Stocks are more expensive on some metrics than at any other point in history. Some investors, seemingly, may eventually take any negative economic news as a reason to sell, and some long-term investors are getting understandably concerned with where valuations are right now.
The publicly traded cannabis sector is one I’ve viewed as highly volatile and one that has represented a bubble in the past. It looks like the bubble we saw inflate in 2018/2019 is reflating again. The last time we saw this bubble form, speculation about rising pot demand linked to Canadian legalization was the primary catalyst.
I think these catalysts remain highly speculative and would encourage long-term investors to avoid momentum investing right now. Underperforming the stock market in the near-term could prove to be wise, if we see this momentum turn around in the wrong direction over the medium-term.