Wednesday’s Key Questions to Consider


This morning’s November ADP jobs report came in with more than 200,000 jobs added. The U.S. economy continues to chug along, but this report was a bit softer than expected. U.S. equities hovered around the flat line with a little late day rally, moving the S&P 500 up 0.36% to 2,074. Mainland China’s Shanghai index is now up over 30% YTD, as China has been stimulating its economy. Greater Europe is just starting its stimulus program. It will be interesting to see how these markets play out next year. Capital generally flows to where it is treated best.

Cannabis indices could certainly benefit from stimulus into year-end and beyond. Really what we need is a major purge of the low quality companies that are trapping capital. For the day, MJIC Marijuana Index and Benzinga 420 Marijuana Index appreciated by 3.79% and declined by 1.89%, respectively.

Daily Positive: Recent selling pressure in GW Pharma (GWPH) appears to have shifted to renewed buyer interest with a gain of 11.05% on the day.

Daily Negative: It is very clear that many investors have left the cannabis sector. It is our belief that probably 90% of current public companies are purely a waste of time and capital. We hope that when better companies come online, we will see investors return.

As we have mentioned for some time, we believe this market is going to have some serious absolving of the companies that are not going to amount to anything. Market forces appear to be moving this process along. We urge investors not to fall into the classic investor behavior of holding losers too long. 2015 is right around the corner, so it is a good time to review holdings. Consider some key questions:

Do you own potential winners for the future or media hogs of the past?

What companies are you reading about that are coming online soon and why these might be a good move?

What cannabis companies have you invested in and how does the addition of another name fill out your holdings?


The discussion above is provided for informational purposes only and does not constitute an offer of, or solicitation for, any investment services or products offered by the author. The author is not making any investment recommendations and the opinions above do not constitute investment advice. Reference to above indices [and companies] is based on information provided by sources the author believes to be credible. Investing in the cannabis industry, as with other industries, presents certain risks including the risk of loss on an investment.

Morgan is a Founding Partner and Managing Director of Poseidon Asset Management. He is the Chief Investor of their Cannabis Focused Fund. Morgan previously worked for a privately owned Registered Investment Adviser and earlier was at UBS Financial Services focusing on wealth management. Morgan believes in the potential of the cannabis industry and likes having an active involvement as it develops. You can follow him on Twitter @PoseidonAsset.

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