It is gratifying to see that cannabis stocks remain open to both extremes of ambient market volatility. When the mood swings against them, they crumple. We’ve seen a lot of that in recent months.
But when sentiment becomes more expansive, these stocks shine. That was the case this week, with my proprietary cannabis index surging 5%, while the broad market stalled.
Of course, there are relative winners and losers in any week. Canopy Growth Corp. (NASDAQ:CGC) is actually down nearly 2% since last Friday.
However, CGC has emerged as one of the weakest stocks in the group. It is one of the largest and a lot of traders simply believe that it’s “boring.”
Boredom is not why people invest in cannabis, so it’s not surprising to see CGC up only 9% year to date (YTD), trailing just about everything else in the industry.
OrganiGram Holdings Inc. (NASDAQ:OGI), CannTrust Holdings (OTC:CNTTQ), Aphria Corp. (NASDAQ:APHA) and Tilray Corp. (NASDAQ:TLRY) all have at least doubled in the last four months.
That’s the opposite of boredom. And it’s why I prefer a balanced approach to any volatile theme.
Pick the right industry and there will be huge winners to capture. There also will be a lot of dead money along the way.
You want to make sure you have the winners in your portfolio. Otherwise, you miss all the fun.
I take a portfolio-focused approach to IPO Edge, where cannabis is only a small piece of a unified buy list. We’re like a venture capital fund in that way, confident that triple-digit-percentage wins will more than compensate for a few missed swings along the way.