You're listening to the Cannabis investing Network before we begin a short disclaimer the full disclaimer follows at the end of this episode. This podcast is a general communication and is being provided for entertainment and information purposes only. It is educational in nature and is not designed to be a recommendation for any specific investment strategy plan feature or other purpose. Please enjoy responsibly.Hello and welcome back to the Cannabis investing Network podcast. My name is Manish and I'm here today with my co-host Abby. How you doing? A be Manish Manish. I've been better. Yeah, I know. I know Abby is really soldiering through this winter illness. He's picked up while he's a globe-trotting while yeah globe-trotting your state trotting more or less. You got to do it for this podcast man. That's right. That's right. Well, we had to come back and give the listeners the fresh material for the end of the year and the beginning of next year because we've been off for a little while today is December but it's today December 16th, and we've been off for a little while and there's been actually a lot happening. So it's good to be back the episode today, which is a sort of end-of-the-year episode is is really About improving upon yourself. It's about the urine reflection and it's is really about five key lessons that I think we've learned in 2019. And these are just personal lessons, right? But I think they're very applicable. Probably the most people listening. I think 2019 was a very humbling year for cannabis investors and it was a year that if you're not learning and you're not improving yourself and you're not upping your game, then I think you are missing the entire opportunity of the Fallout of you know, all of the negative things that we had to deal with this year for sure and I always like to say that, you know, I think that Cannabis investing on the public markets really started in 2014, right? So we've had about five years or so. So it's good year. It's we're now seeing a five year track record, which is greater than C and then on the latter half 2019 was really the first year of a G7 Nation being fully legal. Sure. Yeah great point right? So it's something to keep into consideration that you know, how do we done this last year our well, I guess our perspectives obviously would be a lot different but now we have some legitimacy behind a lot of these numbers. Yeah, and I think if we just pause to think about the year in review, you know, it's easy to get frustrated with how things have gone. But also you have to remember that. You know, I remember when I started on this journey in 2017. There was still a huge amount of uncertainty about even if legalization was going to happen or when it was going to happen or how it was going to happen. So I think if you were if you had told me in 2017 that hey, you know in your first year of legalization, you're going to have a billion dollars of sales. I would have thought that was pretty good. And that's kind of where we are billion dollar industry that didn't exist before right absolutely could never call. A lot of people were saying that it was going to be three billion dollars or six billion dollars, right Billy. Yeah. Exactly. Well six was a number we talked about in the report. Yeah, right. So so yeah, absolutely and we'll get into that. But I think the first thing I want to talk about in terms of Lessons Learned is something that I'm seeing a lot when I when I read online and there's understandably a lot of frustration and anger. ER and negativity that people who have invested in this space are expressing online and that's understandable. Right? But the first lesson is, you know, no excuses play Like A Champion and everybody who is an investor one of the reasons. I love the sport of investing the business of investing is that everybody is CEO of their own account right when you are the term that gets thrown around very loosely. The industry family office easier. Everybody is a family office. I have a family office. So I'm a family office to write everybody's a family off everybody's head of their own family office. Exactly. So the point I'm making there is just you are in charge when you are deciding to invest in something it is your decision 100% So what irks me is to see when people are blaming Being everybody else for their problems and that is probably a pet peeve that I have in life in general. But especially in investing. I really really don't like it when people choose to blame everybody else but themselves because I think what you lose is you lose the the taking responsibility for your actions, right? Because yes, the company might have screwed up, you know, the government might have screwed up but these are all things that as an investor, you know are out of your control. But you have to be thinking about when you make the investment decision, right? We as investors we take risk we get to enjoy in the reward but we also are subject to the downside and when you go through something like this, if you're going to be upset, you need to be upset at yourself for not seeing what was going to happen or not taking adequate risk adjustment measures or whatever because if you don't walk away thinking like hey, I screwed up where can I do better? You're likely to just repeat your mistakes again and again and again and that's the real tragedy. Yeah. So that's rule number one and that's lesson number one. Learn your lessons. There's a great phrase that my manager told me when I was hired into commercial real estate and he said, you know in this industry and this job you can do everything right and things will still go wrong and when it happens it might not be your fault, but it is your problem. That's actually very insightful. Yeah, I really that really study. He said that to me literally on my first job interview like when I was sitting down to be hired by the company and that always stuck with me because he knew you're going to screw up a lot exactly how to let this guy this guy's gonna have a lot of problems so I don't want him to quit so that always it always stuck with me because like one of my red flags is people who can never admit responsibility when they're wrong, right? Everything is always everybody else's problem where everybody else is Fault, but even if that's the case, you know you as a successful investor