E Cannabis Central: December Market Performance Sliced & Diced By Category

Every month I slice and dice the performance of six categories within the overall cannabis market to unveil the strengths and weaknesses of its components. December saw the spread in the returns of those categories range from +10.1% to -15.9% versus +1.0% for the overall marijuana market. That's a dramatic spread and one worth understanding if you are considering positioning yourself in this fledgling market sector.

The 6 baskets of marijuana stocks/ETFs consist of:

1. The Marijuana & Marijuana-related ETFs Category

This category consists of 15 ETFs of which two are US-centric (HMUS; USMJ), 2 are leveraged plays (HMJUHMJI), two are marijuana/marijuana-related plays (ACTMJ) and the remaining nine are more broadly based and six of the 15 are passively managed and nine are actively managed.

Seven ETFs have been added over the course of 2019 making historical performance comparatives for all periods impossible but some interesting results are noted:

The total basket of ETFs, on average:

  • declined 2.75% in December (excluding the leveraged ETFs) following on the heels of a
    • 7.3% decline in November,
    • 8.4% decline in October,
    • a 13.3% decline in September and
    • an 11.9% decline in August.

2. The CBD/THC Extraction Stocks Category

This category consists of five companies (LABSVGWCFRTINEPT and OILFF) that function as the middle-men of sorts in the cannabis supply chain purchasing dried cannabis, extracting the oil-like substance containing THC or CBD from the plant, and selling it back to the same producers, or to other producers that have requested cannabis extract. The category has received a lot of hype with the suggestion that its stocks are poised to capitalize on what could be the next big cannabis investing trend – extracted products - but it has been in decline since its peak back in March/April.

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Disclosure:(Incidentally, you might want to forward this article to your portfolio manager/financial adviser as such insights into the fledgling market are not available elsewhere.

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