Good news for both marijuana investors and income investors
“The Original Marijuana Stock Bull.”
That’s the name marijuana insiders have given Matt McCall over the years. That’s because he’s been tracking the marijuana sector and making his readers money in the space since 2014, long before it was popular.
In fact, in the early days, it was decidedly unpopular. Back in 2014, the host of Fox Business openly laughed at Matt when the interview turned toward Matt’s bullishness on marijuana.
Of course, Matt proved the skeptics wrong, as many of his early recommendations went on to soar hundreds, even thousands of percent. And the winners have continued …
So far in his tenure at InvestorPlace, Matt has already led subscribers to lock in a gain of 153% by selling a portion of marijuana software company, Akerna. Then there’s the 201% gain for subscribers through the marijuana REIT, Innovative Industrial Properties. And there’s the 546% for subscribers who sold their second position in Akerna on Matt’s recommendation.
To be clear, these are locked-in gains — not merely highs that have since pulled back.
Now, exciting news coming out of Matt’s camp …
If you’re interested in locking in even more gains with cannabis, Matt and his Investment Opportunities team are coming out with a new way to play the sector. Matt said it’s a much better approach than just owning ordinary shares. More on that a bit lower in this issue.
But first, let’s recap where things stand today in the marijuana sector. After all, this may be one of the best buying opportunities we’ll see for a long time.
***If you’re a cannabis investor, you’re all-too aware that the sector has been experiencing a pullback in recent months
This hasn’t taken Matt’s subscribers by surprise.
For example, it was back in July that Matt wrote to his subscribers, saying:
… at no time in the past five years have I seen the level of marketing related to marijuana investments that we’re seeing now … Right now, interest in marijuana is very high. This tells me we’re likely due for a short-term correction. And indeed, marijuana stocks as a group are well off their highs from earlier this year.
The critical point for marijuana investors to keep in mind is that this is part of the normal growth cycle.
You see, as with any long-term growth curve, there will be mini “busts” along the way. This is just the way markets work. Sometimes investor sentiment grows too bullish, too fast, inflating market prices well beyond where they should be relative to valuations. When this happens, as it is happening with marijuana stocks right now, prices have to fall to come back in-line with values.
The important thing is to avoid confusing a needed, healthy pullback with a bearish “it’s over” souring on the entire investment opportunity.
Here’s Matt on this point:
Don’t make the same mistake a lot of people will make when short-term corrections come. Don’t sell your holdings because some idiot tells you “the marijuana bubble has popped.”
Instead of selling, just remember: When you study the history of massive, world-altering business trends and the long-term wealth-building opportunities they create, you’ll learn that any time a major new industry is in its early stages, temporary bouts of extreme enthusiasm followed by sharp corrections (aka “high volatility”) are the norm — not the exception.
This is what many cannabis skeptics fail to mention in their critiques of the sector. They see excesses of short-term optimism and then make blanket statements about how the whole sector is a terrible investment that should be avoided like the plague forever. They make no distinction between short-term “froth” in the market and the incredible long-term business fundamentals.
What I’ve found is that returning to cold, objective numbers can help me find my conviction when the market is going against me. On that note, 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. That’s 272% growth in six years.
Then there’s Echelon Wealth Partners that predicts the legal cannabis market in the U.S. alone could be worth $60 billion if 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.
Back to Matt for the takeaway:
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.
On this note, look at the 1-year chart of the popular marijuana ETF, “MG.” It’s the Alternate Harvest ETF. Since this ETF contains dozens of stocks that are engaged in the legal cultivation, production, marketing or distribution of cannabis products, it’s a loose proxy for how the broader marijuana industry is performing.
As you can see, it’s been a painful spring. But you can also see the rebound in late August. The sector is currently retesting those lows, but if it can hold here, it appears the market will be trying to carve out a bottom.
***Meanwhile, in spite of this pullback, Matt’s favorite CBD company has been “performing well”
That’s the term that investment professionals use when a stock defies a broader bearish trend, by either holding its market price or actually climbing. That’s what’s been happening with Charlotte’s Web (CWBHF).
CWBHF was Matt’s pick for InvestorPlace’s Best Stocks for 2019 contest. It’s one of the original hemp-cannabidiol (CBD) companies, and perhaps the biggest success story of Colorado’s legal cannabis boom.
Below, we’ve compared Charlotte’s Web with the Alternative Harvest ETF just referenced since June. As you can see, while the ETF is down 23%, CWBHF is up 28%, even pushing as high as 75% up in early August.
