Marijuana stocks are a big risk but…

I buy 100 HMMJ Marijuana ETF @17.72 and 100 WEED.TO @ 27.12 (Canopy Growth), with the CAD cash in the virtual portfolio.

The ETF HMMJ was around 8 CAD in september and tripled to more than 24 CAD to go back down to a little more than 16 CAD and looks to be back on track now.

Marijuana stocks have become a hype, real good thrustful information is difficult to find between all the bla bla, a few companies will go bankcrupt in the coming years, it is quite impossible to know who will dominate this market, and growth depends on government decisions.   All these things are reasons to stay far away from marijuana stocks.  But on the other hand, I believe this market will skyrocket, no doubt about it.  So I think it’s important to be part of it, but avoiding all the troubles ahead will be very difficult and almost impossible, so I wouldn’t jump all in.

Canada is the place to be with the best looking stocks like:

Aphria, Aurora Cannabis, Cannabis Wheaton, Cronos Group, Canopy Growth corporation, MedReleaf, Organigram Holdings,… or just buy a mix with Horizons Marijuana ETF.

These stocks are very big risks and they can sink a lot further, some all the way to zero, but… I want to jump on the exotic marijuana train and it feels a little bit like now or never.  In this case, it is a small percentage of the total I spend.

The risk is that within a few years we will remember marijuana in the same way like the internet stocks in 1999.  Every company with “dot com” in its name went up to the sky and back to earth in 2000.  Only a few exceptions survived the crash.  I believe the same will happen with marijuana stocks, so maybe we first need a crash before go all the way for it.  It’s like 3D printing stocks recently.  When they were hot they were all going up, good or bad companies, it didn’t matter, everybody wanted 3D printing.  After the hype they crashed, like 3D Systems, and nobody talked about 3D printing anymore.  However, have a look at Proto labs, they have gone up more than 100% since last year.  Not bad….

Only fools buy gold

“Where should I put my money?”.  It’s a question one of my friends asked me because they saved some money over the past years and only have a savings account, except for a small pension fund.  No bonds, no stocks, no gold, no bitcoin, no nothing.  Just a savings account.

Everything depends on your own personal situation and the risks you are prepared to take, but I wouldn’t certainly leave everything in a savings account.

Investing in yourself (education, at any age) and your own house comes first I think.  And then, yes, the savings account or cash, because you want some money that is readily available when you have some bad luck.

Only after that it would be stocks, but if you are not a financial expert and don’t want too much risk, I wouldn’t go too much in stocks in 2018 with the high valuations.   It’s not the right time for bonds either, or even less.

And then there is gold.  Banks will make you feel stupid, if you even consider gold as an investment.

No interests, just a dead piece of metal, and they will bring up a nice chart, starting in 1980 when gold spiked at 850 USD, going lower for 20 years, only to be back at 841 USD in 2007 after a long 27 years.  Calculate inflation and gold was probably the most stupid thing you could buy in 1980 for the long term.

On top of that, it was already considered a barbarous relic according to Keynes, so now in digital ages, it must be even more barbarous.  Music CD’s have become mp3, paper books became epub files on your ereader, movies are streamed on Amazon or Netflix, and cash money disappears, so why would gold – something that only a very small percentage of the population still considers money – not just be replaced by a cryptocurrency?

Jim Rogers said once he doesn’t want to bet against some stupid (but persistent) idea to consider gold as something of value, simply because we do this for more than 4000 years and he believes humanity will be stupid enough in the same way for a while longer.  He’s probably right, but it’s not because we are used to something for a thousands of years that it will last another lifetime, in times when technology changes everything at a speed never seen before.   In the 80’s we wouldn’t think of something like the 500 year old Gutenberg printing habit to disappear, or to have an encyclopedia in your pocket.

One problem however is that gold is still the only thing you can keep in your hand without being dependent on the government, someone else or a system.   And if it was worth nothing, why would central banks, or countries like Russia or China still buy more gold?   If there is a next world war, and the internet as we know it goes dark, you can still have the gold but your crypto may vanish in the cloud.    A crypto may have a lot of similarities to gold but in the real world in a real crisis it may become a very different story.

That’s why it may be wise to be foolish enough to buy some gold, at least 10% or 15%.  Physical, the stuff you can hold in your hands.   Maybe another option to real physical could be to buy gold with an online account like those of goldmoney.com  or bullionvault.com, but then you are dependent on a 3rd party.   When it comes to gold, you only want the real stuff because first of all, you want gold as an insurance when the whole financial whorehouse comes down.   And some day it will.  Because fiat money is still fiat money.

If Lisa Marie Presley decided to buy gold with half of her 80 million dollar heritage in 1993, she would still have 80 million today, and have a nice life for 25 years spending the other 40 million, without losing it all.  Maybe that doesn’t make sense, but a bank showing you a gold chart from 1980 until 2000 doesn’t make sense either.

In fact, you can own only one asset, keep it for over 10 years and be right.

In recent history we had times to own stocks, and times to own bonds, but now it may be the time to own gold again.   At least, a small percentage.  It won’t do too much harm to be a fool for only 10%.

The Crypto Wild Wild West

I had some bitcoin back in 2013 already.  So I should be very rich now, right?  Well, I’m not.  Because first of all I just bought a very little in order to use it in real transactions to buy stuff, as I expected this crypto thing to be huge some day and I wanted to get a feel of it.  And secondly, I sold my bitcoin way too early in 2016.

I’ve never thrown away a winning lottery ticket only to see the winning combination a week later, but I guess the feeling must have been similar for a lot of people who had given up their old laptop for recycling only to remember at the end of 2017 there was something like a bitcoin wallet key and password on that laptop.  Oops.  Sometimes bubbles and hype bring back those good old memories…

5 years ago bitcoin was not an investment for most people who knew it, it was just a new kind of digital currency for transactions and it happened to share some properties with real gold as we all know.  Some even called it gold 2.0.

