In times of uncertainty in the broader market, it is hard to make a discussion on why investing in certain companies or industries is the right decision. Currently, taking any long trades seem to be troublesome for me in a market that looks well overvalued, and finding certain opportunities in undervalued or oversold industries makes it even more difficult to be bullish when recession fears continue to loom over the heads of investors. So where should one look to when trying to decide what move is best for their portfolio?
Well, let’s look at some factors in our market as a whole: President Trump and China continue to butt heads over working out any sort of trade deal, and it seems as if little to no progress has been made. Since losing a major economic partner will look bad on anyone’s presidency, it is hard to see that he will not want any sort deal to work out. Tariffs stay in place, as well as efforts of negotiation, and that should be the case for Trump for as long as he intends to keep the economy afloat. And with the 2020 election approaching, keeping this potential deal “alive” should be a major priority. Cannabis, as well as the U.S. market depends on this.
With that said, let’s look at factors influencing cannabis and what the path looks like for the whole industry. Last year, Trump signed the Farm Bill to begin the initiative of legalizing the cultivation and distribution of hemp products. The bill also signed cannabis out of a Schedule 1 controlled substance, meaning that companies are not as limited by the government to grow and sell cannabis. It is now treated as an agricultural commodity, giving banks the opportunity to back these companies with greater ease. For better and worse, once marijuana becomes totally legal, we will start to see some fundamental changes.
What are the potential problems with this?
As we see an increase of support for cannabis, there could still be setbacks. Amidst the news, more and more cultivators will want in on the game, causing an inflated market of cannabis products. Legitimate companies will be under pressure due to the high volume of producers out there and will more than likely have to cut prices. So we may see big names like Canopy Growth, Curaleaf or Trulieve losing profits initially because of the guy growing in his backyard.
What does that mean for major players in the market?
Although this could cause some setbacks in the industry, the ease of bank protocols regarding cannabis cultivation will eventually outweigh every wannabe pot farm and help those who have already firmly established themselves. These factors will take time for the up-and-coming industry to thrive, and we can’t say how long. But, in time, big cannabis should finally start to outperform and make higher returns, weeding the little guys out and stabilizing the market.
The marijuana industry dropped hard after an immense sell off from smart money. The overall sentiment on U.S. equities is sub-par and news will tell you there is a bubble forming left and right. And investing in an industry still in its infancy could prove to be scary if our market was to enter a recession. But overall, I am bullish on the industry; I have yet to put more money into cannabis regardless of how cheap these stocks look right now. I believe a buy in at these levels will be a great long term play, but it all depends on how long you are willing to let your money sit in the meantime.
AI- Generated Trading Setups
AI-generated bullish/bearish bias setups on forex currencies, gold, & indices.
GDP numbers came in lower than expected in the US, marking the third straight drop in economic output. This is usually good news for the stock market indices and gold, however, bond yields continue to hold up above 5.1%. Here are some potential trade setups for both dollar and index longs depending on how the […]
Hi, I’m Nick! I am the founder of A1 Trading, market analyst, YouTuber, and creator of the EdgeFinder software tool. I caught a huge winner on USoil with the help of the EdgeFinder! In this article, I’ll walk you through my thought process behind the trade and how I found this crazy runner! Finding My […]
Last Friday's report showed a significant change in global market sentiment from smart money. What COT signaled has turned ultra-risk-off for traders who have been hoping for Fed fears to subside. This news could spark up worries about higher interest rates for the long term. EdgeFinder Analysis GBPUSD is now a -12 on the EdgeFinder […]
DISCLAIMER: All comments made by TraderNick’s Forex Group, LLC are for educational and informational purposes only. All comments should not be construed as investment advice regarding the purchase or sale of any securities or financial instrument of any kind. Please consult with your financial adviser before making an investment decision regarding any securities or financial instruments mentioned by TraderNick’s Forex Group, LLC. TraderNick’s Forex Group, LLC assumes no responsibility for your trading and investment results. All information on any of the platforms utilized by TraderNick’s Forex Group, LLC was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. TraderNick’s Forex Group, LLC, its employees, representatives, and affiliated individuals may have a position or effect transactions in the securities and financial instruments herein and or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. Trading of any type involves very high risk and may not be suitable for all investors. TraderNick’s Forex Group, LLC, its subsidiaries and all affiliated individuals assume no responsibility for your trading and investment result. Read our full disclaimer here