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How to Invest in Marijuana: Stocks and Bonds Part 4

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Getting Started with Marijuana Investing

If you see what many people see—a potential gold rush—then you’re narrowing down your investor’s research to one very central question: should you invest or shouldn’t you? That’s exactly what we’ll address in the next few sections.

Should You Invest?

 

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This may be the most central question of them all. Unfortunately, it’s not an easy one to answer. Whether or not you should invest in marijuana stocks depends entirely on your personality as an investor. Are you experienced? Are you inexperienced? Have you done your research and homework on individual marijuana stocks, or are you simply interested in “getting one” so you can be part of the overall gold rush?

You should invest in whatever is safe and legal for you to invest in, so long as you also believe that investment fulfills some part of your overall investment strategy. If marijuana investments add something to your portfolio that you want added, then that’s a great addition. If not, you may want to think twice; sometimes it’s good to even pass up a “good” opportunity in favor of long-term advantages and stable growth.

In the next few sections, we’ll take a closer look at discerning whether or not investing in this field might be right for your portfolio.

Step One: Viability


Take a look at each company’s business model, the same way you’d examine the business model of any other company which you’re considering investing in. Is the company stable? Do you like its numbers, its revenues, its costs, its market share, etc.? Or do you have some concerns?

The key here: Determining the viability of an individual company is no different than determining the viability of any other investment despite what you might think about the field. It’s not enough to say “marijuana stocks will grow.” You have to pick and choose the best investments, the ones that you believe will be stable and growing. If not, you are simply spinning your wheels; you could be likened to a gold prospector who didn’t take the time to properly research what gold mining and panning for gold was all about.

The main lesson here: keep a cool head.

Avoid High-Risk Penny Stocks, and Other Tips for Keeping Your Investment Stable

It’s tempting to look at penny stocks as a potential way to break into a new investment and earn a lot of money. And certainly some people have made a pretty “penny” doing exactly that. However, just because someone has succeeded with a specific strategy does not mean that you will; it may not even mean that the strategy is the best strategy for everyone.

Avoiding the highest risk penny stocks will help you to keep a cool head and examine the investments with a more discerning eye. If you must have a penny stock, choose one that makes sense to you. Don’t simply pick the first one to come across your Google page. Take the time to examine the numbers.

Similarly, remember that your marijuana investments should be part of an overall portfolio. Consider what role they’ll play. If you consider marijuana investments high-risk, then don’t let them take a greater percentage of your portfolio that you’ve set aside for high-risk investments.

Know the Players

In taking on the marijuana industry as a potential choice for investment, you should approach it like any other industry: learn the “who” first.

You saw in the previous section about “Who’s Who” in the marijuana stock market that there are some companies that fetch more attention than others—usually, for good reason. It’s important to have an idea about these things because it will allow you to understand the greater context of the industry and know which “standard-bearers” can serve as a measuring stick for other stocks you might want to pursue.

In taking on the marijuana industry as a potential choice for investment, you should approach it like any other industry: learn the “who” first. Get an idea for some of the top companies, some of which have been mentioned in this very article, and you’ll have a better idea of exactly what is going on in the industry. And as you research some of the lesser-known companies and penny stocks, you’ll know a lot more about the industry as a whole so that you can have the appropriate context for viewing each stock.

How to Track Marijuana Stock Performance

Are you interested in watching the marijuana industry grow before you make any moves? Then it might be a good choice to simply sit back and watch. However, you shouldn’t take this to mean that you should be passive; no, instead take an active role in understanding what’s going on in this particular stock segment.

You can do this by picking some of the stocks you believe will perform the best in the coming months. Many online stock brokers offer automated “stock watcher” options that allow you to track the stocks that have gained your interest. Take full advantage of these features! Watch the news and see how your stocks ‘ value responds to the new. Every day, something new is happening in this industry; it’s important to not only understand the who of the industry, but the when. Getting your timing right is one of the most underrated aspects of investing.

The “Marijuana Index”

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Don’t have the time to look at the individual stocks? You may want to consult the “Marijuana Index.”

