Cannabis Stocks: Full Webinar -- Marijuana Stock Investing Guide. With David Moadel
hello and welcome to my presentation on cannabis stocks building a position that
won't go up in smoke my name is David Moadel and throughout this presentation
you'll see at the bottom of the screen their contact information if you want
more help you can contact me anytime my email address is David Modell at
gmail.com and I also encourage you to visit my blog slash website David Modell
dot blog spot.com all right so cannabis stocks building a position that won't go
up in smoke first I encourage you to read this
disclaimer and I'll give you a little bit of time to read it and please
remember that you can pause or rewind this presentation at any time so that
you can read the disclaimer or any other slide in this presentation carefully
all right so here we go so Who am I about me well again my name is David
Modell I'm an investor slash trader and educator / coach for over 20 years I've
been in the education business for a long time I have a master's degree in
education I have a youtube channel called looking at the markets with David
Modell and I am currently and proudly the chief analyst and researcher at
portfolio wealth global located at portfolio wealth global comm and you're
certainly welcome to visit that website so I'm going to start you off with a fun
quiz question don't worry you won't be graded on it even though I am a teacher
true or false there are more cannabis dispensaries in
Colorado than Starbucks coffee shops so what do you think is that going to be
true or false well here's the answer the answer is it's true and I put the source
there and throughout this presentation I I've tried to put the sources as best as
I can yes it's actually true there are more
cannabis dispensaries in Colorado than Starbucks coffee shops and that's really
saying something because there are quite a few Starbucks coffee shops just goes
to show you how big cannabis is as an industry how much it's growing let's
look at some more cannabis facts the cannabis market in North America will be
estimated to reach as much as forty seven billion dollars throughout the
next ten years this number is up from the almost 10 billion dollars that it
currently stands at the past year has seen in over 30 percent gain in the
amount of cannabis sales in North America so again it's growing I would
say exponentially here are some more facts
a series of polls throughout the end of 2017 showed that on average in the
United States over 60% of individuals supports legalizing marijuana nationwide
I've seen it at 61 percent 62 percent sometimes higher sometimes lower but
it's the majority either way Canada legalizing cannabis will potentially add
another five billion dollars that's billion with a B not million five
billion dollars in sales annually this will be the first time in the world that
a developed country has legalized the use of recreational cannabis nationwide
here's a chart here I'm going to have a number of charts throughout this
presentation to add visual support to what I'm saying
this chart is for the u.s. support for legalizing marijuana it has hit an
all-time high no pun intended so a number of people were asked should the
use of marijuana be made legal or not and the Green Line here represents the
number of people responding yes it should be legal and of course we would
expect that if the Green Line goes up there should be an inverse relationship
between the Green Line and the orange or red line here going down and we can see
that in past decades more people thought it should be illegal than legal and that
has steadily changed and it has changed much more rapidly in recent years to
where it's as I mentioned before it's in the 60s
this one says 64% saying yes should be May legal what about in Canada well in
Canada 22% of the population consumes marijuana recreationally 7% consumes it
daily every day 30% of young adults consume marijuana recreationally in
Canada the total estimated market nearly 40% of
the population or 12 million people that's a lot of people to potentially
sell cannabis and cannabis related products to the industry is in
collective stocks said to be worth a whopping 30 billion dollars again it's
with a be billion that leaves it with the compare with the capability of sales
concerning cannabis based products to reach a staggering 200 billion dollars
over the next 15 years a lot of money to be made and in the United States
cannabis sales have already hit 50 billion dollars a year so yes it's big
in Canada but it's also big in the United States let's talk about the sales
estimates of recreational cannabis in Canada and this is in Canadian dollars
four point six billion dollars of sales in 2019 that's the estimate and it's
just going to keep growing seven point four billion dollars sales estimate in
2024 of recreational cannabis and this is recreational cannabis and in Canada
it's not even counting worldwide and not counting medicinal cannabis again in
Canadian dollars 0.5 to 1.5 billion dollars export market by 2019 from now
that we're talking exports from Canada to nations such as Germany Italy Finland
the Czech Republic another chart here says the grass is looking greener I like
that title the projected legal and illegal sales of cannabis in the United
States in 2016 and projected for 2026 and again it is just a projection but we
can see already just looking at the chart the light green represents legal
sales and dark green represents illegal sales
much bigger for illegal sales than legal sales of cannabis in the United States
but the projection is that it will turn around it'll turn around quite a bit
actually with the illegal sales dwarfing the
illegal sales considerably within a decade of 2016 to 2020 six
so where is recreational cannabis legal in the United States well as it stands
currently it's legal in the United States talking about recreational
cannabis here in nine states and one district so you have ten on the list
