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What's your thoughts on marijuana shares?

Discussion in 'Beginner's Lounge' started by pearcey29, Nov 12, 2018.

  1. pearcey29


    Likes Received:
    Nov 5, 2018
    Ok so obviously I am very new to the share market so this could be a stupid question sorry if it is. But I just wanted to get some people's opinions on marijuana share's specifically Cann group shares from some of the stuff I am reading there are a lot of differing opinions out there on this. some were saying there not making any profit at the moment so steer clear altogether, then i read somewhere else that with in 5 years the industry will be worth $55bil
    is it worth considering??
  2. greggles

    greggles I'll be back!

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    Jul 28, 2004
    If this is the case then how are revenues going to be generated and by which companies?

    I would steer clear until there is a little more certainty about the industry. We're dealing with something that is still illegal to even possess in Australia, so there are no guarantees that a viable and sustainable industry is going to built on the back on its medicinal use. Too much risk and uncertainty for me and far too much hype.

    Look at Queensland Bauxite (QBL). That company has been in a trading halt since July when it announced the acquisition of two medical cannabis companies in an all-scrip deal that started to fall apart when the QBL share price started to sink following the announcement. Three and a half months later and it's still suspended from trading.

    Some info here for those interested: https://www.tga.gov.au/medicinal-cannabis-guidance-documents
    Darc Knight likes this.
  3. ducati916


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    Feb 13, 2006
    Of 100 cannabis related firms tracked by Bloomberg, which have a market cap $76Bn, they only have $2.5Bn in revenues.

    That essentially means that they are trade-able, but likely not of investment grade yet.

    jog on
    Darc Knight and galumay like this.
  4. galumay

    galumay learner

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    Sep 17, 2011
    Pretty much what @ducati916 says, even if the sector becomes viable in the future, like any sector you have to find businesses that are actually profitable and able to grow into the future, are well managed and available at a price that is a sufficient discount to fair value.

    Or you can just gamble and buy one of the pot stocks now, or go to the casino and put it all on red, or buy some bitcoins.
    jbocker and Darc Knight like this.
  5. jbocker


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    May 24, 2009
    Well done for asking and don't EVER feel sorry for doing so. Id keep your money in your pocket till you understand and happy with the risk. Read lots and then LOTS more. You will find elsewhere some great advice but one of note try 'compound interest'.
    New 'industry' are difficult to get going. I put way too much money in an early legal company listing on the ASX. Run by a former Australian Commonwealth Govt Treasurer. You'd think that was good credentials. NUP! I got belted.
    I take responsibility I didn't know enough, and what I know now is, that I DONT know enough still.
    Not saying not to invest money. Far from it, invest in knowledge and do it continuously. Enjoy the ride.
    Smurf1976 and barney like this.
  6. Smurf1976


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    Feb 14, 2005
    With any new industry (well, this one's new in terms of legally doing it) it's always the same basic pattern.

    At one point even smaller cities such as Hobart had numerous local internet service providers. Likewise there were hundreds of car manufacturers in the early days and circa WW1 era moving from one suburb to another in Melbourne quite likely meant you were now connecting to a different power grid because there were lots of separate little systems.

    Same with computers. There was a time when Apple and Microsoft were just one of the many then unknown companies vying for business. There were plenty of others and there were plenty of other completely different computer systems that weren't compatible with each other in any way whatsoever.

    What always ends up happening is the vast majority of those companies either go broke or merge and it ends up with a few dominant players. All those little internet companies and the idea of having 20 rival computer operating systems are long gone now, in their place is a few big ones. Same with everything else.

    The difficulty with investing in a new industry is thus picking the right companies. Someone could have bought shares in 50 computer companies back in 1980 and lost most or all of their money. Or they could have become a multi-millionaire a few years later. All depending on which actual companies they bought shares in since whilst the industry as a whole has transformed society it's a reality that most of the early computer companies didn't survive much past 1990 or thereabouts indeed many were gone before that.

    Marijuana also has the added risk of government regulation. Regardless of actual policies, it's an area far more prone to regulation than most other industries.

    I'm not saying don't do it but be aware that the nature of it is that it's a high risk situation. With that comes the potential for either a very large profit or a very large loss.

    Understand the risk is my point.
    Value Hunter and jbocker like this.

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