you get rewarded for looking ahead and accurately deciding. Hey, does this investment decision make sense given all the risks uncertainty right and don't blame an investment bank for their price Target. If you know for you making your investment decision, that's not how this works. It's your money. You make the decision sure. I mean, you know what? I'm gonna I agree with what you're saying, but I'm just going to kind of pump the brakes a little bit because you know, Do rely on Research? So you do expect some sort of accountability on the reporting Governor sort of the governing bodies sure when you're reporting. So for instance for people to invest in can trust you can't you can't say that to them. Well, no, here's what you can say to them is basically can trust is a great example sort of the Black Swan event, right? Yeah you as an investor could have done everything right and you could have you would have lost a lot of money on can trust right but on the flip side of that is okay. Look what you made a lot of money on can trust. Did you take your profits? Right? What how what amount of money if you I mean in that in that scenario, you're assuming that they've been invested for a long time right A lot of people did catch it at the top because they're coming in and they said hey look like it was fraudulent at the end of the day no a hundred percent I agree. But again, what did you learn from that let's say you caught came in at the very top and you caught this company at the top, right? What did you learn from? What happened in the Fallout that happened? Yes, you can get upset at the management of can trust. Right, and I'm not saying you should let them skate. But what I'm saying is what did you learn? Hmm, right because there are lessons to be learned there. Right? Like did you invest all of your investable assets in one company because maybe then you would have learned. Hey, I really need to be careful. Even the very best company from the outside might still have issues. I'm not seeing right right. So that's I think that's actually a great example of one where you know, it's not necessarily investors fault, but it is their problem. So, how are they going to learn from that and deal with it in the future? That's very true. I agree with you. I'm right. So that's what I'm saying about the mentality. So okay take accountability for ya for your actions, right? You get the upside you get the downside. Mmm, right? Okay. Number two is learn learn learn pay attention. And basically what I started this year of 2019, I would say I was somewhat knowledgeable about cannabis, you know, I followed it from having been invested in it from having done well in investing in it, but I You know, this was really the year that I spent a lot of time, you know through conferences and reading and time and energy and and networking and I spent a lot of time learning about the industry and the end. The lesson is really that there's no free lunch in life. And if you want to make money, it's going to cost you something. Yeah, absolutely, right? It's going to cost you your time. It's going to cost you your effort. It's going to cost you your attention your mental energy. It's going to cost you your band. With and then your Capital obviously, right? So if you want to be successful in this space, like any other space you need to invest that time and energy and pay attention to it for sure for sure. And I wholeheartedly agree with you on that. I'm a big proponent of saying going to these conferences because I find going to these conferences you really keep your thumb on the pulse you meet with other people like ourselves you meet with when I met at a conference exactly exactly and you meet you also meet no Have a seat for me institutional investors, but you also meet the retail investor, right? Yep. And I really - he's yeah, you meet the company's unique companies that you know are shady. Let's say sure. Okay the lack of a better term use of you want to name right here for everybody ABC car? No, but yeah, you mean you meet everybody at these conferences and I actually I think personally I learn more from going to these conferences than I do from reading all the time, right? Right. I obviously I'll read them if there's a flood couple of influencers that I follow in the space sure and then there is no I keep up with the financials and whatnot. I don't even when I go to these conferences. I don't necessarily even attend all the seminars but what I find that I learned the most is from the networking events or going to actually talk. Oh, yeah, one of the companies represent that's where I learned the most the stuff and I learned more about it. Sure. I've learned more about the space through that than through anything else and are really good example. I'm not going to name the company. But we were talking to them. We were interviewing them and we were just got a little bit weary about where they were actually headed in terms of what they actually had. Okay, as we ask that, you know, we ask like very probing questions just like oh like no walks through your balance sheet ball blah and we realize that management was very very very reluctant to go any further than what the balance sheet was saying. Okay, right. Anyways, needless to say the company's not doing that. Well right now okay, but it was because you know, they had some doomsday not doomsday device some issues. They had their issues that you know, what, At first glance you wouldn't be able to see it or by talking to management getting one of them. You kind of got you felt uneasy sure right and that was robbing our conference. Sure. Sure. Sure. So that face-to-face interaction. It's huge. It's yeah and this not the industry. You know, I shouldn't say this the only mystery this is one of very few industries that allow for the retail investor to get in front of some of the top CEOs in the space. That's a great point because I've been able to meet this. I think almost every sort of CEO. I wanted to meet and it's funny for a small private investor, you know to be able to meet CEOs of multi-billion dollar companies, right? It's and when you meet when you meet with them, it's not like they're sort of brushing you off. They give you really really give you the time of day they do they do answer your questions and give you their card. They give you their cell phone