U.S. equities jumped higher on the open as investors were initially optimistic on Alcoa’s earnings. The market bullishness faded through the afternoon and went red on the day, erasing more than a 200 point gain on the Dow Jones. This might make investors ask, “Is volatility back?” The S&P 500 declined 0.26% to 2,023.
Cannabis stocks were skewed to the negative today. Early buyers in the space were met with afternoon selling pressure, very similar to the broader market trading activity. The MJIC Marijuana Index and Benzinga 420 Marijuana Index declined by 0.8% and 1.4%, respectively.
Daily Positive: We believe that 2015 is the year to “put up or shut up.” We believe companies that are able to execute and generate meaningful revenues will separate themselves from the pump and dump crowd. Today, Surna (OTCQB: SRNA), announced a $1.1 million tech contract with indoor cannabis grower CWNevada.
Daily Negative: The sector is off to a good start this year. Unfortunately, many low quality names plague the industry and their price appreciation has buoyed the indices. Valuations are generally way out of reach which leaves poor risk-reward for the investor. We believe maturation will lead to more realistic valuations. How does this happen? There are a few options to consider: actual business growth, price depreciation, or a confluence of both. Either way, a majority of these stocks are not charting a course for smooth waters.
The future of cannabis is now. We have been interviewing potential employees for one of our companies in which we’ve invested and it is thrilling to hear people from all over the country who see the potential in the sector. Obviously we believe in the space, since we are spending all of our time and energy here. It is good to know that people from all walks of life are getting on board. As investors, it is prudent to to get an occasional dipstick read on society’s sentiments around cannabis, so we feel heartened to know that many people are pro-cannabis.