This is an instructive tale of how some investors with the right knowledge just made good money in three marijuana stocks, while others with less knowledge lost money in two marijuana stocks and missed the opportunity to buy the third.
To make money in marijuana stocks, investors need to understand the true nature of the companies and the stocks, and have available to them expert guidance. Let us explore with three charts.
Three chartsPlease click here for an annotated chart of marijuana stock Tilray TLRY, +8.50%
Please click here for an annotated chart of marijuana stock Canopy Growth CGC, +5.15% For the sake of full transparency, this is exactly the same chart that was published previously.
Please click here for an annotated chart of marijuana stock Neptune Technologies NEPT, +3.74% This also is the same chart that was published previously.
Please note the following from the charts:
• The Arora Report call was positive on marijuana stock Tilray, and Tilray moved up significantly after the call.
• The Arora Report calls were negative on marijuana stocks Canopy Growth and Neptune Technologies. Both stocks have fallen significantly after the calls. For details, please see “Investors are making stoner moves by buying marijuana stocks at the wrong time.” Those with sophistication can make money from falling stocks by short-selling them.
• The Arora Report call was to buy Tilray in the IPO for those who could get shares. The IPO was priced at $17.
• The chart shows the call to buy the initial dip in Tilray at $20.80 after Tilray stock started trading. It had opened at $23.05.
• A target of $27 to $30 was given in advance at the time of the buy signal at $20.80 for Tilray.
• Subsequently a new target zone of $29.88 to $33.44 was given.
• The VUD indicator is the most sensitive indicator of net supply and demand in real time. The chart shows that the VUD indicator stayed positive through the rise of Tilray stock.
• Along the way, signals were given to take partial profits and/or raise stops to protect profits. This was done because, in a stock like Tilray, unrealized profits can quickly disappear.
• Throughout the time Tilray was rising, stocks of Canopy Growth and Neptune Technologies posted a negative VUD indicator, showing that money was flowing out of the two stocks. The money was also flowing out of other popular marijuana stocks Cronos Group CRON, -0.92% and Aurora Cannabis ACBFF, +1.60% Money also flowed out of popular pharmaceutical stocks related to marijuana such as Zogenix ZGNX, +0.34% GW Pharmaceuticals GWPH, -0.81% and Zynerba Pharmaceuticals ZYNE, +0.51%
Ask Arora: Nigam Arora answers your questions about investing in stocks, ETFs, bonds, gold and silver, oil and currencies. Have a question? Send it to ask-arora@thearorareport.com.
Be tacticalCannabis is a long-term growth industry. However, that does not mean that investing in cannabis stocks is simple. Investors need to be highly tactical in these stocks if they want to make money as illustrated in the example above.
Do not make this mistakeIt appears that many unsophisticated investors are being drawn into cannabis stocks. It is simply not prudent to dump stocks that have worked, such as Apple AAPL, -0.63% Microsoft MSFT, +1.51% Alphabet GOOG, +0.71% ( GOOGL, +0.47% and Facebook FB, +0.04% to buy cannabis stocks.
For money flows in 11 popular tech stocks that give you an edge, please see “Here are the latest X-rays of 11 popular stocks, including Netflix and Facebook.”
Disclosure: Subscribers to The Arora Report may have positions in the securities mentioned in this article. Nigam Arora is an investor, engineer and nuclear physicist by background who has founded two Inc. 500 fastest-growing companies. He is the founder of The Arora Report, which publishes four newsletters. Nigam can be reached at Nigam@TheAroraReport.com.