number and say call me anytime right and I don't know another industry that has companies of At size that the CEOs are so accessible because they realize they have to be yeah, right because this really is a retail investor dominated space and these people can't afford to really, you know be closed off from investors, right? That's a big part of their job so great point. So I'm glad you brought up the conference's Abby because part of the learning that I wanted to say and what's been my number one thing that I accomplished this year was really building a network, right? And this is something I think I'm Good at which is when I want to learn something new. I will part of my learning is to really network with people find people who I like and I trust and then share information amongst ourselves. Right? So, you know, obviously it's the Genesis for this podcast. Yeah, but also, you know now I've got what I feel is a pretty strong network of well-informed people, you know, High net worth or very involved. Let's say in the space and just Having you know smart people who are paying attention who you can trust and bounce ideas off of I mean, I really can't describe how invaluable that is, right? Because what I see again online and obviously online is skewed but what I see is a lot of people who are sort of deliberately spreading either like fear or you know, hype about something they like or don't like and there's also a lot of paid writers on laws. Absolutely. I'm going to kind of come to that later. Okay when it come to that That later but for sure that's a good point but having you know, I've always believed that you know, if you can build a good team around you right then one plus one can equal three, right? So the idea that when you work together, you can get something more out of it and write the beauty of this industry is for a investment to be successful. It needs a lot of different investors behind it, right? There's no company in this space. I can survive with one investor, so It actually is additive like when I when I talk to people and I say hey, I'm looking at this investment. What do you think right like, what are you seeing? What do you think by comparing notes? We actually learn a lot and what you see is that the same names often come up over and over again, right and that, you know as much as you need to make your own decisions having people you can bounce ideas off of is so key. And for me a big thing is I like to float sort of my idea and my thesis to people and I asked them to shoot holes in it, right? I don't ask them. Just to just to get you know, a yes out of them. I really want people to shoot holes in it and tell me what I'm missing and you know what needs to be done and you know what the risks are right, so I want to see the whole picture and if you if you do that enough, I think you'll get a very good sense of what's going on pretty quickly. I agree. So that's that is learn learn learn those learn learn learn learn whether we're to learn and pay attention. Okay. Sorry, I wasn't paying attention. There you go. Nice. Nice. Nice. Nice. Okay. So in that vein, I'm going to talk about some sort of some of the lessons that I've that I've learned terms of how my mindset has changed from the beginning of the year to the end of the year. Okay, how you've matured how I've sure something like that. The first one is investing versus trading. All right, so when I started out early in the year, I really thought of myself as an investor and I still think of myself as an investor, but I would say that I had a very negative connotation to trading so in my mind trading was basically speculation. It's short term. It's sort of being in and out. Just trying to make a quick buck and we're investing was really more long-term focused. It's and really more fundamental or quality focused. Okay, but it's really tough to find fundamentals in a growth Market. Well, it's sector in a sector that doesn't necessarily have fundamentals yet. Right, but now it's starting to emerge but yet still on the way right but I would say that basically what what I learned and how my mentality is shifted is that before I was I was biased in that investing was like a positive term trading was a negative term right? So somebody said I'm a Her I looked at that very negatively. Right and I think I've said to you before I actually aggressively ignore technical analysis. So when people start talking about candlesticks and dips and Vees, I literally, you know, turn off what I'm listening to it because I don't even want to have the knowledge in my head of what that is. Okay. So that's how aggressively I was sort of ignoring that side of the the stock market. Let's say right? Okay, it's coming from a commercial real estate background, you know, you don't deal with sort of the The those kind of elements of a market right the elements of a the real estate market are very different than the stock market. Hmm. And so how that's changed is that now after spending more time in it, I acknowledge and learned that you know trading is not a dirty word and certainly, you know trading or looking for kind of what goes into short-term decision making actually has its own benefits and is important and I think that a winning strategy Specially in cannabis being that it's such a nascent industry is that you have to look at both, right? So I do think in my strategy. I'm really focused on sort of the quality and longer term. However, you do need to be aware of what drives us talk in the short term things like share on locks things like MMA, you know what, you know things like Equity raises like what puts pressure on a stock in the short. Term and then how that might affect your buying decision, but I feel like that's not limited to cannabis. I feel like that's sort of sector agnostic in the sense that every industry is faced with the same with Myung every commodity actually is well, I think a better way of putting it is that every volatile Industries for sure but also jr. Industries for sure because their cap tables are so much more their cap tables. How do I say this? They have much more junior cap. Right, there's a lot more like warrant structures outstanding and funky stuff like that. And then also the blocks of shares being held by certain groups exactly come off like escrow or come awfully different Sheriff's friction exactly. And