January 26, 2022

Psychedelics: New ETF, Low Prices, Long term Win | $PSIL

Midas Letter
Midas Letter
Psychedelics: New ETF, Low Prices, Long term Win | $PSIL

The potential to outperform the market is one advantage that actively managed funds have over index funds. The notion of outperformance is obviously very attractive to investors. Index funds are considered the less sexy investment vehicle, but the evidence that actively managed funds can consistently outperform their relevant index is difficult to find.

An example of this is looking at cannabis index funds versus actively managed funds. The cannabis asset class is too volatile and often the largest companies are not the best investment. This trend of a new, developing area in the stock market will carry over into a new biotech subsector: psychedelics.

AdvisorShares Psychedelics ETF (NYSEARCA: PSIL) is an ETF that tracks the entire psychedelics market. With one purchase, investors can track the entire psychedelic market, traded on a stock exchange in the same way a regular stock is.

$PSIL launched at $10 per share. Since then the market has drastically downturned resulting in a new share price of around $5 per share. The new price presents a compelling opportunity for investors who have a long-term focus and believe psychedelic drugs and psychotherapies are the future standard to treat mental health.

“This is a new area, new fund, low prices. they have been driven down and if someone has a long-term focus and can accept extreme volatility like you’re going to get in any kind of new quickly growing area but with lots of potential, you got to accept risk with potential, but I think the sky is the limit to invest in new psychedelic treatments.” – AdvisorShares Psychedelics ETF Managing Director Dan Ahrens

There will not be adult-use magic mushrooms like we are seeing in the cannabis market, but the new biotech potential is starting to be seen. The potential for psychedelics (psilocybin, ketamine, MDMA, etc.) to treat PTSD, depression, alcohol-use disorder, and other mental health disorders could finally overtake the antidepressants and opioids big pharma has flooded the market with.

“Does the world and US have an opioid problem/crisis? Absolutely. Can psycehliedelics treamtent help circument all of that? Possibly. We need to do all the research and development, but that’s where that huge opportunity is.” – AdvisorShares Psychedelics ETF Managing Director Dan Ahrens

One of the safer ways to invest is to average into a market tracking index like the S&P 500 (INDEXSP: .INX), which requires less due diligence into single stocks and overall markets and the economy. However, if you know certain areas of the market are trading at a discount like the psychedelics market could be, it could make sense to gain some exposure. Possibly an index fund like the AdvisorsShares Psychedelics ETF.


00:00 – AdvisorShares Psychedelics ETF Managing Director Dan Ahrens
00:50 – Psychedelics market synopsis
02:09 – Fund due diligence & cannabis correlations
05:14 – $PSIL holdings
07:40 – Investment methodology & criteria
11:36 – Short stocks?
11:58 – Lending shares to create income for the fund
13:14 – Conflict of interest by lending shares?
14:43 – Psychedelics market primary catalyst

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