This index is not exactly the S&P 500, but it does do a good job of showing you where the marijuana industry is at. If you’re interested in the industry but haven’t looked at individual stocks yet, then you may want to pay particular attention to this ‘index’ and keep up on the latest news as well. Understanding how the “index” reacts to various news events can really help you understand market timing.

It’s in this index that you can identify potential stocks to buy, as well. Doing your research with this index as a baseline or a guide, you’ll be able to identify all sorts of companies that you hadn’t thought of, perhaps even when you were doing your serious research into the industry.

Continue to How to Invest in Marijuana: Cash In Now Part 5>>

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Mnuchin: Next Stimulus Coming By End of Month, No More Extra Unemployment Money

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Mnuchin: Next Stimulus Coming By End of Month, No More Extra Unemployment Money

Treasury Secretary Steve Mnuchin said the next stimulus bill will be much more targeted than previous bills. He also said the goal is to get the next bill approved between July 20 and the end of this month. That time is when Congress will return from their holiday break and before they leave for August recess.

On Broad Stimulus Measures

It appears the White House will not support the type of broad stimulus measures of the previous bills. Instead, it will focus on direct payments to Americans. In an interview with CNBC yesterday, Mnuchin said “we do support another round” of stimulus checks to individuals. This mirrors the $1,200 payments that the government sent out as part of the $2 trillion rescue legislation passed in March.

Mnuchin didn’t mention whether he supported the idea of a $40,000 income cap to receive a check that has been floated by GOP lawmakers. The income cap for the first stimulus check was $75,000. He did say that he spoke with Senate Majority Leader Mitch McConnell. He also mentioned the “level and criteria” for checks would be discussed when lawmakers return to Washington.

Any new stimulus bill would likely not include proposals from the Democrats that include hazard pay for essential workers. It likely won’t include a longer extension of strengthened unemployment benefits, mortgage and rent relief, and support for state and local governments, too.

Mnuchin reiterated that the White House isn’t in favor of more relief money for states and municipalities to make up for lost revenue. Some state and local governments are considering trimming essential services as costs balloon and revenues drop. He said the administration does not want to “bail out” states that were “mismanaged” before the virus hit.

On Unemployment Benefits

Another critical topic the lawmakers will tackle the end of the enhanced unemployment benefits on July 30. They will do so when they return to Washington D.C.

Mnuchin said the White House has no interest in extending the enhanced benefits any further. Instead, he said it wants to change how they pay benefits. He did not give details. However, he did hint that unemployed workers shouldn’t be able to earn more money compared to full-time employees

“You can assume that it will be no more than 100%” of a worker’s usual pay, Mnuchin said. This echoes many Republicans who argue the additional benefits are preventing some from returning to work. These workers do this so that they make more at home than they would at their jobs.

While Mnuchin says the White House isn’t in favor of extending unemployment benefits, it is extending the Paycheck Protection Program that provides loans for small businesses. Earlier this week the Trump administration released a list of companies that received loans from the government. With that, backlash ensued as numerous businesses tied to wealthy individuals were found to have requested funds. Of the $130 billion remaining in the program, Mnuchin said he wants new relief to be “much, much more targeted” than past rounds of funding.

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Kudlow: Economy Doing Great, Second Shutdown ‘Really Big Mistake’

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Kudlow: Economy Doing Great, Second Shutdown ‘Really Big Mistake’

White House Economic Advisor Larry Kudlow says that the country is squarely in the middle of the “v-shaped” recovery that everyone had hoped for, and despite reports of coronavirus hotspots popping up, shutting down the economy for a second time would make the “solution worse than the disease.”

Kudlow spoke on “Fox and Friends” yesterday and said that the White House is monitoring the jump in new coronavirus cases in states like California, Arizona, Texas and Florida, but added that as a country we now know what works to stop the spread, and just need to work together.

“We know the right mitigation, which has worked, and if we use that wholeheartedly and respect each other, I think we’ll get out of this pretty well and it will not stop the V-shaped recovery.”

On A Second Shutdown

He added that a second shut down would be a “really big mistake.”

“Another shutdown, in itself is controversial,” and would “do more harm than good,” said Kudlow before adding, “It would harm everyone. Not just businesses — the V-shaped recovery would give way. It would harm kids, we saw numbers on depression, drinking and so on… that solution would be worse than the disease.”