then because of the ownership is skewed to retail. Yeah. I don't have that same stability level. Right? Right, you know your volume is lower. So you can your subject to these more difficult exactly the subject to these weird like Rises and falls, right? And that's so I'm really glad that you brought that up because So volume is very important for small cap stocks and you and I chat about some we first met for a lot of people who don't know a lot of these stocks a lot of small cap names trade by appointment and what that means is there's no volume. I put a buy order in the price goes up, right so I'm going off basically just going up because of my by order. Okay, I put a sell order in and the price goes down only because of myself soldiers are moving the stock basically the sock so you got to look at the bid and the ask spread. Sherman the trading volume and if it's very low and the spread is really wide that term is called trading By Appointment God's if you hear that term the stock trades by appointment just means an eel. It's not an e liquid stock, but it's not a liquid stock. Yeah, and I would say it liquid meaning it's fully you can't trade it, but it's very low liquidity low liquidity right at you. If you were to have a sizable portion. You would move that movie, right? Okay. And then in the real estate World we'd say well who cares? I mean, you know, it doesn't matter right but in in this world, it does matters of all right, and so that's what What I learned right that is the importance of those and now how to look for those short-term Factory. Right? So their stock that I look at that I say but again the focus is investing. So if the values there I'll buy I'll buy today but maybe instead of buying, you know, the hundred percent position. Maybe I'll by 50% or 60% and I'll say well there's share on locks coming up. There's this is coming up that's coming up. So maybe I'll wait until this time to see ya right. So that's how the mentality has shifted. And now I'm also more willing. I've no after being humbled by what's happened in the market. More willing to take profits along the way. Yeah, because yeah, you know what? I might be missing out on some profit few later on but also if it goes back the other way, I'd like to be able to buy back in with that extra Capital taken off the table exactly. Right? So so that's how it's changed instead of investing for one of the things that I guess I didn't learn this but this is something that I noticed on the industry. It's I mean, can we agree that? This is a commodity you agree? That's a commodity I kind of think it is on my people selling cannabis cannabis. Yeah cannabis. Like throwing flour in general. Yeah, I think dry flour is a commodity. I think the whole industry is basically based off a commodity right kind of like oil and gas but okay, there's no world cannabis price. Okay, there's World oil prices. There's copper prices gold prices whatever right and that gives you an indication of how like, so that's these gold. So you have the gold price you've got miners if the price of gold goes up the price of miners usually go up as well because they're selling gold right to be don't have that right now in the Cannabis space. As one thing that I really noticed it's really difficult to sort of Peg any irrational movements to anything right because for us you and I have had this discussion just in like our chat groups. How do we fight? Like, you know, we would send each other. Oh this much oil or this one cannabis was sold at this price. This is what these guys are getting a tour you sent me an article being like this is what the actual price for EU is right? Yeah. There's no way to validate that right? Because we don't know that transaction. It was a private transaction that was done reporter reported on it. It could be validity behind there couldn't be right. So I think eventually as this industry sort of matures will start seeing that and I think that the data will get better. Well, yeah, I think I'll be more transparency. They'll be like a world cannabis price p.m. Okay cannabis now $2 or cannabis is now 250, right and it will move just like how regular commodity was how oil moves right? Well 60 bucks. I think the difference is the borders, right? So right now I would say in its really The markets are Regional right? So we have an Ontario market like even in Canada where you can break a minute. All right, you've got wtiu WCS. You got Brent you got right and I don't know oil that well, but my understanding is that it's legal to ship oil from any point of the world to any part of the world. Yeah low tariffs and whatnot. Yeah, right, but you can't do that with canvas right? I'm saying that it's going to eventually I think that once the the industry is maturing. That's when we'll start seeing that sort of world price. Come in will say I'm a little bit more. Yeah. I'm just very ooh doubtful because I think I think for the foreseeable future there will be borders around cannabis. Yeah, even if it's I think even more than countries like I even think that regionally in the u.s. You will have borders around cannabis. Like I think even if they go federally legal I think so because what will happen is the states of invested so much into building out these infrastructures and Frameworks. Yeah, you know, if you go if you go fully legal no state lines, then what happens is all the production centralizes right like and like any other business, but if you're Like Lappy a good thing though. Well, it depends good for who right so it looks consumer sure for the consumer. But again a lot of the reason people have done this is for taxes and jobs and whatever right? So if you are let's pick a State Michigan where it's cold and it's you know, expensive and hard to grow does it Michigan Government necessarily who was early on to adopt full legality. Do they now want to lose this industry and this trade to the middle of the country which can grow cheaper. Right. So I personally think that given the way the Frameworks are gone on so far being very Patchwork. I have a feeling that the states are going to fight very hard to keep it that way and that when it goes but you have this in other Industries like hey, let's not use oil. I mean oil's good example, you could use a level is he's milk. For example in Canada. Milk. Dairy Farmers get charged a