Less Than a Month Until Legalization: Should You Buy Canopy Growth Corp. (TSX:WEED) Before October 17?
The Motley Fool
Published Dec 31, 0000 19:00
Updated Sep 20, 2018 21:30
Canopy Growth (TSX:WEED)(NYSE:CGC) has pulled apart from the broader basket of pot stocks of late. Many surprising events have made Canopy investors rich over a very short period and as we head past legalization day into what could be another “Santa Claus reefer rally,” I think there’s still plenty of upside to be had over the next year in spite of the stock’s seemingly absurd run.
Now, that’s not to say another crash won’t happen between now and a year from now. If you intend to hold onto your shares for at least a year, you’ll probably run into two, maybe even three bear market moments .
Buying such violent dips has been a profoundly profitable endeavour in the past, and if you’re planning on initiating a position in Canopy today, I’d advise taking a prudent, “Constellation Brands (NYSE:STZ) approach” by accumulating shares on the dip at a time when others are fearful.
Yes, Warren Buffett’s famous line: “Be fearful when others are greedy, and greedy when others are fearful” still applies in the marijuana market, even though the Oracle (NYSE:ORCL) himself would never directly invest in the cannabis industry.
While the $100 milestone looks like an inevitability for Canopy, you need to keep in mind that you’re trading alongside reckless gamblers, some of whom trade Bitcoin and other “turd” cryptocurrencies (a.k.a. Altcoins) based solely on momentum.
These weak-handed investors will exacerbate sell-offs, creating oversold buying opportunities for investors to initiate positions without needing to worry about vomit-inducing amounts of volatility. Thus, you shouldn’t feel the need to buy Canopy, or any other pot stocks at the price Mr. Market asks for on any given day.
Sure, there are still many further developments (and surprises) that could catapult Canopy and the industry higher over the short-term. But nobody knows when precisely such events will occur, so if everybody is exhibiting the fear of missing out mentality, and no rally-inducing event occurs, pot stocks could sell off as the default course of action as a high probability of “surprise” developments are already baked into shares of Canopy and other smoking hot pot names like Cronos Group or Tilray stock.
Get The App
Foolish takeaway
We’re less than a month away from legalization day, but don’t feel obligated to back up the truck the before October 17. Legalization day is a non-event at this point, so I’d suggest keeping plenty of dry powder on the sidelines so you, like Constellation Brands, can get the best bang for your buck.
Get some skin in the game toda, so you don’t miss out on another potential Santa Claus rally. But plan to build your position on dips that are bound to happen over time.
Stay hungry. Stay Foolish.
Fool contributor Joey Frenette has no position in any of the stocks mentioned.
This Article Was First Published on The Motley Fool
Written By: The Motley Fool
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.