the ETF or the big players as most of the smaller ones will fail or get bought out. For baby boomers this industry may not be ideal as it comes with high risk and longer investment horizons.

In summary if you believe the liquor industry is profitable and worth investing in then you should look at the emerging weed market.
 

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I would say, I am slightly more negative on the sector than a few weeks ago. Primarily because of all of the new capital entering the space. Big raises from many companies, I think close to $500M since Xmas, maybe even more. Multiple IPOs as well. Based on some of my predictions of $/kg of cannabis, I actually think oversupply might happen within two or three years. There is easily in excess of 1000 tons production planned in Canada alone, and with the new money it might be 1500 tons. That is up to three times the estimated size of the market. Unless serious export markets are opened up, but I have the feeling most countries want it grown locally, not imported. Now to see how it all shakes out.
 

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Weed stock will continue after a major correction.

What is happening is 40-80 year olds with money and no investing experience are buying in.

The ones that take profits and deploy that money else where will be long term winners.
 

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Discussion Starter · #110 ·
This is interesting. HMMJ still had very high volume today (2.7 million shares). Additionally, pot stocks (WEED, ACB, APH) showed their usual high volume despite US being closed today.

So perhaps American investors aren't driving this rally. Could be a homegrown phenomenon.
 

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Well I used to poke fun but I just bought into today. I feel like this has momentum behind it and on the macro side there is a bit of mania in the markets right now as people are putting in money with nowhere else to go. I think you can't ignore the flood of capital coming in especially since bitcoin has been front and centre in the financial news for so long, I think there will be a lot of demand from the get-rich-quick crowd that wants to find the next bubble. I put in money I can afford to lose, so lets see how this one turns out.
 

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See below for the latest tracking of HMMJ total units:

Jun 8 - 11.8 million
Nov 7 - 17.3 million
Nov 28 - 20.8 million
Dec 29 - 26.3 million
Jan 5 - 32.2 million
Jan 24 - 36.1 million

You can see how growth in net assets has begun to slow somewhat, although still very positive. If tracked by HMMJ, there is about $6 million of new units being created per trading day over the last three weeks. There has easily been $500M+ of new stock issued by public cannabis companies just so far this year.

I think the supply and demand of stock paper is more balanced now, as there are enough treasury stock issuances at this time to meet the demand of new investors, at least at this time. Expect many more stock issues. The value of cannabis paper is very high, the barriers to entry low, and the margins excellent, attracting more capital.
 

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Discussion Starter · #114 · (Edited)
I pulled up a quote screen this morning and these volumes for marijuana stocks are still utterly insane.

It's 11 am in Toronto. According to my quote screen, Canadian Tire has traded 32K shares so far. Rogers has traded 235K shares. Suncor has traded 461K shares, Royal Bank (biggest stock in the market) has traded 543K shares.

And then we have, WEED with 4.8 million shares traded, ACB with 16 million shares, APH with 3 million shares

That's 16 million shares on ACB... MILLION! That's the volume that America's SPY... arguably the most popular and liquid security in the world has traded at this time of day? I wonder how much stress these marijuana stocks are putting on the Canadian stock market system.

Insanity and sickness, is what this is! I agree the pot stocks are interesting but these volumes are absolutely crazy, not in a good way.
 

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I pulled up a quote screen this morning and these volumes for marijuana stocks are still utterly insane.

It's 11 am in Toronto. According to my quote screen, Canadian Tire has traded 32K shares so far. Rogers has traded 235K shares. Suncor has traded 461K shares, Royal Bank (biggest stock in the market) has traded 543K shares.

And then we have, WEED with 4.8 million shares traded, ACB with 16 million shares, APH with 3 million shares

That's 16 million shares on ACB... MILLION! That's the volume that America's SPY... arguably the most popular and liquid security in the world has traded at this time of day? I wonder how much stress these marijuana stocks are putting on the Canadian stock market system.

Insanity and sickness, is what this is! I agree the pot stocks are interesting but these volumes are absolutely crazy, not in a good way.


meanwhle have u noticed how the good old stuff is declining

banks may finally be starting to turn down although it's too soon to see any trend confirmed

good old stuff like SNC, FTS, BCE, T & ENB dropping steadily, day after day


.
 

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Discussion Starter · #118 ·
MJ stocks crashing in lock step with bitcoin. It's the same crowd holding them. Risk of contagion to broader stock market imo.

Luckily though everyone has diverse asset allocations to guard against such things :)
 
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