You’ve probably seen a lot of people blaming Aphria for the recent cannabis stock downturn. They’re wrong. Here’s the real story…

We saw a little bit of downside volatility in the NICI 50 index and in cannabis stocks generally last week. It was the first real downdraft since the cannabis market turned up with the overall equity market in late December of 2018.

Whenever these downturns occur, I get a lot of questions.

“What’s going on?”

“What’s driving the market lower?”

And, of course, “When will things turn back around?”

And in this case, the answer is simple: Cannabis is doing just fine, the overall market is driving cannabis stocks lower, and I don’t know when things will turn, but they will.

That’s not very satisfying, is it? But it is the truth.

Let me explain.

When the cannabis market turned down in November and December, it turned out that the stocks were selling off in the context of a worldwide rout of riskier assets. Tech stocks got crushed, emerging markets’ stocks were down, even blue-chip stocks got hit. It was only natural that cannabis stocks would have their turn in the punishment room.

These graphs will show you what I’m talking about…

Marketwide Volatility

Cannabis industry bellwether Canopy Growth (NYSE: CGC, TSX: WEED) declined by 34.6% between the October 23 launch of Cannabis Profits Daily and Christmas, which marked the low point for most cannabis stocks. That’s a big decline. But Apple (NASDAQ: AAPL) was down by almost the same amount – 34.1%.

And there was a reason Apple was down. It turns out that there is the possibility of a recession in China, so Chinese consumers haven’t been scooping up as many iPhones as people thought they would. There is also the possibility that trade tensions between China and the United States could eventually increase Apple’s costs.

So why was Canopy down? Canopy was down because all stocks were down, and all stocks were down partly because of the possibility of a recession in China. If that makes no sense to you at all, that’s good. It’s nonsensical. It’s just the way stock markets trade these days.

A Reality Check in Our Favor

But as I’ve said, eventually reality moves the stock market, not the other way around. Eventually, people realized that Canopy Growth was a Canadian cannabis company. No one in China will ever choose to buy or not to buy their products. So Canopy and other cannabis stocks recovered and then added more to their prior high levels. Let’s look at that same chart through today.

Canopy is back. Apple only came back a little, because there are still those Chinese consumers out there who might not buy an iPhone this quarter.

What about this time? What sent the NICI 50 index down nearly 5% in two days last week?

The same thing. The world is getting a little nervous about its big, global stocks. A slowdown in China, zero growth in Europe, trade tensions, Brexit, central bank doings – all of these things have investors jittery. And since cannabis is considered among the riskiest asset classes, some of the first and strongest sell signals come in that sector.

NICILytics could be the most powerful cannabis-investing tool on the market. That’s because we do the dogged research to have the most up-to-date and accurate information in the business. Most financial websites’ information about things like share counts and market caps are outdated or just plain wrong. To find out how NICILytics works, and how to get your advantage in cannabis investing, click here now.

Finger Pointing

I will say that there’s one thing which did NOT send the sector down.

You may have seen articles blaming the declines on Aphria (NYSE: APHA) rebuffing Green Growth Brands’ (CSE: GGB, OTC: GGBXF) hostile takeover offer or on the news that New York City’s restaurant regulator is cracking down on CBD. I’ll have more to share on that restaurant story later this week, but know that it did not send stocks down.

Whenever stocks decline, financial journalists scramble to find the reason why – and most often they get it wrong.

This time, though, reality seems to be catching up more quickly. As I write this, stocks are down .6%, the NICI 50 index is basically flat, and the stocks in our model portfolios are doing better than that – most are up for the day.

No one can guarantee that will continue, of course – and you shouldn’t listen to those who claim they can. But my message to you is that this kind of short-term volatility is normal, particularly after a period of big gains like we saw in January.

It’s nothing to worry about, and it’s certainly not a signal that it’s time to sell anything! In fact, you might use any price backup to add to some cannabis positions you especially like.

Thank you again for being an important member of the National Institute for Cannabis Investors,

Greg Miller
Executive Director, National Institute for Cannabis Investors

P.S. We’re about to see an explosion of new cannabis IPOs hit the market. And for smart investors who get in on IPO day, the gains can be incredible. We’re talking about the potential for each of these stocks to soar 200%, 500%, 1,000%, or more, practically overnight. And today, we’ve uncovered two potentially high-flying companies set to go public that you can’t afford to miss out on. Just click here to find out more.


