Cannabis stocks have zig-zagged for months. It’s been a regular roller coaster! Now, the next breakout is here. Just how high could this next round of reefer madness take us?

Dude … pretty darned high!

Here’s a chart of the Horizons Medical Marijuana Life Sciences ETF (TSX: HMMJ) (OTC Grey: HMLSF). It’s a basket of 37 leading cannabis-related stocks operating in North America.

You can see that HMMJ is on a wild ride. After soaring into August, it slumped all that month. It didn’t make new highs until September. Then it was off to the races until October, until it went into consolidation. Again!

But now … well. Now, it’s time to shatter that ceiling.

The most recent thing to light a firecracker under cannabis stocks is the news that broke on Monday.

Alcohol goliath Constellation Brands is guzzling nearly 10% of Canada’s premier marijuana company, Canopy Growth. It only cost Constellation $190.9 million. Such a deal!

 Constellation will provide support in areas such as consumer analytics, marketing and brand development.

In return, it gets a front row seat in seeing how a successful consumer cannabis brand develops. Canada has had legal medical marijuana for years.

Starting in July 2018, recreational marijuana use will be legal across the country. That’s only cannabis flowers (buds), though. A year later, the regulated sale of cannabis edibles will start.

The companies will also collaborate in developing cannabis-based beverages for adults.

When recreational cannabis is legalized in the U.S. – and you know that’s a matter of when, not if – Constellation will be able to import that knowledge across the border.

In other words, it’s a genius move.

And the U.S. isn’t waiting for the foot-draggers of federal legalization.

For the first six months of 2017, cannabis beverage sales in Colorado, Oregon and Washington, totaled $13 million. That’s up 26% from the comparable year-ago period.

Heck, that’s before Nevada got in on the act. And California legalizes in January.

As I said, it’s a genius move on Constellation’s part. And you have to wonder: What’s the NEXT U.S. company to buy its way into Canadian marijuana expertise?

Marijuana Millionaire subscribers are riding that wave. They owned Canopy Growth. Sold it, took profits. Then I recommended it again recently. And now, it’s up 44% in a little over a month.

Boom-shakalaka!

So, go back and look at that chart of the Horizons Medical Marijuana Life Sciences ETF. And ask yourself how high it can go.

How high indeed.

Do you want to sit on your hands? Or reach for the weed … and the big profits!?

Best wishes,

Sean

Leonardo da Vinci’s 500-year-old painting known as Salvator Mundi (Saviour of the World) is the only work in private hands. It just sold at Christie’s auction room in New York for a record $450m – almost half-billion. The painting apparently once belonged to King Charles I of England back in the 1600s. The last time it was sold at auction was 1958 when it was sold in London for a mere £45. At that time, it was generally believed to have been the work of a follower of Leonardo rather than the work of Leonardo himself.

The painting was sold by the family trust of the Russian billionaire collector Dmitry E Rybolovlev, who is reported to have bought it in a private sale in May 2013 for $127.5m. So that’s a pretty good profit. It is the highest auction price ever paid for any work of art.  There are fewer than 20 of Leonardo paintings in existence. The Salvator Mundi, is believed to have been painted sometime after 1505. The bidding began at $100m and the final bid for the work was $400m, with the buyer’s premium, the full price up to $450.3m. The unidentified buyer was involved in a bidding contest, via telephone, that lasted nearly 20 minutes. The mystery buyer hopefully lives outside of New York so that avoids the sales tax. Purchases above $110 are subject to a 4.5% New York City Sales Tax and a 4% NY State Sales Tax. That makes anything bought in New York City subject to a total Sales and Use Tax of 8.875%. What is astonishing, is that with taxes, rates rise with the more people. That is counter to capitalism which dictates that prices decline with scale. Government costs rise with the scale showing something is just not right!

Obviously, this is serious money still moving off the grid!

…also from Martin:

EU Preparing for the Banking Crisis

and…

Our Ignorance of Cycles Causes them to Exist?

The recent report by the Commodity Futures Trading Commission (CFTC), shows that the professional investors have continued to bet on falling Dow Jones “short” as private investors are starting to bet heavily on rising prices ( “Long”). Professional investors remain suspicious of a further rise in the US stock market. The private investors’ view is exactly the opposite. The question is; Who will be right?

There have been plenty of times that the professional is dead wrong and the average person on the street has actually outperformed the professionals. Reuters reported that 69% of hedge fund investors expected the second half of 2017 to be worse than the first half. So why are the professionals so pessimistic?

When you live and breath the market every single day, it is hard to get a grip on vertical markets. The professionals, more so that even the average street investor, tends to do worse in such markets because it makes them uncomfortable. Then there is the self-gratifying notion that the market is over when the retail invest comes in. But they tend not to look at the fact that there is a huge difference between the average retail investor and the person who has never invested who rushes in to join the party at the top simply be everybody else if there.

I have told the story before how I was doing an institutional only seminar in Tokyo at the Imperial Hotel. This individual bribed someone in the hotel to get in. He came up to me and apologized offering to pay. He said he just had to speak to me. I asked him what was the problem, He explained he had bought the Japanese share market on the very day of the high and now it was crashing. His investment was $50 million. But the intrigue came when he said it was the first time in his life he had purchased any stock. He then had my attention since I was talking to the guy who bought the high.

I asked him what made him buy that day for the first time in his life? He said brokers had called him every year saying the Nikkei rallied on average 5% every January with the New Year. He watched it for 7 years and then finally bought the high. That is what I mean as the difference between the average retail investor and the fool who rushes in at the end because everybody else is there. It is when that final group of people rush in that marks the end of the market – not when simply average investors buy who follow the market generally.

We have four actual groups:

1. smart strategic big money (long-term portfolios)
2. professional short-term traders
3. the day trader who thinks he is limiting his risks
4. program traders who try to arbitrage ticks
5. the average retail investor
6. the fool who rushes in at the last minute

In most real good vertical markets, it is the professional short-term traders who keep trying to sell the new highs. This has been the group that has been bearish ever since 2009. They never saw new highs coming, and they still will try sell every new high today. They falsely believe that they are “professional” and so they will be right and the average investor is the fool. But the average investor sees the trend for what it is, goes with the trend, while the short-term “professional” keeps trying to beat the market.

Usually, the day trader who thinks he is limiting his risks and the program traders who try to arbitrage ticks will typically get caught when they suddenly find the lack of liquidity traps than in a position they cannot get out of.

….also from Martin: Diamonds replacing Gold?