Your opinion on Marijuana stocks & ETFs

JuniorR · 24 May 2018

Hello ASF,
I decided to sign up after researching about australian stocks the last few days. I have a lot to learn before I begin to invest and I am rather interested in this field after googling the last few days.
I was wondering what your thoughts and opinions are on investing in Marijuana stocks such as Auscann (AC8) and Cann Group Limited (CAN)?
I'm interested in buying shares for the long term side of things, I think once it becomes legalised within Australia the company will bloom.

I have also considered investing in ETFs like so:
35% VAS
35% VGS
30% VAF
Maybe RDV?
What are your thoughts here?

Thanks for taking the time to read, I look forward to reading some of the quality threads I have found here.

So_Cynical · 24 May 2018

My opinion of the Aussie pot stocks is that they are massively over valued, as a sector they have a combined valuation (market Cap) of about 1.4 Billion, and they have a combined revenue of (guesstimate) about 10 to 20 million PA, i doubt any of them actually operate profitably, many of them will not exist in 2 years time.

galumay · 25 May 2018

Its a mistake beginners often make, (and I certainly made it), thinking about sectors or products they would like to be invested in because it sounds cool/popular/like the next big thing etc.

Over time I learnt to look for investible businesses that were priced at what I felt was a sufficient discount to value as to provide a healthy margin of safety - regardless of whether they were selling pot, insurance or widgets.

JuniorR · 25 May 2018

So in saying that a beginner like myself should look to invest in value stocks like Facebook, Microsoft, johnson & johnson, Google, Apple whilst I dig deeper into gaining more knowledge about the stock market.
I have been looking at Stock Trading and Investment courses online, Has anyone here had any experience in doing an online course?

galumay · 25 May 2018

I wouldnt describe most of those examples as value stocks!

I am suggesting you should dig deeper and gain more knowledge before investing any money!

Personally my belief is you have to develop a strategy that is consistent with your personality and world view, and that may look nothing like mine! Posters like @tech/a, @CanOz and @peter2 have developed trading strategies that are literally non-sensical to me, but I would suggest they have all been successful - because they spent a lot of time learning a strategy, applied it with discipline and had some form of risk management.

Read books, listen to podcasts, watch videos, follow links, try to learn about things you might not expect to benefit with investing, psychology, maths, history..approach investing as an interest and challenge rather than a way to make money.

One final point, everytime you read about, hear about, think about, a possible thing to invest in, spend all your initial energy in thinking about why you shouldn't invest, if it passes that test then think about why you should invest!

Oh, and last final point, take no notice of self appointed experts on anonymous internet forums.

So_Cynical · 26 May 2018

galumay said:
Personally my belief is you have to develop a strategy that is consistent with your personality and world view, and that may look nothing like mine!

That's it exactly...great advise

tech/a · 27 May 2018

I cant let this slide by. I've pondered this for days!

galumay said:
Personally my belief is you have to develop a strategy that is consistent with your personality and world view, and that may look nothing like mine!

Personally I think that whatever you come up with -- will have very similar
traits to ANY PROFITABLE trading method.

The worn out mantras appear to be tendered by those still unable to
put together a workable trading method and IMPLEMENT it. regardless
of how many posts of profitable methods in action appear here!

Allow me alter this a little

galumay said:
but I would suggest they have all been successful - because they spent time developing a strategy, applied it with discipline and have excellent risk and trade management.

galumay said:
One final point, everytime you read about, hear about, think about, a possible thing to invest in, spend all your initial energy in thinking about why you shouldn't invest, if it passes that test then think about why you should invest!

Sadly this is the mantra of those who talk but DONT ACT.
You have to TRADE!
Being wrong is OK.

galumay said:
take no notice of self appointed experts on anonymous internet forums.

Yet you advise?

galumay said:
listen to podcasts, watch videos, follow links,

galumay · 27 May 2018

tech/a said:
Allow me alter this a little

I suspect you have completely misunderstood what i was trying to say, sorry if I was less than clear!

As a long term investor nearly everything you do and think as a trader is contrary to my world view and personal strategy. The point I was trying to make was that despite having nearly nothing in common, i believe that the traders who are successful in the long term must at least have those qualities I described.

tech/a said:
Sadly this is the mantra of those who talk but DONT ACT.

Again I dont seem to have made myself clear, my point is that due to biases like confirmation bias and availability bias, its very easy to rush to convincing ourselves of all the reasons we should make an investment, I have found it a very powerful mental model to try to find reasons not to invest in a business firstly, if I cant find reasons not to risk my capital, then I do my analysis to see if its what I consider an investible business. Hopefully that helps you understand.

tech/a said:
Yet you advise?

Oh dear, surely you could see the ironic humour in the way it was intended?! (with more than a grain of truth in it.)

tech/a · 27 May 2018

Nah crystal clear
Now more so!

galumay · 27 May 2018

Best stay away from those funny ciggies, Mr Duck!

peter2 · 28 May 2018

Ha, I was pondering also whether to reply or not. I wrote a post but deleted it.

I thought that @galumay 's advice was generally good, but didn't go far enough down the journey to success. I agree with read lots, learn heaps then, find a methodology that resonates with your beliefs, understand the basics of trading/investing profitably, ignore 90% of what you've just learned, construct an initial TP or Investment Plan, test it, refine it, test it, refine it, test it, follow it, learn from your mistakes, try to follow your TP/IP better while making minor adjustments as you gain experience.

Then I thought that's too much work and 95% won't do it. Why bother posting.

Whoops, back on the OP's topic. Stick that in your pipe an smoke it. OR
if you're aware of BDA's trial (Cannabis Sublingual Wafer Formulation trial), stick that under your tongue and suck on it. BDA's price ticking higher...

WesternTaipan · 28 May 2018

JuniorR said:
Hello ASF,

What are your thoughts here ?

For long or short term always check the P/E first. Anything over 10 is less likely to attract other buyers to push the price up. Next look at the dividend yeild and be sure to factor in the franking calculation.

No yeild means you're gambling (think day trading) not investing. If you want to gamble then fine but don't kid yourself its investing or you'll be burnt.

None of the cannabis start ups are worth investing in. Medical cannabis is so expensive it is going to force legalisation of personal Marihuana so don't even think about CAN or BDA etc. Unless you want to bet.

You'll need 50,000 to start with and you can easily lose it all. Understand the business you're investing in as if you ran it. Then make a decision.

galumay · 28 May 2018

peter2 said:
Then I thought that's too much work and 95% won't do it. Why bother posting.

I think you are probably right about 95% not doing it, but its worth bothering posting for two reasons, it reminds you of what you do and why, and for the 5% who listen to what you say, it gives them some useful information to feed into their journey.

Your opinion on Marijuana stocks & ETFs

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