I’ve hesitated to write this for a while now.
Not because I’m wrong or because I don’t think this is going to happen… but because this type of investing isn’t really investing. It’s more of a trade. No, it’s basically a straight up bet.
I’ve written about this before in a report I did on marijuana stocks. What I’m about to outline for you was way in the back of the report, so I doubt many people really looked at it.
Even though what I am about to show you is a bet, it’s still an opportunity to make money, so it’d be silly to just ignore this bet.
As we all know, the upcoming election is November 8th. We (the entire world) has been barraged with mostly useless news about the presidential election. “He said this!” and, “She said that!”
What most people don’t know is that there are other important topics that will be voted on. One of which is the legality of marijuana in several US states. Of most importance is proposition 64 in California, which would legalize the adult use of marijuana.
Proposition 64 shows almost a 60% passing rate in several different polls, which would mean that recreational marijuana would become legal in the 6th largest economy in the world – California.
The moment that this makes the news, there will be a whole bunch of people who say, “I gotta invest in marijuana!”
Fortunately for you and I, we’ve been thinking about this for several years… and if you’ve only now just heard about it, there’s still time.
I’m going to show you what happens when you type in “marijuana” on the world’s most popular stock analyzer – Yahoo! finance: See what comes up? It’s the company Medical Marijuana Inc, with the stock ticker MJNA.
So pretend you’re one of these people who is searching for marijuana stocks… MJNA is going to be the first one that pops up.
As soon as you see that MJNA is trading for literally pennies you think, “Well, I’ll buy some; it’s so cheap that it’s worth the bet.”
And then the stock starts to get bid higher and higher as more people catch on to what is going on. Eventually the stock goes so high, it bursts and comes back to the earth.
But, for you and I, we can play the game of getting in early, and more importantly, exiting early.
If we look at the historical chart of MJNA, we can see spikes in the price that correlate to election cycles. The price starts to rise in November and finally bursts around February. This is the time people originally notice the stock, then the price gets bid up, and then finally the tiny bubble bursts. The last two times, MJNA fell after hitting 40 cents, which is not much for a single share. But, if you bough at 10 cents, then you just made some serious money.
Now, I do not recommend making this bet. There are all kinds of traps along the way.
First, you have to worry about liquidity. If you buy a bunch of MJNA shares and then try to off-load them after they’ve shot up in price, there might not be any buyers.
Second, although we can see the price history, we have no idea what the actual stock price is going to do. For all we know the stock could go to zero before the election date because of some type of disaster within the company.
Third, if this actually happens and the stock price starts to get bid up, it’s unlikely you will be able to make a perfect exit at the top.
All of that said, proceed at your own risk.
This is a highly risky trade that will probably result in you losing any money that you invest.
But, if you can buy early and sell at the right time, you could make a pretty penny.
As a disclosure, I own 100,000 shares bought for an average price of $.03.