Editors Note: This is a guest post.

Cannabis as an investment

The cannabis industry experienced exponential growth between 2014-2018, becoming a billion-dollar industry. During that time span, plenty of cannabis companies went public in Canada, as well as the major US exchanges like NYSE and NASDAQ. They’ve managed to attract significant funding from investors, which means there was a broad audience believing in the potential of the industry.

Increased media attention and investors’ enthusiasm pushed cannabis stocks higher, but things started to settle during 2019 and 2020, when a temporary loss of confidence occurred, mainly due to reduced profitability, as is expected with any new industry.

Since cannabis stocks were so volatile on the upside and the downside, trading CFDs on these assets had become a popular activity, considering that multi-asset brokerages such as TRADE.com are now covering all the top cannabis-related stocks.

Now that the initial enthusiasm had settled, rampant growth switched to the backseat and investors are focusing on the fundamentals, looking after profitability and positive balance sheets. If most of the cannabis-related companies experienced high profits and big losses afterward, some emerged as leading names, managing to generate confidence among investors.

Top 3 Cannabis stocks

Cronos Group Inc (NASDAQ: CGC) is an innovative global cannabinoid company, with international production and distribution across five continents. Committed to building disruptive intellectual property by advancing cannabis research, technology, and product development, the company has a passion for customer experience. Listed on the NASDAQ, its stock is currently valued at $7.34, trading in positive territory for 2020, after several ups and downs throughout the year.

A Canadian licensed cannabis producer and listed on the Toronto Stock Exchange, Aurora Cannabis Inc (NASDAQ: ACB) is a company with eight licensed production facilities, five sales licenses, and operations in 25 different countries. With a funded capacity of 625,000 kilograms of cannabis production per year, it is currently among the largest companies in the industry. The ACB stock is trading for 9.39 CAD, down on the year, but posting increased volatility.

Aside from the companies fully focused on the cannabis industry, there are plenty of large players interested in the field. One of them is AbbVie (NASDAQ: ABBV), also known as Abbott Labs. Currently the 9th largest pharmaceutical company in the world by revenue, it has filed for more than 50 cannabis-related patents in the USA, more than any other company, according to a report published in 2019. Currently valued above $100, the AbbVie stock benefits from increased investor attention.

Considering all these companies are publicly listed, there are plenty of different trading instruments available for retail traders, including CFDs. The TRADE.com CFDs on cannabis stocks offer is one of the most trusted, due to the solid reputation of the trading brand.

Conclusion

With many large companies investing in cannabis-related research and product development, the industry still has growth potential. Retail traders and investors can take advantage of both rising and falling markets thanks to trading instruments such as CFDs, providing tight trading costs and optimal liquidity. As cannabis-related therapeutics are embraced globally and regulation is put into place, investors can join the industry without having to worry about compliance.

CFDs and spread bets are complex instruments and come with a high risk of losing money rapidly due to leverage. 79.9% % of retail investor accounts lose money when trading CFDs and spread bets with this provider. You should consider whether you understand how CFDs and spread bets work and whether you can afford to take the high risk of losing your money.

Editors Note: Guest post by  Matt McCall, Editor, MoneyWire Aug 29, 2019, 4:45 pm EDT

Let me be clear: I try to limit emotions when it comes to investing. I’m a research fanatic, and I always go first to the big-picture trends, data, and face-to-face conversations.

But I’ve also learned not to ignore my gut feelings, especially when they have data to back them up.

That wasn’t always the case. Like anything else, my “gut” has gotten better the longer I’ve invested. After 20 years in this business, my intuition tends to be correct.

I have a very strong gut feeling right now, and it’s related to the big opportunity in marijuana stocks.

I have been recommending marijuana investments since 2014, well before most analysts. Many of my early recommendations have soared hundreds … even thousands of percent. A colleague of mine even refers to me as “The Original Marijuana Stock Bull.”

Recently, though, some may have questioned my bullish thesis. My long-term view has never wavered, but marijuana stocks have gotten hammered in the last few months. Since hitting a yearly high in March, the ETFMG Alternative Harvest ETF (NYSEARCA: MJ) is down 40%.

The weakness has turned even some of the biggest marijuana bulls into doubters, but I think the current pullback represents one of the best buying opportunities we may see for some time if you want to invest in one of the fastest-growing sectors in the world.

That’s why I tweeted this last week:

“Are we supposed to use our feelings and emotions in investing?” someone replied. “Hope it turns out right for you.”

That’s why I wanted to write about this subject. I was sharing a feeling I had at a moment when I didn’t have a lot of data at my fingertips. But there are strong indicators to back up my gut feeling.

Take a look at the chart of the EFTMG Alternative Harvest ETF below. Notice how the ETF is near a double bottom at its December low just above $23. A double bottom is a bullish pattern and usually signals a reversal to the upside.

Then there’s the relative strength index (RSI), located at the bottom of the chart. The RSI measures overbought and oversold conditions. A reading above 70 indicates a stock is overbought, while a reading below 30 indicates that it is oversold.

You can see how many times MJ has bounced when the RSI got down to 30, and it is now just below 26. That’s a strong signal that the recent selling is overdone.

It also puts the ETF extremely close to an RSI Crossover, which is when the indicator crosses back above 30 into neutral territory. This is one of my favorite technical buy signals. I’ve made good money over the years thanks to it.

The Upside Is Endless

There is so much negativity in the marijuana sector right now that even some of the long-term bulls have joined in on the selling. That short-sightedness costs them. Every high-growth, early-stage investment theme sees times of both parabolic rallies and sizeable pullbacks.

This happened on the internet … biotech … emerging markets … you name it. And it’s what we’re seeing now with marijuana.

But history shows that these are the BEST times to buy.

I’m not trying to call a bottom — that’s not only irresponsible, but it’s also nearly impossible and just plain foolish. But I am saying there is a lot more upside in the best cannabis stocks than downside.

According to Arcview Market Research and BDS Analytics, global sales of legal marijuana will increase from $10.9 billion in 2018 to $40.6 billion in 2024. Where else can you find an industry that is expected to grow 272% in six years?

The majority of those sales will come from North America, but here’s the kicker. Those projections assume that marijuana will remain federally illegal in the U.S. You know that I firmly believe legalization is coming far sooner than most expect, which means those estimates are too low and could, in fact, be closer to $60-$80 billion.

According to Echelon Wealth Partners, the legal cannabis market in the U.S. alone could be worth $60 billion if the federal prohibition is repealed. To put that into perspective, the vitamin/supplement market is worth $28 billion and the beer industry is worth $110 billion.

So don’t get caught in the herd of doubters running for the hills. The long-term story is intact, and today is the day to buy. Not tomorrow … not next month … not next year. By then, the big money will have already been made.

Matthew McCall is the founder and president of Penn Financial Group, an investment advisory firm, as well as the editor of Investment Opportunities and Early Stage Investor. He has dedicated his career to getting investors into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA), +1,044% in Tesla (TSLA), +611% in Liquefied Natural Gas Limited (LNGLY), +324% in Bitcoin Services (BTSC), just to name a few. If you’re interested in making triple-digit gains from the world’s biggest investment trends BEFORE anyone else, click here to learn more about Matt McCall and his investments strategy today.