Crowdfunding and Cannabis |
| Written by Rob Goldman | ||||||||||||||||
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Every few years a brand new market evolves and takes America by storm. With recent and pending events, I believe that two markets are going to change everything as we know it: crowdfunding and cannabis. For those of you still groggy this morning after changing the clock, this week brings us the Halloween Indicator in full swing and a bunch of key growth stock names slated to release financials this week. We make a very brief mention of 3 stocks whose reports will surely tell us what to expect going forward. BIG CHANGES CREATE BIG MARKETSWhen Benjamin Franklin signed the Declaration of Independence, he famously said: “If we do not hang together, we shall all hang separately.” In an era where most people seem to lack an independent thought or a move made by themselves, two things have happened/are about to happen that could change all of our lives for years to come. If you were to take a poll of millennials asking if they currently invest in stocks or own homes he answers will surprise you. Remembering what their parents went through and with not a lot of opportunity to get rich quick, the response is usually no, they do not invest in stocks because they don’t like the risks or trust the system. As to homes, buying a home is on their bucket list but not a priority today so they do not mind paying rent. As older baby boomers retire, their places as investors or homeowners re not being replaced by the younger set, which prefers to follow the herd or do things in packs. What makes all of this amusing is that while they appear to be risk-averse, they actually throw caution to the wind and do not realize it. For example, many were and are engaged in crowdfunding. It is a cool concept whereby an entity raises money form multiple donors/investors via a platform to execute a project or build a business. Considering how these type of ventures are at the earliest of stages, isn’t this riskiest of ventures? I love the concept and it is huge! Crowdfunding platforms have raised billions for entities large and small with only accredited investors able to participate in equity programs. Now, that has all changed. After years of waiting, the SEC last week finally adopted rules that allow the average Joe to invest in private companies. And that will make this space grow exponentially, aiding the economy and investors. The Crowds...According to a recent article in The New York Times: “The new rules allow companies to raise up to $1 million in a 12-month period through a crowdfunding campaign. Companies will need to provide their potential investors with financial statements, but some first-time issuers and those seeking less than $500,000 will not be required to have the statements audited. The amount of money backers will be allowed to invest depends on their income. Those with an annual income or net worth of less than $100,000 will be allowed to invest up to $2,000 in a 12-month period, or 5 percent of the lesser of their income or net worth, whichever is greater. Those with an income and net worth of more than $100,000 will be permitted to invest up to 10 percent of the lesser of their annual income or net worth.” These new regulations take effect sometime early next year and in my view, could change revolutionize the small business market—especially start-ups. Again, the risk is great—greater than the liquidity provided in the capital markets today. But, with the concept of referrals-based marketing and others, new and existing platforms will be quite busy. After all, people tend to share and do so many things together online; hence, the success of crowdfunding to begin with. The bottom line is that this event could be the shot in the arm for existing small businesses, entrepreneurs currently not working full-time, and others. It is likely to change many aspects of our economy. Speaking of how new regulations and crowds come together to build a new market, we released the first edition of Cannabis Stock Report last week, a new premium, bi-weekly newsletter. If smoking pot isn’t the prototypical thing to do in a group I don’t know what is, and we are not alone in this line of thinking, but I digress. We elected to release it now because of the convergence of a number of events: political, economic, and market-related. One of the next major potential milestones occurs on Tuesday, November 3rd. Citizens of the state of Ohio, the 7th most populous state in the U.S., with a population above the combined number of residents in Oregon and Colorado (where medical and recreational marijuana is legal), will consider a constitutional amendment to allow marijuana for both medical and personal use. The Votes...What is unusual is how this has come about so fast...it took on a life of its own in recent months, as many industry pundits assumed this critical swing state would not have any measure on the ballot this year. Well, the odds are looking 50/50 right now and if the proposal passes, Ohio will be the first state to approve marijuana for personal use without first legalizing medicinal marijuana use. We aren’t talking the trendy/liberal/progressive West Coast states. We are talking Main Street, the heartland! As ‘ol blue eyes might say: “If we can pass it there, we can pass it any-where…” Whether it does or not I am not smart enough to say, especially when the circumstances and proposed structure varies from state to state. However, there is such a groundswell of support nationwide, even if it does not pass, it will surely pass in the next “go-around.” If it does pass, wow...talk about a big turning point... Not to be outdone, rival Pennsylvania, the 6th largest state in the Union appears to be getting closer to medical marijuana legalization, which would join 23 other states that have approved it for use. The ability for small investors to invest in small private companies...the ability to buy marijuana for medical or recreational use...talk about a true market economy. If this is what the people want, the people will get it. We cannot speak to how to best take advantage of crowdfunding at this juncture, but we can on the cannabis side. Check out this link below...we are offering a special 6-month introductory subscription for just $99. It is an incredible deal for a bi-weekly publication that provides a unique viewpoint and of the current and future market forces, key publicly traded stocks, and even features on stocks soon to be traded in the U.S. http://www.goldmanresearch.com/the-cannabis-stock-report.html The Stock Market Today Two themes seem primed to dominate this week.
First, the Halloween Indicator is no in full effect. For the uninitiated, this indicator refers to a six month period (from November—May) where stocks tend to enjoy the greatest gains. The second theme is the current quarterly earnings performance, which has about two more weeks to go. Thus far, stocks are soundly beating Wall Street estimates and they are moving higher as a result, sometimes sharply so.
Here are my top 3 stocks to watch this week. All 5 report quarterly financials sometime during the week.
Facebook (NASDAQ—FB): Trading near its all-time high I am looing to see how the Street and the company respond to the 3 M’s: metrics, M&A, and model.
Tesla (NASDAQ—TSLA): Which way will it go? Still a darling or has it hit a speed bump?
Say What?
The New York Post http://nypost.com/2015/10/31/a-look-at-the-major-casualties-of-hedge-fund-downturn/ If your returns have kept you up at night, imagine these guys.
The New York Times Big news, as we outlined earlier. CNBC http://www.cnbc.com/2015/11/01/earnings-help-make-beating-wall-street-that-much-sweeter.html Another piece of evidence that small caps should do well. Zero Hedge Are you listening America? (Note: I do not own any guns.) Investor’s Business Daily Big week for earnings of some of the most popular growth stocks. Just the Stats! AAII Sentiment Survey (figures rounded)
Hooray! For the first time in 35 weeks, the AAII Bullish category is over 40%. It is about time. With AAII over 40%, and Ticker Sense at 50% with declining Neutral and Bearish categories, the future is bright.
Have a great week! 1498 Reisterstown Road, Suite 286 Baltimore Maryland 21208 Phone: 410.609.7100 [email protected] www.goldmanresearch.com Launched in May 2010, The Goldman Guide is a free weekly publication of Goldman Small Cap Research and is written by Founder Rob Goldman with contributions from the GSCR contributor team. This non-sponsored investment newsletter seeks to provide investors with market, economic, political and equity-specific insights via an action-oriented, straight to the point approach. No companies mentioned in this newsletter are current sponsored research clients of the Company or its parent, unless noted, With some exceptions, all companies or investment ideas mentioned in this publication are publicly traded stocks listed either on the NYSE or the NASDAQ. 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