Cannabis Corner: Marathon Time for ‘Green’ Shoots

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street.

Wall Street’s failure of nerve this week played out across all speculative themes, especially Big Cannabis.

My proprietary basket of stocks like Aurora Cannabis Inc. (NYSE:ACB), Canopy Growth Corp. (NYSE:CGC) and Tilray Inc. (NASDAQ:TLRY) dropped another 10% and is now up a mere 22% year to date (YTD).

If you bought the top, it has been a harrowing ride. But for those who had the conviction to buy these stocks back in December and hold on, you’re still beating the market by about 7 percentage points.

That’s not so bad, is it? Never forget that these stocks are a marathon and not so much a sprint. Weak players will drop out of the industry and surrender their market share to stronger rivals.

Demand for cannabis hasn’t gone away in the pandemic or afterward. That’s a good thing.

Talk about a federal repeal of consumption and sales restrictions will only accelerate the success path here. And these companies were always going to take years to achieve sustainable profitability anyway.

We won’t know who wins the marathon for miles to come. That’s why I insist on diversification. You want to be sure you end up holding the winners in your hand when the last losers fold.

Naturally, that means owning the losers as well. But their pain isn’t going to be as intense as the delight the winners will provide when the race is over.

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