here and I'll let you read that list
there's a much bigger list here whereas medical or medicinal cannabis legal in
the United States 44 states so let you take a glance at that where is medical
cannabis not legal in the United States well four states Idaho Kansas Nebraska
and South Dakota will that change eventually it's hard to imagine that
that won't change sooner or later and here it is in visual form again four
states where cannabis use is entirely illegal and many many states yellow
states where medical marijuana is legalized and some states in green where
not only medical but recreational is legalized currently this map would have
been unimaginable not that long ago it's really amazing how its progressed in
recent years here's another quiz question for you
can you guess which state according to the percentage of the population that
used marijuana in the past month is America's marijuana capital take a
moment to think about that yeah you might think it's California Colorado
Arizona Nevada well let's take a look at the answer which one according to
percentage of population that used marijuana in the past month is America's
marijuana capital believe it or not according to this chart here and the
source is the Washington Post tiny Rhode Island is America's marijuana capital
there it is followed thirteen percent followed by Alaska Vermont Oregon DC
Montana Colorado Washington Massachusetts and New Mexico so it's not
necessarily what you think the marijuana use is not and the cannabis use is not
just restricted to certain states the stereotype is not true that it's just
restricted to California Nevada Colorado Arizona and so on but keep in mind as an
investor keep in mind before you get too excited and decide to pour all of your
capital into marijuana stocks keep in mind that marijuana is still illegal
federally it is classified as a schedule 1 drug meaning that it has no currently
accepted medical use and a hyper high potential for abuse that's how it's
classified that's not my opinion necessarily it's just how it's
classified according to the US federal government and yet even though it's
still ill illegal federally Americans are in fact buying cannabis and cannabis
products and by that I mean the accessories that go along with cannabis
use here's a chart to demonstrate that
America's 2015 and I know that's a few years ago now America's 2015 marijuana
sales in context and I imagine it would be even greater now now that it's it's
growing in terms of legality this was before it was legal in most states legal
marijuana sales clearly Dwarfs sales in terms of dollar amount of Dasani water
DiGiorno which sells pizzas Girl Scout cookies Oreo cookies and so on
Pringles Twizzlers it's amazing products that have been widely accepted and
perfectly legal for a long time legal marijuana sales even back then
dwarfed any of these it's amazing to think about and again I imagine this
number is much bigger now us marijuana market the grass is getting greener
projected growth of US recreational and medical marijuana sales in terms of
billions of US dollars and again these are projections we're going into the
2020s here but we can see the recreational and medical totals should
if it pans out as expected should grow quite exponentially in the coming years
and don't forget about sales of vaporizers accessories etc it's not just
about the cannabis itself here's the forecast of sales of vaporizers and
accessories according to Wells Fargo securities well into the 2020s here
going up slowly actually not slowly but slower compared
to the exponential growth that should come actually pretty soon
and of course there's money being made from taxes you know Uncle Sam has to
take his cut right Colorado and Washington are making millions of
dollars off of marijuana sales and these are just two states but it's a good
representation and this was a few years ago I imagine it would be even greater
dollar figures currently marijuana tax revenue since sales began through
present in millions of dollars we can see it's a very large amount and just
growing so the question is how to allocate your capital how much to invest
in US vs. Canadian cannabis stocks that's the big question isn't it I'll
give you a rule number one right now rule number one is keep your total
position sizing in the cannabis sector small relative to your total portfolio
after all this is a speculative and volatile industry okay this is not Coca
Cola stock all right it's not it's not General Motors or Ford a stock like that
that you know remains fairly steady and doesn't move that much relatively
speaking cannabis stocks move a lot more both up
and down and so oh by obeying rule number one I've been able to sleep
better at night knowing that no matter what happens I'll be fine because I did
not allocate too much of my capital of my portfolio into any one particular
position or sector such as the cannabis sector and here's a chart that shows the
volatility that I'm talking about volatility in marijuana stocks versus
the overall market and again this was a few years ago but this exemplifies it
perfectly the orange represents the marijuana
stocks
and the darker and light green represent the NASDAQ and the S&P 500 look at how
much further down and up the marijuana stocks move in orange compared to the
green colored indices indexes here all right so be careful out there as an
investor and here's an example of I just put one example of a marijuana related
stock here GW pH also known as GW Pharmaceuticals look at that look at the
movement they're big movements in terms of percentage it's huge but the question
remains how to allocate your capital how much to invest in u.s. versus Canadian
cannabis stocks yeah how much do you allocate toward the United States
cannabis stocks how much do you allocate toward Canadian cannabis stocks or how
much do i allocate really is what we're asking here personally I like to
diversify when I choose to invest I tend to invest in a mix of US and Canadian
