Now that cannabis is receding from its dominant position as the hottest sector, investors are wondering what’s next?
Would you believe the next hot sector for 2020 is going to be ….drumroll please….
Yes, that’s right. The most hated stocks are threatening to make a rebound and then some in 2020.
Trump has now been impeached, which, while just another burr under his saddle in the political arena, will nonetheless cause great harm to his chances in 2020. That’s because forces within his own camp are willing to overlook sexual assault and fraud, but abusing the Office of President is the worst crime he could possibly commit, in their eyes.
Already, Christianity Magazine has publicly called for his removal from office. If there’s one voter contingent that you don’t want to mess with in America, its religious right. And Trump’s base is comprised almost entirely of that holy segment of the population.
That means, as November nears, and his inclination to perceive conspiracies from all sides starts to fuel more off-the-cuff decision making without the input of any advisors, Trump is going to contemplate Federal De-prohibition of Cannabis by Executive Order as one of the last arrows in his quiver to thwart Democrats from winning seats.
The problem (or opportunity, depending on where you stand), is that the Democrats, who are already ideologically predisposed to embrace federal regulation of cannabis going forward, will be having their own belly button contemplations about using the popular desire to see cannabis laws normalized to increase cachet with voters.
Never mind that one by one, the states that have still not embraced cannabis for any reason are gradually becoming green states, and the truth is that regulation of cannabis is demonstrating in no uncertain terms in states where it has been legal for years that the economic opportunity, as well as the chance to regulate more closely its availability, are irresistible catalysts for de-prohibition.
But not only that.
Larger and larger financial institutions are starting to nibble at the edges of transactions that equates to larger and larger numbers of institutional positions are building behind some of the bigger names, which creates its own form of political impetus to legitimize something that a politicians wealthier constituents have invested in.
In other words, this river only flows in one direction.
Despite huge losses and a total sector discount of 80% from April highs, this is nothing more or less than the healthy respiration of an emerging market. Volatility is to be expected as the overcapitalization/undercapitalization dynamic plays out on the timeline of supply and demand.
If the cannabis sector tacks on 80% or better in the next 12 months, will there be a million talking heads trying to take credit for predicting it? You better believe it.
From where I sit, and through experience (which in my case is repeating the same mistakes with incrementally more sophistication as the years grind on), it looks to me like the third wave of cannabis investors is going to be the biggest, and this next bull move in 2020 will dwarf anything we’ve seen yet.
Cannabis will start to generate a lot of bio-tech IP too in 2020, which is going to be another Tsnuami factor.
But not before the implosion of some of the biggest names in Cannabis. Those will be painful to watch, and will act as the moderating influence over what will still nonetheless be Unbridled Enthusiasm 3.0.
DISCLOSURE: I will be building positions in select cannabis issuers starting next week.
Happy Holidays everyone!
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