premium because but there is still a world milk price, right? I mean what waving once once that kind of comes in then you'll get like a Futures Market derivatives market then this Market will start to behave more like commodity. Okay. So let's say does what's the end the end point? Oh, I'm going back to what you're saying about the whole trading and then the technical analysis. Okay, not then they'll be a lot more validity to it because right now you mean I don't know like you can look at dead cat bounce as you can look at candlesticks. You can look at whatever but I don't so I get like comment to my mean I guess the thought is and again I know nothing about technical analysis, but I guess the thought is that humans are humans and if you can follow Behavior patterns and how people react and you know when there's fear and when there's greed you. Try to adjust that accordingly, right? So sure I believe there's some validity to that because people react how people react. Right? Right. However, I do think that one of the challenges is with with you know, that fear is if you're only doing technical analysis and you ignore the fundamentals. Yes, you can trade the ups and downs, right but I think ultimately the risk is that you can get caught holding something that is really worthless. Right and you're trading the ups and downs and then suddenly it drops like a rock on you and You know now you're stuck right now you take it. I don't like technicians. Like I'm not a technician by any means but I don't think technicians ignore fundamental analysis. I think the whole I know I know there's definitely want to do like absolutely and I know some very popular ones who have yeah listen to just out of curiosity and they've they've said like like the same way, I aggressively ignore technical they aggressively nor fundamentals gotcha. So I know that's out there. I'm not saying everybody does that. Yeah. I think the for me at least the right track as an investor the right strategy was to marry the two It was to say no, I believe in the fundamental investing but I need to learn what I can from the Traders and see how that applies to what I'm doing. Right? So it's let's say 80% of that sort of core fundamental 20% taking the things that made sense for me and learn from that. Look right--yeah looking at the volume. Yeah. Exactly. Yeah. I know. Sorry. I also think that like, yeah as this continues as this industry does continue to mature. We will start seeing that yeah unified world price and they'll be an exciting day when that happened. Interesting to see what happens, right? If it does get to that point then yeah, it'll be full on just a commodity right now. You can ship it from one part of the globe to another right now, you know, there's very stringent rules around that the medical only etc. Etc. But if that day comes it's a completely different ballgame, right? So, let's see who knows so next on the list in terms of learning actually this kind of relates to what we were just talking about which is data and the point is read the data not the headlines and this is one of my pet peeves for a while, which is that investors and I'm use that term loosely but investors in the Cannabis trade have been buying and selling based on what they read in the newspaper or even just what the headline says and Getting into the actual text right wasn't that wasn't very there's a canopy article or can it be results that came out? Yeah, like a 1.25 or 2 billion or something huge loss, but on paper it was you know, 200 million not billion read it. Yeah exactly and this relates to the whole topic of what we're discussing today, which is upping your game improving yourself. Like we are we have shifted from that hype driven. Getting type of investment ecosystem to now the results based right? It's gone from the tell me to the show me. So if you are not changing how you invest that's a problem. So before yeah the company who shouted the loudest and got the most attention. That was the company that's share price was going to do the best because they were the best at marketing themselves. That's all that mattered. But now it's chill it's shifted right and you have to be looking at the financial result when they come out If you are not good if you are avoiding doing that because you don't know how to read a balance sheet. Then you need to acknowledge that you need to take responsibility of that and you need to fix that. Right? Ultimately you have to fix your weak points. You need to start looking at the raw data and you need to start or at least you need to have sources who look at it and explain it it you know, like you have to have some way of absorbing that data. You can't just read headlines anymore. It's not good enough for or the reality that we're in now going into 2020, right? It's not just stories that sell anymore. You need some meaningful numbers to back it up. Absolutely. Absolutely and and it'll give you some examples like if you read the data you it's like literally a crystal ball that lets you see what's happening and what's going to happen going forward. So for example, you know, I talked about having that Network, right? Well the first conference I went to I met somebody and you know, he was he was very sophisticated guy and he Vested going to quite some money into different funds and so we ended up becoming like pen pals we end up sending e-mails back and forth. And so he meant he was the first one ever mentioned to me. Let me know we're talking like four or five months ago. He said hey, have you noticed that in Canada? There's a huge buildup of inventory and the inventory is building up at higher way higher levels and they're selling it doesn't this seem like a problem to you and he had found this stats can article in page. That nobody was talking about that shows you pretty clearly the data of how much inventory is building up month-over-month. And the first time he showed it to me. I kind of said well, I mean, yeah, it's a bit concerning but sales are still ramping up. Let's see Ontario only has 24 stores. So that's a problem. But when did he show you this data? This must have been at least four to five months before anybody was talking about it? Like a long time before anybody was talking about it and that actually became like something that sort of I knew and processed and said, yeah, of course and