Kudlow highlighted the job growth in the last two months, and pointed out that jobs are being added back so quickly, workers are now quitting jobs to search for new, higher-paying ones.

He said there existed a “tremendous burst of jobs in May and June” and “tremendous record hiring rates. People are starting to quit their jobs again, which is extraordinary, in order to shop around for better jobs and wages.”

All those workers looking for jobs should bring down the unemployment rate to as low as 7% iby the end of the year, according to St. Louis Federal Reserve President James Bullard.

That would be quite a rollercoaster ride for the job market, which has swung from a 50-year low unemployment rate of 3.5% earlier this year, to a post-WWII high of 14.7% in April.

U.S. Economy Doing “Very Well”

Appearing on “Closing Bell” yesterday, Bullard said “I think we’re tracking very well right now. Seems to me like by the end of the year you can get down certainly to single digits, probably even below 8%, maybe 7% by the end of the year.”

A surge in new cases could slow the re-hiring of workers across the country, but Bullard believes that wearing a mask will become standard and that will help bring back jobs and boost the economy.

“If we get to that situation, we’ll have the disease under control,” he said. “What I like about that scenario is it does not rely on a vaccine coming or a therapeutic coming. We can use simple, easy technology that we have today, get a good situation, get most of the production back to normal.”

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Bulls See ‘Once-In-A-Lifetime’ Opportunity, Bears Worried Market Will Drop 10%

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Bulls See ‘Once-In-A-Lifetime’ Opportunity, Bears Worried Market Will Drop 10%

The coronavirus continues to be a battleground for stock market bulls and bears. This comes with the bulls pointing to an opportunity and an economy that is slowly recovering. It also comes with the Federal Reserve providing trillions of dollars in stimulus.

An Opportunity

One of those bulls in Marc Lasry. He runs a $14-billion Avenue Capital investment firm and co-owns the Milwaukee Bucks NBA team.

He views the coronavirus pandemic as a “once-in-a-lifetime” opportunity to make money.

“I know you’re not supposed to say this, but it’s a once-in-a-lifetime opportunity. You’re not going to see this again: Where you’ve actually got an economy that’s fine, and you’ve got a Fed pumping trillions of dollars in.”

Lasry’s firm specializes in providing funding to distressed businesses. The number of bankruptcies piling up means more business for him. Just today, men’s clothier Brooks Brothers filed for bankruptcy protection.

“You’ve got a lot of companies that are in trouble,” Lasry said, adding that today’s business environment is very similar to what he saw during the Great Recession. “It’s a once-in-a-lifetime, but it happened 10 years ago, also.”

Is the US Better Prepared?

He adds that while the outlook for many forcibly closed businesses as part of the economic shutdown doesn’t look promising, the country as a whole has become better prepared to weather the storm compared to that of the Great Recession.

“Today we all know something,” he said. “We will be fine in two years. People will be back out, there will be a vaccine. The question is: How long will it take to get back to normal?”

If you ask Savita Subramanian, she says she’s not a bear, but does expect the stock market to end the year almost 10% lower than it is today.

Subramanian, the head of equity research at Bank of America, says the economy is facing a litany of headwinds.

“I wouldn’t paint myself as a bear but the risks between here and year end are completely to the downside,” Subramanian said. “We’ve had a reopening frenzy and now we’re seeing payback.”

The Negative Outlook

Unlike Lasry, Subramanian felt “really worried” that the fiscal and monetary stimulus used to boost the economy has pulled forward future growth.

She also points to a historically-expensive stock market. Three things had driven the gains of that market, and all of them might come to a grinding halt soon: globalization, falling interest rates, and tax cuts.

Subramanian says a Democratic victory in November will likely have the effect of reversing those market-friendly policies.

Stocks continue to climb higher despite surges in new coronavirus cases. With this, Subramanian said she doesn’t think the markets are assuming everything will be okay. She notes that “work from home” stocks are still doing very well. Also, she mentions that if investors thought we would be returning to offices and jobs anytime soon, those stocks should suffer.

She advises being overweight consumer staples, industrials, technology, and financial stocks.

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