cannabis stocks I like to mix it up however it's not an equal allocation
because marijuana is still federally considered illegal across the United
States I will usually tend to favor Canadian over us cannabis stocks it's
still federally illegal in the United States in Canada they have different
views different laws now there are exceptions to this but if I have to
choose oftentimes I'll choose the Canadian over the United States cannabis
stocks and I might allocate more toward the Canadian side of things in order to
have a relatively safe cannabis stock allocation I diversify not only
geographically we talked about that Canada and the United States some of
each but I also diversify across multiple sub sectors of the cannabis
industry sub sectors sectors within sectors if the overall sector is
cannabis then there are sub sectors smaller sectors within the cannabis
industry and some diversifying in a number of ways geographically and in
terms of sub sectors within the cannabis industry and as I have emphasized
already I keep my entire cannabis stock position as a small small portion
talking about position sizing here a small portion of my entire portfolio is
cannabis stocks sometimes I'm not invested at all especially when there is
too much hype and when prices are very elevated and it's ok to stay out of this
sector or even all sectors at any given time if you feel that there's too much
hype going on and prices are elevated but in any case my entire cannabis stock
position is only a small portion of my entire portfolio at any given time which
leads me to the next rule do not chase the price action do not chase the price
action know chasing aloud please again when there is a lot of hype when prices
are very elevated that's not the time to start trying to make massive gains you
don't want to chase the gains at least I don't so let's go back to GW pH that
chart again GW Pharmaceuticals chasers got punished value investors did fine if
they knew to take profits and so that's another that's another rule there know
when to take profits don't be greedy all right so the chasers the people who
bought up here got punished and people who bought way up here at a lofty
valuation really got punished value investors who got in
at any you know at any part of the dip here of this big dip if they got in here
here near the bottom they did great so no one to get in no one to get out just
as important so you may ask what are these marijuana stock or cannabis stock
sub-sectors that I mentioned well there are a number of them these would include
licensed producers providers of growing aids such as hydroponic equipment lights
soil fertilizers etc providers of accessories for smoking / vaping
ingesting etc drug developers biotechs / pharmaceutical companies companies
that invest in other cannabis companies cannabis consulting companies cannabis
media companies cannabis real estate companies cannabis AG tech or
agricultural technology companies cryptocurrency and blockchain companies
related to the cannabis sector and there are more but those are some of the sub
sectors for me staying safe in my cannabis stock investments means being
very selective about what I invest in be picky be choosy I only invest in
companies that meet certain criteria so you might be wondering what these
criteria are what do I insist on what do I look for when I'm being selective
about cannabis stocks for my portfolio evaluating cannabis companies my
personal criteria include the following and this is not all of them but this is
some of the bigger ones for me if the company produces cannabis is it a
government licensed producer that's a big one I'm looking for great visionary
visionary leadership and a strong team I'm looking for plenty of available
capital and not too much debt I'm looking for a company that's
consistently profitable or in the case of newer companies which may not be
consistently profitable yet because they don't have the history yet so if it's a
newer company at least they should have a strong prospect of being consistently
profitable sometime in the near future I asked myself is there sufficient trading
volume I don't want to buy something that's too thinly traded I want
something where the price hasn't already run up too much again we talked about
this no chasing at the top for smaller companies I want to know is it a
potential buyout target and for larger companies is it a leader in its sub
sector and finally while you must make your own decisions regarding what you
choose to invest in here I'm going to give you my personal watchlist or at
least part of it some of it because it keeps changing so you have to make your
own decisions but here we are here are some of the stocks and I'll also give
you one ETF or exchange-traded fund on my watch list so here we are
we'll start with the ETF exchange-traded fund and if you don't know an ETF or
exchange-traded fund it's kind of almost like a mutual fund where you get a
basket of stocks that you can invest in all at once in the same sector or
category and in this case it's the horizons marijuana life sciences index
exchange-traded fund ETF and we'll give you the tickers for all these the stock
tickers so you can look them up on your own which I recommend that you've
cornered do your own due diligence don't invest in anything just because somebody
else is buying it or looking at it you have to do your own research make your
own decisions all right so the ETF the stock tickers on the TSX Toronto Stock
Exchange the ticker is hmm J and on the OTC markets in the United States it is H
MLS F so I'm going to tell you now about this ETF because it's important because
it's very popular and many people use this as a means of entering into
cannabis stocks without having to really make decisions a lot of decisions on
their own they're kind of letting the management of the ETF make the decisions
the stock picking decisions for them so this ETF it's the first and most heavily
traded cannabis ETF at the moment currently it has 38 holdings or stocks
