Over the past four years Seeking Alpha has published more than 40 articles I have written about publicly held cannabis stocks. Those articles brought forth a wealth of comments and questions from readers. One of my articles, "Cannabis Stocks Ranked From Cheapest To Most Expensive," became possibly the most read cannabis article ever written on cannabis stocks It was published on October 1, 2020; and, in a rarity for articles, it still attracts new readers on a daily basis almost a year after its publication.
I started to update that article to incorporate many new ideas along with comments and suggestions made by readers. I soon realized, however, the article was too lengthy. When I mentioned that to a few followers they suggested I write a book on investing in cannabis stocks. You have them to thank or blame for this book.
I have been investing in the cannabis sector since 2014, so I have witnessed the birthing pains of a new industry from a front-row seat. In that process, I have gone through stages of investor elation, as well as grief, and managed to emerge with an acceptable amount of scar tissue and significant profits. Importantly, however, I have been able to identify financial metrics of successful and unsuccessful cannabis companies. This book reveals those metrics and applies them to publicly traded cannabis stocks.
As such, this book focuses on the financial fundamentals of a cannabis company that underpin its stock price. I personally appreciate and use technical analysis in arriving at investment decisions, however, chart patterns are ignored in this book.
Traditional fundamental analysis is as applicable to selecting cannabis stocks as stocks in any other sector. Investments made with the rigorous application of fundamental analysis do not guarantee success, but they do tip the scales in the favor of investors who use these techniques, just as card counting raises a blackjack player's odds of winning.
Company stock prices get divorced from company fundamentals for periods of time, and they may get alarmingly overvalued or horribly undervalued. To paraphrase John Maynard Keynes it is wise to remember that a stock price can remain irrational longer than an investor can remain solvent.
After reading this book, you will be armed with a wealth of knowledge enabling you to evaluate the relative value of various cannabis stocks. You will also find the financial metrics presented in this book helpful in analyzing stocks in other sectors.