“Just as with cigarette smoking and other socially sensitive issues we want to be on the right side and we feel we have made the right decision.”
That is a comment from Gordon Reid, president and CEO at Goodreid Investment Counsel, in an interview with BNN. The report goes on to say the following: “Reid said his company has no exposure to the growing number of marijuana stocks that have been popping up in Canada. And while he has not done a formal survey of what his clients think of the stocks, he called them highly speculative.”
Now, if he were in charge of my portfolio — assuming I had lots of money to let a money manager handle — he’d be fired on the spot and I would be moving my money elsewhere. Because here is what he has let his clients miss out on so far: gains of 500% or more for Canopy Growth, which has become the largest legal pot dealer in the world. You could have bought the stock in July for less than $3. It has since traded as high as $17.86, and settled in today around $13.
It is the bellwether stock in the cannabis investment community. As it has risen, so has the stocks of many other cannabis companies — both producers and related firms — by high percentages. All of the producers are already selling legal medicinal pot in Canada and abroad. But the big money will come as more and more jurisdictions legalize recreational weed, as several have in the United States and other nations. The Liberal government in Canada has promised to legalize pot next year.
So, naturally, marijuana companies in Canada and other places are getting ready to sell their products to people in the recreational market, and investors — some institutional investors — are getting in now while stock prices are within reach.
Already, though, marijuana stock prices are soaring, and a lot of people have made a lot of money. Some have even become millionaires, no doubt, with marijuana stock investments.
But not Reid’s clients. And not the clients of other money managers who, apparently, lack the vision to see the potential in marijuana stocks.
As for marijuana being a “socially sensitive issue” like tobacco, one wonders just where Reid is getting those ideas: The alt-right?
There is no comparison, in health terms, between tobacco and pot: I don’t know of anyone who uses tobacco for medicinal purposes.
So, what is so speculative about marijuana stocks in Canada?
Well, sure, if the Trudeau Liberals renege on their promise to legalize recreational pot, it will have a negative effect on share prices. It won’t eliminate all marijuana sales, though. Companies will still sell medicinal pot, and more important, they will still be exporting pot to foreign countries where medicinal and recreational pot is legal.
But Trudeau also knows that if he doesn’t legalize pot, he won’t be elected for a second term, because his promise was the major reason he won the last election for many voters.
In truth, this is not much of a gamble, though it would be prudent not to bet the proverbial farm on marijuana stocks. But if I had, say, $500,000 in investments being handled by a money manager and he didn’t buy, say, $5,000 worth of marijuana stocks for me last summer or earlier, I’d fire him.
Photo credit: Field of dreams for marijuana investors, by Aleks on Wikimedia Commons