Pot Stocks in 2020 [[CHART]]
It’s no secret that last year was a tough stretch for pot stocks.
The very best cannabis stocks got clobbered in 2019. As for the worst pot stocks…
2019 marked the first time we’ve seen a publicly traded cannabis company declare bankruptcy.
If you’ve followed my research like this report on cannabis extinction events, this news is no surprise. In fact, we expected it.
Ironically, that’s probably why we’re looking at one of the best times in history to be a cannabis stock investor.
A Word on Hype Cycles and Investing
The legal pot industry, like the tech industry before it and many others before that, follows the same trajectory over time. That trajectory is summed up best by the Gartner Hype Cycle.
The Gartner Hype Cycle is a graphical representation of a common pattern that arises with each new technology, innovation or industry. Wild expectations lead to a meteoric rise. But then many realize the initial hype was overblown.
And like the industries before it, pot stocks rode the wave to peak expectations and then fell sharply into the “Trough of Disillusionment.”
The good news is that the pain should be close to, if not already, over. The Slope of Enlightenment is what we have to look forward to next.
The long-term trend is still very profitable and 2020 could be a breakout year for the sector.
Too Many Tailwinds to Count
While 2019 was a tumultuous year for pot stocks, it was a year of amazing milestones for the cannabis industry:
- Illinois signed a recreational marijuana bill that went into full effect on Jan. 1, making it the 11th state to fully legalize cannabis
- The House passed cannabis banking reform
- “Cannabis 2.0” kicked off in Canada, dramatically increasing the number of legal pot-derived products on the market in North America
- Scores of jurisdictions decriminalized cannabis legislatively
- A handful of pot companies graduated from over-the-counter trading status to major U.S. stock exchanges.
And those are just a few of the tailwinds we have to look forward to this year. Another big one is the expected surge in states legalizing marijuana use.
According to a recent report by Marijuana Business Daily, experts predict up to 12 more states could legalize cannabis use for medicinal or recreational purposes, or in Vermont’s case revamp current legislation to facilitate more sales and industry growth.
Psychologically, a new calendar year often comes with a mental “reset” for investors — we saw that at the end of 2018 when a brutal year-end correction in the S&P 500 gave way to a rebound as soon as the calendar flipped to January.
We’re already starting to see this take place in cannabis. While some industry laggards continue to make new lows, the sector’s leaders are beginning to separate from the pack.
And those are the names we’ll focus on in Q1 2020.
For Technology Profits Daily,
Chief Technology Expert, Technology Profits Daily