Don’t look now, but the bears are coming. The markets have been overvalued for some time, and recent developments could have investors second guessing these sky-high valuations.
In January, we saw Aurora Cannabis Inc (TSX:ACB) pay over $1 billion for CanniMed Therapeutics Inc (TSX:CMED), a company that had just over $15 million in sales in the past year. If that wasn’t bad enough, Aphria Inc (TSX:APH) recently signed up to buy Nuuvera Inc (CVE:NUU) for a staggering $826 million valuation, and I’ll tell you how overpriced that is once I’m able to locate a set of financials for the company.
In addition to pot stocks reminding investors how overpriced the industry has become, we’ve recently seen a big sell off in Bitcoin as concerns about countries cracking down on crypto trading has given investors pause as to whether or not it is still a good buy. And with recent news that Facebook Inc (NASDAQ:FB) would ban cryptocurrency ads, it could be the beginning of an even bigger decline. The cryptocurrency is down to less than US$10,000 after coming close to double that amount back in December.
However, the sell-off hasn’t been limited to pot stocks or Bitcoin. The TSX has been down more than 280 points in the first two days of the week while the Dow Jones has plummeted more than 500 points. Whether these speculative buys are starting to weigh on investors will remain to be seen, but investors may want to consider putting their funds into safer stocks for now.
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