Not a week goes by that I don’t get at least one person asking me “Is now a good time to invest in the Cannabis sector?” My answer has been very consistent and very unpopular. No. The time to invest in the Cannabis sector was 3 years ago. The ship has sailed (at least for now), and the easy money has been made already. Following the herd and investing in things that are “cool and trendy” can make you a hit at the next dinner party or at the water cooler at work but will most likely be very costly to you as an investor. In my 15 years of experience in the financial services industry, one thing has become abundantly clear: in order to get above average investment results you have to be willing and able to invest your capital in areas that others aren’t. You cannot invest in the exact same thing everyone else is investing in and expect superior results. This is the definition of financial insanity. Instead, we should be looking in areas that very few others are, areas that nobody is talking about, areas that aren’t cool or trendy, areas in which valuations are attractive. How about Canadian energy companies? Yes, that’s right. I said it. You think I am crazy, right? Everyone probably thinks I am crazy, right? That’s exactly why there is opportunity for those patient enough to wait.
Maybe I am completely out to lunch on this. Maybe this time is different. Maybe Cannabis stocks will soar to highs not seen since the Tech Bubble in early 2000’s. Possible. But I doubt it. So, in summary, allow me to quote Warren Buffet: “Be fearful when others are greedy, be greedy when others are fearful.” Couldn’t have said it better myself. Smoke it (if that’s your thing), but don’t invest in it.
-Andrew Fox
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