or companies in the ETF it includes the top Canadian names and I'll be
mentioning some of these very soon it includes canopy growth corp áfreeá
aurora emblem emerald organa gram med relief Invictus md etc those are some of
the big names in there in the holdings for this ETF
now it is mostly Canadian companies and we're going to look at a chart on the
next slide for that one so that's something to be aware of if you want
more US exposure than Canadian then this may not be right for you this ETF it's a
good way to get diversification because you're really what you're doing is
you're investing indirectly in a number of stocks all at once but there's no
flexibility when you buy an ETF instead of stock picking you have to own all of
the holdings it's either all or none when you purchase shares of an ETF you
can't separate the companies with an ETF so you might prefer to build your own
ETF as I call it instead all right and so you can build your own ETF by doing
the research and choosing companies on your own in the sector now there are
advantages to just owning the ETF you can buy all these companies all at once
and if you have Commission's to think about then think about the commissions
and fees involved in just buying an ETF all at once as opposed to buying 10 or
20 or 30 companies or stocks separately the Commission's can run up pretty high
if you build your own ETF by purchasing the stocks separately or individually
one at a time so you can save potentially on commission costs by
purchasing the ETF and also if you don't want to have to think about what you're
going to buy if you want to just kind of set it and forget it
although i don't recommend forgetting anything I recommend watching your
investments but if you'd rather allow the management of the ETF fund to take
care of the thinking and the researching for you then this may be a way to get in
another approach is to just buy some shares of the ETF and then also pick
some some individual stocks that's a nice way
to have the best of both worlds alright so I promised a chart for the horizons
marijuana life science Sciences index ETF and I mentioned that it's heavily on
the Canadian side of things we can see an orange that that's the Canadian
allocations the Canadian holdings the u.s. is much smaller and Great Britain
even smaller than that all right so what are my individual stock picks well you
might have guessed that canopy would be in there somewhere
well I put it first this is the big one canopy growth Corp and they're the stock
tickers and generally I've been putting whenever there's a Canadian ticker and
then an American equivalent ticker I've generally have put the Canadian one
first and the United States equivalent ticker symbol second so in this example
for canopy growth Corp in Canada its w ee d we'd make sense right and C G C in
the United States now this is the biggest cannabis company canopy it's a
licensed producer with massive growing facilities you're basically buying a
blue-chip stock if you buy this one yes we don't normally include marijuana
stocks as blue chip stocks that usually does not fit the definition but if
marijuana stocks had blue chips canopy would be it it's kind of like buying
Apple alright it's the equivalent of that perhaps in the marijuana stock
space is huge plenty of capital been around for a long time at least compared
to other stocks in this space the next one I put on my personal watch list
right now is Aurora Aurora cannabis Inc a CB a CB FF the second biggest cannabis
company so it's like another blue chip this is
another licensed producer with huge state of the art growing facilities and
Aurora acquired canna med therapeutics
next one GW Pharmaceuticals we did see a chart of that earlier this one trades on
the NASDAQ in the United States under ticker symbol GW pH this company is a
very successful US biopharmaceutical company with plenty of cannabinoid based
products in the pipeline and here's a similar one
Kaira therapeutics inc again it's similar because it's on the NASDAQ and
it's another biopharmaceutical company in the cannabis space Kara therapeutics
the ticker symbol easy to remember Kara see ara trades on the Nasdaq it's
another large US biopharmaceutical company with promising drugs in the
clinical trial phase to help alleviate pain that's one of their specialties
going back to the Canadian side of things áfreeá Inc AP h AP h qf this
Canadian licensed producer is too big to ignore legally it legally produces
massive amounts of cannabis and this is a company áfreeá acquired new Vera
notice a trend here these larger companies acquiring smaller companies if
you own a stock representing a smaller company you might hope that a larger
company such as F RIA or Aurora or canopy might acquire that
company that could be a good thing and if it's a larger company and its
acquiring smaller companies you want to do the research on those smaller
companies to find out exactly what that acquisition means what it entails and
decide for yourself whether or not it will benefit that larger company in the
long term to own or acquire that smaller company
back to united states stocks hemp ink on the OTC markets in the United States HG
MP camp easy to remember this diverse US company produces industrial hemp
products offers products and services to the medical and recreational marijuana
industries and provides entertainment and news on the web related to the
medical marijuana industry so through one stock one company you can be
involved in a number of sub sectors here we can see in the much broader cannabis
space Agrotech Holdings Inc in the United States it is a gtk the ticker
symbol this US company is involved in the acquisition and leasing of cannabis
related real estate properties remember I listed that as one of the sub sectors
in the cannabis space this company also offers compliance consulting never again
another sub sector consulting and distributes hemp-based nutritional
