By: Steve Smith
After a smoking-hot performance during 2018, cannabis-related stocks have cooled quite a bit in 2019. Many popular names such as Tilray (TLRY), Canopy (CGC), and Cronos (CRON) are 25% to 50% off their 52-week highs.
This may actually prove to be a good thing for both investors and the three firms that are set to launch new Cannabis based exchange-traded funds (ETFs) in the coming days.
The initial speculative rush into weed stocks was based on the notion that as society, business and regulatory landscapes evolve in the 21st century. The upside potential of cannabis as an emerging investment was presented near blue-sky potential with some analysts, predicting multiple $100 billion opportunities, which together would comprise a $5 trillion-dollar industry over the next decade.
But investors were faced with a wide range of unproven business models, management teams and the sky-high valuations certainly assures that many companies will fail as the winners are separated from losers.
For those that didn’t want to try to pick individual companies, but rather use a fund to invest across the whole sector, there were very few choices. The most popular and oldest cannabis-focused exchange-traded fund is Alternative Harves (MJ). It invests in companies that cover the spectrum of recreational to pharmaceutical applications and businesses that supply equipment for growing and packaging products.
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