The Canadian marijuana production sector has seen out-of-this-world growth in recent years, with investors seeking incredible short term results largely being rewarded for what can only otherwise be categorized as speculative wagers in a market which is feverish for cannabis.
Valuations have detached themselves from any sort of fundamental reality, and at this point in time the cumulative cannabis production space looks more like the chart of Bitcoin at the end of 2017 than anything else, in my opinion.
The worry I have is for small cannabis investors who have plugged their life savings into a "cause" or "hobby investment" which is almost inevitably going to turn out poorly. Any time valuations become completely removed from fundamentals, hindsight becomes 20/20 and investors wonder why they piled into that "hot" sector or the stock everyone wanted to buy at a given time.
Cannabis stocks are the new designer stocks, and while investor sentiment may still be near all-time highs, such a pervasive sentiment alone is one reason for investors to consider just what will happen when (not if) such sentiment turns sour.
In all my investing years, the only time I have seen a sector which is headed straight toward a brick wall was the 1999 NASDAQ. I would encourage every investor to seriously consider a short position on this sector at this point in time, especially those who are heavily invested (as a form of insurance), because legalization will simply not be as great as everyone believes and profitability is still a few years away in this nascent industry.
Invest wisely, my friends.