then it's funny to see then, you know. For five months and then you know, some people did bring it up and it was mentioned sort of in passing and it was interesting to see online. Everybody just said well that's going to be converted to oil. It doesn't matter right and so only recently in Q4 of this year company started having all these negative results, like really really bad results and you know, they got punished for it in the market and all the CEOs came on the calls and said there's too much inventory buildup sales aren't high enough. We don't have enough distribution and it was like almost Night or over a couple of nights. Suddenly. Everybody got the talking point. And then everybody online was saying this is all Ontario's fault. We don't have enough distribution, etc, etc, which is true. But again, we could have seen this coming with the data. If you were paying attention to the data you could see there was an inventory buildup, right? So it's a little bit of mental gymnastics to sort of ignore it ignore it ignore it ignore it and then suddenly oh, this is a huge problem, right? Yeah, because the first time I heard that was actually this year last this time last year was when people started talking about improving on December October basically legalization happened people isn't like that's when that stats Canada website after website been around for a while. Yeah, but that's beginning for sure did. I know if you first and if and if you just look at it, like I said, like if you just look at the headlines if you just look at the graph, it's pretty flat. Right when you start looking at the numbers. That's when you start seeing the very like the the growth rate right the growth rate for inventory billion trade back. Yeah. Yep, growing quite exponentially and it was funny that you mention that excuse me. It's funny that you mention that because an analyst that I know here. He was bringing that up quite a bit and he was the one who was saying he was preaching extraction and at that time, A lot of people. I don't think we're seeing that value right but it's just now if you recall it's just it's just crazy to see that how quickly the the the the conversation has shifted in the in the Cannabis space specifically from that inventory buildup because Bosher this time everybody was talking about short like sorry Supply not meeting demand charges. Yeah supplies, right? Nobody talks about that. I mean, right right, which is just hilarious to see right. It is funny to see how quickly it shifted, right? It was like not even once well earlier in the year 2019 it was shortage of short of shortage and then that started to we didn't save your large. Oh my in a larger role me. Yeah, it was funny because again like if you start looking at the data that wasn't there anymore, right? So what I'm saying is find the data for yourself go dig it up yourself like the Florida iommu weekly data is released every week. You can see full transparency. What every company in Florida is selling how the Florida Market? Is growing so you know when I start talking about Liberty Health a few weeks ago before it had its huge run, you know, I ended up looking looking really good and I did really well on the investment but it wasn't rocket science. It was literally just I was paying attention to the data that other people weren't right. So I could see that their next earnings were going to be you know far outsized from what their market value was. Right? So find the data yourself and look at it yourself be curious be critical, you know, always ask yourself. Am I? What am I some shinned? What am I risks? Am I being too aggressive my being too conservative and the numbers matter Financial results matter the margins matter don't take the CEOs at their words when they say it's going to get better. How's it going to get a break? But get better. How much is it going to get better? How long is it going to take right? There's a lot of I think critical thinking that needs to be done on investors parts. And you know again if you're just reading headlines, it's not nearly good enough anymore. Oh and lastly, this is your earlier Point watch your sources every Source, I believe is biased including us right or not pay. This is labor of life. Well, if you're getting paid, well, that's true. But but the point is that we are still biased because we're investors. We have our own Investments we have Own way are we going about things right? But there's multiple sources that I watch online or listen to and you need to ask yourself sort of what's their track record what's in it for them? You know are they honest when they make mistakes, they look back and say wow. I was wrong about that. Right which is something that I hope will we always try to do right what we just delete the episode. Yeah. I'm kidding. Yeah a little bit of a red flag right there if they do that, but you know, are you getting your information from good? Sources like that's really important too because what you want is you want honest thoughtful informative discussion on what's happening, right? That's that's the goal. Okay, so coming to the end of the list what else we learned quality versus quantity. So at the beginning of the year, I started the Year by sort of investing in everything shiny. Okay. So there was a lot of fomo going on at the beginning of the year. It was a lot of you know things were taking off especially in the u.s. I had pivoted to looking at the u.s. Very hard and So suddenly it was like, oh there's all these different opportunities and companies and Etc. And the way I sort of work is for me to really pay attention. I have to invest a little bit of money into a name and then I follow it more right so I'm literally invested in it, right? So I started the year with a really wide portfolio of shiny names and I'm finishing the year with a very slimmed-down portfolio of names that I feel are winners. Okay. So what is a winner we've talked about this before we'll talk about it again. For me, it's having cash in the bank having access to cash having cash flow and good margins having a history of execution and then being in the right market and being the right business right quality management as well quality forget about the people that are involved. Absolutely. Yeah, I kind of fold that into execution but you're right management should be a standalone. So