E Your Ultimate Guide To Pot Stock Investing

The cannabis sector is extremely volatile with many of the stocks trading for only pennies a share so I have been slicing and dicing the market over the past few months and I have identified 7 sub-sectors within the overall market that are well worth your attention as the performance of each has varied considerably ranging from +12% to -30.6% in September. That is a dramatic spread and one worth understanding as you position yourself in this burgeoning market sector.

My 7 baskets of stocks/ETFs consist of:

1. The Marijuana & Marijuana-related ETFs Category

This category consists of 14 ETFs of which 2 are US-centric (HMUS; USMJ), 2 are leveraged plays (HMJU; HMJI), 2 are marijuana/marijuana-related plays (ACT; MJ) and the remaining 8 are more broadly based and 5 the 14 are passively managed and 8 are actively managed.

6 ETFs have been added over the course of 2019 making historical performance comparatives for all periods moot except for the July/August period but some interesting results are noted:

  • the total basket of ETFs, in total (excluding the leveraged ETFs) declined 14.6% in September, on average, following on the heels of a 11.8% decline, on average, in August.
  • the passively managed pure play ETFs (HMUS, HMJR, HMMJ, THCX) declined 16.5% in September, on average, vs. "only" a 13.1% decline, on average, in August.
  • the actively managed pure play ETFs (MJJ, YOLO, CNBS, TOKE & USMJ) declined 14.6% in September, on average, vs. "only" a 12.4% decline, on average, in August.
  • the very diversified ETFs (ACT & MJ which contain a large number of tobacco, alcohol, packaged goods consumer and pharmaceutical companies) declined 10.0% in September, on average, vs. a 9.3% decline, on average, in August.
  • the 2x daily bull ETF declined 29.5% in September following a 30.5% decline in August.
  • the inverse ETF increased by 12.0% in September following a 12.2% increase in August.
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