Pot Stocks Bounce

by JDH on December 29, 2018

Interesting week, eh?

Big crash before Christmas, big bounce on Boxing Day (but the Toronto markets were closed), then a drop on Thursday, and then on Friday, thanks to a hostile takeover bid for pot stock Aphria, the pot stocks bounced big.

Big, but it’s a bounce off the bottom.

My favorite pot stock, The Green Organic Dutchman (TGOD.TO), was up 16% on Friday, which was great, but compared to it’s $10 high on the year, it’s had a swift ride to the bottom.

Is it done?

Yes, I think so.

Tax loss season is over.

The big guys (like tobacco and beverage companies) can buy these companies at great prices, so I would not be surprised to see many take over offers in 2019.

The biggest factor will be that the USA is moving towards legalization at the federal level, which will create explosive legal demand.  Cannabis stocks will be a great place to be in 2019.


Some thoughts: I did very well on my puts over the last two weeks.  I buy puts, two months out, $30 or more out of the money.  When Tesla drops, I sell the puts, and reinvest the original capital in more puts, either farther out or more out of the money.  So, if I’m playing with $10,000, I sell the puts for $12,000, pocket the $2,000, and reinvest the $10,000.

Tesla bounced at the end of the week, but it’s still and over-hyped stock that likely will not exist in it’s current form by the end of 2019, so I will stay short.

For 2019, short Tesla, and buy gold.

More next week, but until then, happy new year!