In today’s Money Morning…genuine opportunities, bubbles and smokescreens in the medical marijuana industry…the RBA building imbalances into the foundations of the Aussie economy…new opportunities in wearable medical tech…and more…
What do you do when you’re witnessing the birth of a whole new industry?
Everyone knows that fortunes are being made. But, inevitably, as soon as it starts to take off, there will be as many wannabes jumping on the bandwagon as genuinely successful startups. How do you separate the winners that could make you thousands of percent in gains, from the losers that will bubble and then burst?
That question should be in the front of your mind as the medical marijuana industry explodes into existence in Australia. Many of the leading companies, who have been preparing for the legalisation of medical marijuana in Australia, have already made massive gains. And, as small-cap analyst Sam Volkering wrote in Money Morning this week, we’ve only seen the beginning.
But as always, excitement overcomes common sense as investors become desperate to jump on anything that smells remotely like weed.
Companies have seen massive share price jumps just from announcing that they’ve hired a consultant to look into the medical marijuana industry. No grow licence, no distribution licence, no infrastructure, no plans! Just a consultant, and a whole lot of hype.
At this rate, I wouldn’t be surprised to see a few street corner dealers trying to turn legit and launch an IPO sometime next week.
Perhaps some, even many, of the bandwagon-jumpers will perform well. It’s already obvious that fortunes are being made as medical marijuana is legalised across Australia, and gradually integrated into our healthcare system. But there are plenty of landmines to avoid, too.
As Sam advises, don’t dive into anything without doing plenty of research, and being sure you understand the companies and their prospects. If you want to get in on the incredible gains from this new sector, you need to understand it. Sam’s recent special report is a great place to start. You can find the details here.
The high-risk, high-potential-reward chaos of a new industry being born wasn’t the only focus for Money Morning this week. As you’ll see below, longstanding institutions like the RBA and the US Fed are perfectly capable of generating instability and uncertainty all on their own. Read on for more…
This week in Money Morning
On Monday Greg began with a look at the overall market, which is drifting sideways despite a lot of bullish sentiment. Greg discussed the challenges facing Australia’s economy, and the warnings of a potential crash from fellow Port Phillip Publishing editor, Vern Gowdie.
While Greg doesn’t believe that a major market collapse is imminent, there are risks that have to be dealt with. One of those is the overheating property market. Greg lays much of the blame for that at the RBA’s doorstep. Now retail banks are beginning to raise rates where the Reserve Bank has failed to. You can read the details in Monday’s article, here.
Tuesday continued the theme. There was a quick and ugly backlash in the media against those banks who raised rates independent of the RBA. But the housing bubble is only getting more dangerous, and while politicians and housing spruikers are desperately looking for any other way to take some of the heat out of the market, interest rates are the only really effective tool. Greg argues that the RBA has put the Australian economy, and everyone in it, in danger by reigniting the housing market. So are banks being opportunistic and greedy, or is it simple prudence in the face of danger?
It’s not just housing where the RBA’s decisions are creating imbalances, risk and unpredictable outcomes. To read how some of Australia’s largest retail stocks have been set up for a fall, you can find Tuesday’s article here.
Wednesday’s Money Morning came in two distinct parts. In the first, Greg looked at the sharp overnight fall in US markets. It was the first significant market pullback in five months, and the question on everyone’s lips was, ‘What caused it?’ Instead of answering, Greg argued that this isn’t really something anyone can know. And the answer wouldn’t be that useful even if that weren’t the case.
It’s one thing to look at the markets with hindsight, and attribute causes to buying or selling. But humans aren’t perfectly rational, logical people. We’re emotive and panicky. A big sell-off can be caused by any number of things, and gains momentum of its own once it’s begun. The more interesting question isn’t why something happened yesterday, but what may happen tomorrow. And how you can invest for the possibilities. Read more here.
In the second half of Wednesday’s Money Morning, Greg looked at the RBA’s biggest mistake to date, and the consequences for Australia’s market. Their stated intent has completely failed, and the unintended effects continue to make our housing market ever more dangerous. You can read the details here.
Speaking of bubbles, there are already loud voices in the media calling the Aussie medical marijuana industry a bubble. And with such huge gains being made so quickly, it’s a concern you have to take into account, if you’re thinking of investing. On Thursday, Sam discussed the possibility. He looked at a few medical cannabis companies that he wouldn’t touch with a five foot bargepole — and he explained why, despite those examples, he thinks that there are plenty of real opportunities to be found. For investors looking at an industry only now emerging from illegitimacy and a regulatory nightmare, it can be tough to pick out the needles from the haystack. You can click here to read Sam’s rundown.
Then on Friday Sam looked at a new wave in wearable medical technology. These devices, only now beginning to hit the market, could be life-changing for people living with ongoing medical conditions. As Sam explains, they could mean the difference between relying on the kindness and quick thinking of strangers…or continuing with your normal life, crisis averted. Technology like that could represent an incredible opportunity for investors. You can find out more in Friday’s Money Morning.
And if you listen carefully, you might just be able to hear the Formula 1 cars of Melbourne’s Grand Prix in the background of this week’s Financial Anarchists podcast. So it’s the perfect time for Sam to sit down with the boys and talk about all the latest news in car technology, and what it will mean for investors. And, of course, they also touch on the monumental changes coming with the legalisation of medical cannabis, and the companies that are profiting from it.
As we’ve seen with the legalisation of medical marijuana in many other nations, this story isn’t likely to be wrapped up quickly. Many of the medical benefits have been dismayingly under-researched, though we do have examples from countries like the US to guide the way.
Many of the social and political battles over medical pot are also yet to be settled. While the evidence for its benefits seems overwhelming, change takes time. Investors in the medical marijuana industry can hardly avoid the public debate around this issue.
But if analysts like Sam are right, the opportunities may just be too good to miss out on.
Editor, Money Weekend
Publisher’s Pick: ‘Marijuana Mania’ This ground-breaking medical mega-trend has already spawned levels of wealth we haven’t seen since the tech boom of the early 2000s. Jaw-dropping stock gains like 1,380%, 1,102% and 13,627%! If you’ve got the guts — and a few coins in your pocket to play with — this mega-trend has the power to potentially nab you a ‘high-bagger’ gain of 1,233% by this time next year. But only if you act NOW… [More]
Numbers of Interest, as of Friday
Aussie Dollar to US Dollar: 76.3
Gold: US$1,244.39 (AU$1,630.79) per troy ounce
Silver: US$17.57 (AU$23.03) per troy ounce
Bitcoin: US$1,007.45 (AU$1,322.28)
West Texas Intermediate Crude Oil: US$47.82 per barrel
ASX 200: 5,753.50