Enjoy it While it Lasts
Over the long run, the S&P 500 has produced an average annual return of about 10% per year. Our aim at Cabot, through our various services, is to do better, and in the long run we do.
Some years, however, it’s difficult. 2008 was tough. 2001 and 2002 were tough.
2021, contrarily, has been a piece of cake so far, and marijuana stocks have been the candles on top of the cake, blazing brightly as investors continue to plow money into the sector.
Here we are on the 20th day of the year (just the 12th trading day) and our portfolio is already up 24.6%—a return I would have killed for in 2008. But that’s not even keeping up with the Marijuana Index, which is up 34.6% thanks to the buying of laggards (including Canadian stocks) as the new year started.
It can’t continue (as I’ve said before) but we’ll enjoy it while it lasts.
Turning to our individual stocks, there have been only two notable news items this week.
Canopy (CGC) last Thursday filed an early warning report relating to a new option it has acquired, which if exercised would give it a greater than 10% stake in TerrAscend (TRSSF). The option will be triggered if there is a change in the legal status of cannabis in the U.S.—which of course we are all expecting eventually. Canopy said it has no immediate plans or intentions with regard to TerrAscend, but this would give it a nice foothold in the country.
Jushi Holdings (JUSHF) also on Thursday announced that it was buying an operating dispensary located in Palm Springs, California, and approximately 78% of the equity of a retail license holder located in Grover Beach, California. Jushi has 15 operating dispensaries in four states and an ambitious plan of openings for 2021.
As for the charts, nine of our twelve stocks have hit new highs in the past week, and there’s been no heavy selling pressure yet, so trends are still clearly up. As I mentioned last week, every day I am tempted to take some profits and raise some cash, because these stocks have come a long way in ten months and sentiment is universally bullish. But for now we’ll continue to ride the trend.
Next week I’ll send you a full issue, with charts and commentary on every stock in our portfolio.