This is a sign of significant strength.
In all likelihood, this is just a preview of the gains to come.
After all, as Matt tells us, Charlotte’s Web is expecting to post sales of $120-$170 million for the year. But next year, analysts are expecting sales of $348 million … and $444 million the year after that.
This growth will be fueled by significant expansion. You see, Charlotte’s Web CBD will soon be in twice as many stores as it was last year. From a niche product that was mainly found in health stores, you can now buy it at “big box” stores like CVS Health (CVS) and, now, Kroger (KR).
This recently announced Kroger deal means it will add 1,350 stores (in 22 states) to Charlotte’s Web’s retail network.
***Plus, there’s reason to believe things are only going to get better for Charlotte’s Web and the CBD market
That’s because news from two days ago is that Senate Majority Leader Mitch McConnell (R-KY) is pushing to add language into a congressional spending report that demands the Food and Drug Administration (FDA) clear a path for the lawful marketing of hemp-derived CBD products.
At present, the FDA’s position is that allowing CBD to be sold as food items or dietary supplements would require alternative regulations that need to be developed. This could take years without congressional action.
McConnell doesn’t want to wait.
He’s asking FDA to “issue a policy of enforcement discretion with regard to certain products containing CBD” within 120 days. If this happens, it will be a major step toward clarifying rules which could result in banks being more willing to service CBD companies. And that points toward even more gains for Charlotte’s Web and other top-shelf CBD companies.
To read more from Matt about Charlotte’s Web and the other ways Matt likes to play CBD, click here.
***Back to the big news from Matt and his team
At the top of this Digest, we referenced an exciting update from Matt. It turns out, Matt has come up with a new way for investors to make big returns from marijuana.
I’m not able to say too much at this point, but look for more details next week. What I can say is this strategy is a way to generate gains even if the broader sector needs more time to consolidate before starting its next push higher.
Here’s how Matt recently described it:
This approach can net you thousands of dollars … week after week … for up to 70 different times over the next 12 months.
The most incredible part is that this unique strategy is less risky and potentially much more profitable than just owning ordinary cannabis stocks.
***Finally, another moneymaking “heads-up” — this one from Neil George
As you know, the Fed lowered interest rates yesterday. Of course, another quarter-point cut could be just the beginning.
If President Trump gets his way, rates will be going to zero — or lower.
Last week, he tweeted:
The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt. INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term.
This comes after former Fed Chair, Alan Greenspan, said a few weeks ago that it won’t be long before negative interest rates come to the U.S.
You’re seeing it pretty much throughout the world. It’s only a matter of time before it’s more in the United States.
***If you’re an income investor or a retiree in need of investment cash-flow, you know that this means trouble
With the FOMC having raised the Fed Funds rate nine times in three years (before beginning to lower them recently), the highest-yielding savings accounts topped out around 2.5%. This is still low historically, but it’s miles better than the average yield of 0.1%, which was where we were back in 2015 before the Fed began raising rates.
But if the Fed is going to be taking rates to zero — or lower — expect that 2.5% yield to be gutted again … and other income investments to run into huge headwinds.
Plus, dividend yields are already low on an historical basis. Below, you can see the S&P’s dividend yield dating back over 100 years.
As rates continue dropping, you can expect yield-hungry investors to flood into anything that pays decent income, pushing yields even lower.
So, what’s an investor in need of income to do?
Enter Neil George.
As regular Digest readers know, Neil is a master income investor. For example, as June turned into July this past summer, we featured the “first half of 2019” performance of our analysts in the Digest.
It turns out Neil’s 10 highest-yielding stocks, bonds, and funds had been paying subscribers an average yield of 8.5%. Topping that list were MFA Financial at an 11.1% yield, and Hercules Capital at 10.06%.
As an income investor, Neil is familiar with the challenge investors have when trying to find safe, significant income in today’s market. That’s why he decided to help by writing his new book: Income for Life: 65 Income Streams ANYONE Can Collect.
The book is filled with all sorts of income ideas — both related to the market as well as unique “side hustle” opportunities. There are dozens of little-known financial secrets to living a richer, more fulfilling life.
From Neil:
No matter what your current financial situation is like … living the kind of life you want isn’t a pipedream.
All you need to do is tap into a few work-free income streams … pay yourself first … and let your money create even more money.
The key is to work SMARTER!
And I’ve put all the resources you’ll need in my new book.
The book comes out next week, but you can click here to learn more right now. If you’re an income investor watching rates drop with a growing sense of anxiety, please take a few minutes to learn more.