However, not too many shops on the internet allowed the use of bitcoin back then, and after a while I lost my interest in the whole thing and I even forgot I had an account.

1 bitcoin was around 250 dollar for a long time, went down a little and when I remembered my forgotten bitcoin account I saw the price was back where it started for me.  It was 2015/2016 and bitcoin had not succeeded in becoming a popular payment method like paypal.  Transaction fees were high and transactions were also slow.  In fact, the whole system sucked.   Even worse, big e-commerce shops that were planning to allow the use of bitcoin cancelled their plans.

So I used most of my remaining bitcoin to buy some electronics in one of the few shops where you could pay with it and I sold the remaining value on coinbase and transferred it back to my regular bank account.    Of course, the value of bitcoin started to rise just after that until the end of 2017.  In hindsight, it seems stupid, but people who would call themselve a crypto expert in 2017 claiming to know everything about Ethereum, Litecoin, Ripple or whatever, well… most of them didn’t even know what a crypto was in 2016.

Even friends told me they were buying crypto’s and that I should do the same because we were going to miss the train.  Well, I missed the train already in 2016 and I was certainly not going to jump on it again because the price was going parabolic.  Everything that goes parabolic comes down hard and it did.  You should stay away from that.  Always.  In case of the bitcoin it crashed from about over 19300 USD to 6900 USD.  That was an interesting Fibonacci retracement level and worth a try for a very small amount of money if you’re not afraid of some risk.  I wouldn’t sell my home and live in a camper for bitcoin like mr Didi Taihuttu did, but I believe the bitcoin price can at least bounce back a little.  I don’t say it’s going further until 100000 USD but at least it can go up a little now, it’s purely technical.  I know, that’s not investing though, it’s a little bit closer to casino or Russian roulette but why not have some fun together with the Koreans?  The biggest problem by the way may not be just the price going down, but the fact that you are always dependent on a system.  Once the price of a crypto goes into crash mode you may get the following error when visiting your exchange: “Our site is down due to technical problems.  Please try again later”.   “Later” in that case will be days or weeks and your crypto may be worth nothing when the “technical” problems have been solved, or in other words, when the crash has come to an end.

And yes, maybe the bitcoin will crash to zero, but cryptocurrencies are here to stay.  There will be regulation some day, and the creation of a new cryptocurrency backed by the government is just a matter of time (there are attempts but not very good ones) and the official reasons will certainly be to protect you from all the bad criminals trying to hack your digital wallet, or maybe it will be to block those scary terrorists or drug dealers doing money laundering or whatever.   In reality, they are just afraid of losing control.

They could regulate bitcoin, but that doesn’t matter as your local hitman will probably prefer monero for his/her services anyway.  There will always be another dark crypto, out of control.

I could be wrong but I believe bitcoin can still go up from here.  Short term.

Fish where the fish are

Charlie Munger is a very wise and funny guy.  “Fish were the fish are, and you don’t have to be a very good fisherman to do pretty well”, is what the 94-year old master says, and that is some very solid advice everybody can understand and agree on.   But where are these places?   Do they still exist?  Where to look geographically?  In which sectors?  Which companies?  Or do we have to wait for better times?

I believe there will always be good places but these days they may be smaller and harder to find.  However, with a possible rising inflation you don’t want to be in cash, at least not for the long term.

One of those places could be Myanmar, just maybe.   The stock market is almost non existent with just a few companies listed on the Yangon stock exchange and little background information.  There are still high political risks with a remaining military influence, there are ethnical problems (Rohingya conflict), investments remain low, etc.  But since the country is more open for tourism and foreign investments while it is located between richer and more developed countries, everything could change very quickly the coming years.  Also Thailand could benefit economically from an awakening neighbour like Myanmar, but Thai stocks have maybe gone a little bit too fast the last year like the iShares MSCI Thailand shows.  I think it’s not the right time for that.

There is no Myanmar ETF as far as I know, and maybe it’s just a little bit too early but it is certainly worth to keep an eye on.

 

Initial setup of a virtual portfolio

A lot of people will tell you to buy or sell stocks because this or that will make them skyrocket.  When they tell you to buy and later the stock goes belly up, you don’t hear them anymore.

In fact, it is exactly what commercial financial sites do all the time.  They talk about 10 stocks you should buy and after 6 months or a year they are screaming about the gigantic profits you would have made with one of those stocks, devoting long articles about how they saw this coming with a complex analysis.  They will remain silent about the 9 others stocks they advised you.

That is why I added a virtual portfolio of stocks I believe in today.  A test, a game, call it whatever you want. Anyway, I won’t be able to lie about the performance.  This is it.

Currently, this means a lot of gold and commodities, and some cash.

Have a look at the S&P or Nasdaq chart over 30 years and you don’t have to be a technical genius to see this bull market in stocks is coming to an end some day.  Maybe this year, maybe in 2 years or maybe it can last as long as 14 years as Jeff Staut was saying this week?

I believe there may be one last run higher this year, but when the shit hits the fan it will probably be the most horrible crash ever seen, faster then ever before.  Not yet however: the economy is still in good shape, rates are going up but very slowly and a rising inflation is on the horizon.

The recent correction in the market felt for the happy ones like the electricity at the party was accidentally cut off but was restored quickly. Oh, it was nothing, let’s party on!  Hmmm, if this party continues for years I will lose, but I don’t believe it can continu for years and even if it does having one more look at that 30-year chart you can probably buy stocks in the future at a much lower price even if you have to wait 5 years from now.  I don’t want to be in the next crash, I can wait.