products among other pursuits that's another thing that you might see as a
trend here something I look for would be companies that are diverse so you're
getting diversity even within one holding one stock the next one on my
watch list is hydropathy carry corp THC X or hy ydf this is a Quebec based
company involved in medical cannabis production but which also offers
extracts oils and powders again many different things going on within a
single company I like that
the next one is cannabis Wheaton income Corp CB W or CB WTF this is a royalty
and streaming company something very different from the ones we've mentioned
so far that provides capital financing another sub sector here a financing
company provides capital financing to cannabis companies so that they can
expand their capacity or their product lines the next one is Invictus md ticker
symbols gene or ivi TF a Canadian company that provides cannabis products
for medical and recreational use this company also produces and sells
fertilisers and nutrients that's another sub sub sector being covered here these
are products that help to grow the cannabis the next one is Organa Graham
Holdings Inc ogi or OG r MF through a number of subsidiaries this company
produces and sells medical marijuana and offers a variety of marijuana plants
seeds cuttings cannabis oil and dried flowers so now we're getting into the
cannabis oil we're getting into the dried flowers we're getting into medical
marijuana in many different ways here with one company again diversifying even
within one holding the next one is med relief Corp leaf le AF or in Canada M
Edie FF I'm sorry leaf leaf is in Canada in the United States is its meed FF
specializes in cannabis oil and extracts it also offers various accessories
including grinders vaporizers and lockable containers so that sub-sector
accessories it's covered here along with cannabis oil and extracts in this
company med relief
so those are the ones that I wanted to describe in detail and there's so many
there's no way to go into all of them into detail but here's some others that
are on my watch list or that I keep on my watch list at various times and this
is by no means a complete list so others that I keep on my watch list at various
times would include Medical Marijuana Inc that's a United States company
MJN a on the United States OTC markets a Canadian company emerald health
therapeutics Inc EMH in Canada or e/m HTF in the United States insists
therapeutics Inc in the United States on the NASDAQ it trades under the stock
ticker symbol I nsy Chronos Group Inc which trades on the tsx and also on the
United States NASDAQ exchange under the ticker symbol C R o n new strike
Resources Ltd which is hip or n w k RF and AB can global Corp which trades as
ABC N or in the United States a b c CF
so I'll go ahead and recap now proper position sizing is rule number one if
you had to take anything with you I would say that's it that's rule number
one for me other takeaways include to diversify not only geographically for
example in the United States and in Canada perhaps one could hold some
stocks in both of those regions and worldwide but also diversify across
various sub sectors within the cannabis industry and if you saw the holdings and
the descriptions or the watch list I should say I made a deliberate attempt
to diversify among a number of sub sectors within the cannabis space be
selective yeah be picky have specific criteria for choosing companies be
choosy and know exactly what you're looking for is what I'm saying know what
you need to see in a company before you invest in it and know what the red flags
are what to look out for and what you don't want don't chase the price action
of the stock and I would say this is true for any stock and certainly true
for very volatile stocks and marijuana stocks can be volatile you don't want to
buy at the top because these stocks can go down very quickly and have mentors
but make the final decisions and take charge of your finances yeah it's good
to have somebody to help you to learn about stocks and their thought process
their thought process of how they select stocks how they allocate how much they
allocate when to get in when to get out how to read charts how to read
fundamentals things like that it makes sense to have a coach or
coaches mentor or mentors but in the end nobody is going to care about your
finances as much as you do nobody's going to look after them like you do or
should and so you have to make those final decisions and you should take
charge of your finances don't just entrust your finances to
somebody else check it out yourself have a guide by your side sure have a mentor
but you have to make those final decisions so what's the next step well
if you do want to learn more you can contact me anytime the next step would
be to contact me I'm David Modell and what can I help people with what have I
helped people with well I've helped people to form a plan for your trading
or investing because you need to have a plan if you don't have a plan as they
say if you fail to plan then you're just planning to fail so you want to have a
plan for your trading investing not just investing or trading and hoping for the
best because hope is not a strategy you have to have a plan if you want to do
this successfully over the long term what else do I help people with I help
people to learn to select the right stocks for your portfolio I help people
to identify entry points and exit points for your trades and to minimize risk and
maximize your potential so once again if you want more help contact me anytime
the email address is right down there below David Modell Davi DM o ei de l @
gmail.com and I encourage you to visit David Modell blog spot.com that serves
as my blog as well as my website currently and I want to thank you so
much for watching and listening to this presentation I hope you learned a lot I
really appreciate it and I'll see you out there thank you so much
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