I haven’t looked at a spiel from Michael Robinson in quite some time, so when a few readers forwarded his latest pitch for the Nova-X Report I thought I’d take a quick look for you. That newsletter, which is currently being sold for $99, is getting the hype treatment with his pitch about marijuana investing, like most other growth-focused newsletters who don’t want to miss the boat, but the article I saw hinted at some of the “regular” investments in his portfolio… so that’s what we’re going to look for today.
The marijuana part of the ad, by the way, does not really hint at his current recommendations (the ad part is from December, anyway, so it’s getting a bit long in the tooth)… but the hinting in his current “article” is from just the past week, so perhaps it will give some real idea of what he’s recommending now.
And yes, for those who are asking, I continue to not dip my toes into marijuana investing — not because I’m against legalization, or because I have a moral objection (I’d say it’s about the same as alcohol, and should be treated similarly), but because so many of the companies are ridiculous story stocks that skyrocket by 1,000% and then fall by 99%. There is little fundamental basis for most of these stocks, and marijuana is a plant that’s pretty easy to grow just about anywhere… which means it’s a commodity where the prices should fall dramatically as legal production ramps up.
There are a few stocks that have begun to develop brands that might remain compelling and valuable, like Canopy Growth in Canada (WEED.TO, TWMJF), and I’d probably look at those first if I were inclined to put a lot of time into these stocks… but I’d have to understand the market a lot better in order to justify valuing even that market leader at a billion dollars when they have only $20 million in revenue. Even if they get up to $100 million in revenue in a year or two, as is possible, that’s hard to stomach for a company that actually has to invest in facilities and grow plants and process marijuana and distribute and sell it — this is not a particularly high margin business, and it should be fairly expensive to scale it up unless you’re going to grow outside and start using big agriculture’s industrial farming techniques.
So perhaps others will enjoy the “real” companies like Canopy, and while I’m not buying I wouldn’t try to talk you out of researching them… but I have no interest at all in looking at the dozens of micro-companies that have no real business, no brand, no unique product or meaningful revenue or anything else to distinguish them, and just add the word “cannabis” or “marijuana” to their letterhead. Those stocks have had 1,000%+ runs a couple times as well, but almost all of them have given up those gains almost as quickly — a 20 cent stock that goes to $7 is exciting, but not if you’re the sucker who was convinced by the growth move to buy it and purchased at $4 on the way up and wasn’t nimble enough to sell before it fell back down to 20 cents. Those stories repeat over and over in marijuana-world, they happened each of the times there was a major legalization vote (Colorado a few years ago, California this past year, etc.), and those companies really have no “there” there, betting on one of the teensies to be a survivor is a bet with very, very long odds, even if you’re not worried about the US Federal Government cracking down on marijuana again. That doesn’t mean everyone should avoid them — some people like long odds gambling and see the huge potential reward as fair compensation for the strong likelihood of a 99% loss, but I don’t like to spend a lot of time researching or writing about ideas like that.
Most marijuana microcaps and startups and penny stocks are not investments, they’re speculative thrill rides — and those can be fun and I wouldn’t begrudge you playing with them if you have money to risk, but, despite what they told you about keeping your hands and feet inside the car at all times when you were a kid on the roller coaster, you should always remember to unbuckle and jump out of the car whenever you see it starting to go down. Companies that are trading just on speculation and sentiment have no clear fundamental basis for any particular stock price (like revenue, or even revenue growth, or earnings, or assets), and that means they tend to have no floor when sentiment shifts and they start going down.
So that’s my long way of saying I’m not going to try to ID whatever pot stocks Robinson was teasing back in December, but I will try to identify the stocks he’s teasing today. Here’s a bit of his pitch…
“How to Beat the Market by Ninefold…
“Here’s the thing Wall Street doesn’t want you to know: This remains a stock picker’s market.
“See, as far as the Street is concerned, they’d be happy if you’d just be “passive” – and stick all your money in market-tracking mutual funds or ETFs. Of course, if you’re a bit of a bigger “whale,” they’re happy to charge you a bundle for their analysts’ mediocre “buy” and “sell” advice.
“But if you did that, you’d be leaving a lot of money on the table.
“You see, having the right tech investing guide could help you beat