Comments

19 responses to “No, Aphria Did Not Crash Cannabis Stocks”

  1. Awesome information. Earnings week, cannabis stocks may head even lower for the very near term. Great buying opportunities

  2. After previously joining two other advisory groups and being disappointed with the results of their advice, plus the money I spent on their memberships, I have high hopes that your group will be a different story. Wish I had the money back that I invested so that I could be a little more bold, but my portfolio is the one you advocate right down the line and even though my investments are modest, I hope that you will keep me advised on the best moves to make. At 88, still working, I would love to see some exciting success with these investments.
    Thanks
    Bruce Risely

  3. What role did short squeeze buying and momentum money flows play in the recent stock price movements up and now moving lower? I’m wondering why you have not addressed those implications, or perhaps if you think there are any, in your analysis. Thank you.

  4. Once we are in for “100%” on a recommended stock will you ever suggest when we should purchase more of any previously recommended stock?

  5. The Aphria Green Growth debacle has me confused. I own stock in both companies and have read arguments on both sides. Is this a good merger/buyout or a failure in the making?

    • The offer is 1.5+ shares of GG, for each share of Aphria! Since Aphria is worth at least 5x more than GG, NOT a good trade. Don’t know when it was put together, but terrible deal

  6. Concise and clear explanation, Greg. Thank you. Investing now before the surge coming soon. Love the updates and counsel.
    Jon

  7. I see Green Growth partnership with Simon Property Group will put them in 108 retail stores. Does this mean anything for GreenGrowth or the situation with Aphria?

  8. I’ve never invested before, but I am all in with you guys on this. I’d be lost without your advice, so thanks Greg and crew. Feeling optimistic!

  9. There appears to be quite a bit of short squeeze going on. Not uncommon for a volatile market but agree is worth digging in to.

  10. I like to thank the staff at NICI for providing the fantastic research information. The extra step was very beneficial as well.
    Thanks.

  11. Thanks Greg for the clarification on that. Any updates on when you might think the schedule for cannabis in the US may change so the big money will geer up and start flowing in? I am thinking we don’t want it too soon until our portfolios are all nicely padded — is that safe to say?
    Hilton

  12. I too joined two other advisory groups. I’ve been very disappointed since almost day one. Almost each email I receive, they want you to subscribe something new. After joining NICI, the information and updates have so far been very useful. Thanks Greg and all the NICI staff.

  13. Thanks Greg for those “nerves calming” words… hopefully the prices goes down a little more so that people like me can scoop up more deals.. ALL IN HERE 😊

  14. I have a corporate action notice from my direct investing firm that Green Growth Brands Inc. has made an offer to purchase all issued and outstanding shares of Aphria including any that may become issued prior to May 9th, 2019 (expiry time) subject to the conditions in the Offer to Purchase dated Jan 22, 2019.
    I have 2 options:
    1. Tender my Aphria shares – receive 1.5714 common shares of Green Growth
    2. or I can decide not to tender my shares

    Has the Green Growth purchase been cast in stone… ?
    I do not know anything about Green Growth… I know Aphria

    What is your advice?
    Thank you.

  15. One thing I have noticed and it is never accepted or made public is the fact of day trading by the big stock holders. Several years back the day trading was blamed on little investors who might have a few hundred shares of stock and small day trading does no drive the market. Start putting the blame where it belongs.

  16. What is going on this week with the stocks? One has been especially hard hit, today alone down over 13%. Most of my portfolio looks like a massacre. I survived Nov and Dec but wow this is crazy!!! Anyone else???

  17. You don’t lose money until you sell. Until then, it’s just numbers on a chart. If you believe in the cannabis industry..,.which I do, though I think it might be a little overblown..and if you believe in your particular stock/company…then don ‘t worry. As the industry expands your company stock will rise and then you can either hold for more growth or sell for a profit
    More people lose money by trading on emotions…instead of statistics, than any other reason. Fear and greed are two of the biggest emotional reasons for bad trades!!

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