it doesn't mean that I'm not gambling there still are companies that are more of Gamble's earlier stage companies, for example Technically, you know, I'm putting that in quotes gambling, right you taking more of a risk, but the lesson is guys get get paid for taking a risk. Okay, so too often I see people, you know looking at a company and there could be nothing wrong with the company. It's just that if the valuation is too high then all of the everything has to go perfectly sort of for the company to perform and for you to even break even on the company, right so When I look at I mentioned before price targets, right and and a lot of people have a lot of anger towards the investment Banks, right and when an investment Bank comes out with a price target of $10 on the stock. Okay sure that the data point but I don't even really care that they came out with $10. I'm more interested of how did they get to $10? Sure right. I want to read through the report and get to the part where they talk about valuation, right and they talk about why and how they think it's worth $10 because a lot of times What you would see is that they say well we think are going to make this much money next year, right and then the multiplier we're going to attach to that is 25 times, right and that's how we get to $10. Okay. And so I sit back and I say okay 25 times that seems pretty aggressive right? Let's run some sensitivity here what happens if it only gets 10 times or 15 times, right like more online would sort of traditional businesses with less risk, right? And if you do it that way then you look at what the price is. Right instead of being 10 dollars. Maybe it's seven dollars or six dollars. And if the price it's a price of the stock right now is already seven dollars, right then you look at that and say you have to ask yourself if everything goes right, but they get a lower multiple. I'm sort of just breaking even right. Am I getting adequately paid for the risk? I'm taking right? That's what you really need to think about when I say quality, right? What is the risk reward if I'm going into something earlier stage? I better be getting a better risk reward. Word out of it, right and I do think you're starting to see that now especially in the private Market you're starting to see I think things have kind of shifted the other way where there's a lot of negativity in capitals very hard to get so because of that people are offering very good deals, right and very very I think reasonable deals and well-structured Deals and stuff like that. Right but in the public markets, you still have this kind of problem and if I'm you know, just going to speak very honestly about large Canadian LPS, for example, one of the Alms is when you're valued at you know, two five eight billion dollars, but you're doing very small sales. And your Market is limited by just the number of people there in the various government regulations. You look at all of the things that have to go right just for you to be worth that number and you start thinking to yourself, you know, there might be nothing wrong with this company, but the valuation is still too rich for me to be adequately rewarded for the risk. I'm taking For sure for sure and one other thing that I would add actually talk touched on it before was sources. Yeah, right when you're looking at Investment Banking reports find out if the company's their client they disclose it for sure for sure. They and it's usually like, you know, they try to be as unbiased as possible. But I mean it's in the day, you know, maybe that 25 times multiplier. You're like ha, you know, these guys are the investment banking clients are the lead runner on the book. They've got a vested interest at least something that organization does of some sort. For sure, I would even go so far to say though that almost every investment every big Investment Bank was involved in cannabis has a vested interest in almost every company because yes canaccord might be the lead bookrunner. But realistically they share that deal with everybody right? Everybody's taken a piece. So everybody's making money on this whether or not to delete realistically and then something that I've heard. I don't know if this is true, but apparently some large percentage right like almost, you know, like very close to a hundred percent. Of price targets and reports and coverage that's written our by recommendations or hold recommendations. It's very rare for investment Banks to write sell recommendations. And if you just think about it for a second, what's the incentive for a company that literally sells stock two people two cells Investments people to write a sell rating, right? I mean, yes, they gain some credibility by doing it but really they piss off a lot of people right? They piss off the company they piss off other. Is a piss off a lot of people so the system is not set up for you know, the Investment Bank necessary to give you unbiased advice. That's not how it works. Right? They're not running a charity. They're running a business. Okay. So it is what it is, right you have to you know, I read those reports out of curiosity to read the valuation section and also because they often have good information about the company, but if you're making your investment decisions based on those and I think you're setting yourself up for failure. Gotcha. So that's my sort of two cents on that. Very last point on finishing out the year. Don't sweat the fomo. We talked a lot about the fear of missing out this year. Right? I think that phase of the Cannabis investing cycle has passed us and from a logical perspective. The reason I say that is because this is a capital intensive business. I think in 2019. We finally learned just how capital-intensive it is after seeing raised after raised after raised and companies. Still needing more money, even the best of companies, right and we're gonna have another episode where we go through what sort of my top picks are going into 2020, but even the best of companies will have to keep raising money. That's just a reality of where we are today. And if you want to be a world-class organization, it takes a lot of money. So what that means is that, you know, every time there's an equity raise. Typically you see values drop, right? So it just means that there's no Easier fast money like a lot of that's already happened in past now, right? So it's gone, you know, my mentality has gone from you know, if I saw an opportunity and it's like oh this this could take off. I really had to be a part of it. I didn't want to miss it right now I've shifted and I'm like, you know what? I'm not going to make all of the money on all of the Investments. That's not what I'm here to do. Right? I'm not I'm not here to call every ball and strike. What I'm here to do is find the pitch. Makes sense to me that I think I can you know hit reasonably. Well, right so that means that there's going to be deals that I passed on that end up doing really well, right. There's going to be deal that I passed on that don't do so. Well, right right. There's going to be deals that I do that do well and I'm like, oh, I wish I did more right that's that is what it is. Right? It's more important to try to get just carefully pick the winners then try to pick everything right and and that goes to sort of the last point which is I think that the ETF model for cannabis is sort of over originally you could maybe buy a little bit of everything and everything kind of went up together and went down together. Right? So it was like you're sort of spread out over the sector the sector does. Well you do. Well, right. This will go into sort of the next episode which is about predictions going forward, but you're going to start to see the separation now from the winners from the losers in the markets from the good markets in the bad markets, so It's not so much about owning everything now and trying to ride the wave it's really about. You know focusing and batting down and try to get the ones that are winners. Sounds good. Sounds good. There you go, Abby. They're all the Lessons Learned for 2019. What do you think there was more lessons than that learned over the past year. We only have half an hour or so to get it to get him out. So he had half an hour and it took us 50 minutes. So there you go. See wow, give or take give or take so okay guys. There you go. There are the lessons for 2019 on a personal note. This has been a great year for the cin podcast, you know, we started and I think June or July it's been about six months. Yeah, and I think Had a really great run. So I want to thank all of the listeners I want to thank people who have you know, helped get the word out. I want to thank everybody who helped make this podcast happen. Yeah people who subscribe to give us likes absolutely reviews, right? Who's sending emails those we appreciate all that. Absolutely we do and I read them all to and we read them all and I reply to probably about half of them. So if you don't get a reply send another one in and you know coin flip 50/50 or get a reply I haven't got nerve. Why yes cin podcast at gmail.com. Thanks so much guys, and we are looking forward to a probably productive and hopefully profitable 2020 with everybody. Excellent. Thanks guys for listening. This podcast is a general communication and entertainment being provided for informational purposes only. It is educational in nature and not designed to be a recommendation for any specific investment product strategy plan feature or other purposes and examples used in this podcast or generic hypothetical and for entertainment purposes only none of cannabis investing Network or its Affiliates or suggesting that the listener or any other person take a specific course of action or any action at all. Communication such as this are not impartial and are provided in connection with advertising and marketing of products and services prior to making any investment or financial decisions and investors should seek individualize advice from perform a personal financial legal tax and other professional adviser that take into account all of the particular facts and circumstances for investors own situation by listening to this communication you agree with the intended purpose described earlier opinions and statements of financial market trends that are based on current market conditions. Shoot our judgment and are subject to change without notice. We believe the information provided here is reliable, but should not be assumed to be accurate or completely the views and strategies describe may not be suitable for all investors.
If you are not changing the way you invest going into 2020 you are in trouble! In this end of the year episode we recap the top 5 lessons learned for Cannabis Investing. #1 - No Excuses, Play Like A Champion - Every investor is the CEO of their own account - Take full responsibility for your own results and learn from your mistakes - "It's not your fault but it is your problem" #2 - LEARN LEARN LEARN & Pay Attention - The importance of investing time and energy into learning this space - Continually evolving your thinking in this fast moving environment - Building a network of trustworthy investors to bounce ideas off of #3 -  Investing vs Trading in Cannabis - Shifting away from the negative stigma of Trading - Learning what can affect short term movements of a stock - Marrying the best of both worlds to find the strategy that works best for you #4 - Read Data NOT Headlines - Importance of reading past the headlines - Acknowledge your weaknesses and improve upon them - especially if they are financial related - Future will be financial and results based - make sure you are analyzing for yourself! - Good data is like a crystal ball - Beware paid and biased information sources (including investment banks) #5 - Quality over Quantity - Shifting from a broad portfolio of shiny companies to a consolidated list of winners - Willing to make lower profits in favour of lower risk - Getting paid for taking risk on earlier stage names - Running sensitivity on valuations to see what the margin for error is CLOSING - NOMO FOMO - This business is extremely capital intensive, even the best companies will need to keep raising - Investors will have chances to buy into these companies along the way as equity raises will be needed - Keep evolving your mindset into 2020 and beyond! Please note: This episode was recorded before the Trulieve short report came out. Our detailed breakdown of the Trulieve report here:   https://www.reddit.com/r/weedstocks/comments/ebztnd/my_analysis_of_the_trul_trulieve_short_report/?utm_source=share&utm_medium=web2x  Next Episode: Top Predictions for 2020 