I try to avoid talking politics here.
My job at Strategic Tech Investor is to help you make money no matter who’s occupying the White House and Congress.
I’m not here to comment on what they’re doing except on how it affects your money.
And even though I could score some points if I did so, I’m certainly not here to endorse one party or the other.
I’m quite conservative myself – and have vocally supported the president on a number of matters (a tough thing to do sometimes in liberal Silicon Valley).
But I cannot hold my tongue any longer as President Donald Trump keeps damaging Main Street investors and their retirement holdings.
Of course, I’m talking about the president’s misguided attacks on Amazon.com Inc. (Nasdaq: AMZN).
I want to show you how these attacks are part of a pattern for this administration.
In fact, they’re related to the pressure we’ve seen on pot stocks of late.
Today I’m going to show you how that’s playing out.
But more importantly, I’m going to show you how to profit right in the face of these roadblocks…
Lack of Leadership
Not to boast – well, maybe just a tad – but this is the kind of insight you just can’t find on Wall Street.
But I believe it’s one of the reasons why my readers consistently score market-crushing gains.
So, let’s get started by taking a look at the situation with Amazon.
President Trump charges that Amazon is cheating the U.S. Postal Service, but that’s simply not true. The e-commerce company is just taking advantage of current low rates, as any business should.
The president is showing poor leadership here.
You just can’t get around the fact that he isn’t proposing any kind of solution. See, I live by that adage that if a leader offers criticism, then that person better have a solution.
President Trump knows full well that neither he nor the U.S. Postal Service is equipped to change the postal rates that Amazon pays for what are known as “last-mile deliveries.”
In fact, just about every commercial shipper piggy-backs off the post office’s friendly rates. Moreover, data compiled by The Wall Street Journal reveals that Amazon and other e-commerce firms are probably doing the USPS a favor by adding new sales on top of what amounts to a fixed-cost base.
He also accuses Amazon of running Main Street retailers out of business. Yet, Trump leaves alone Starbucks Corp. (Nasdaq: SBUX) and Walmart Inc. (NYSE: WMT), two retail outfits that have been putting mom-and-pop shops under duress for decades.
Here’s what he’s missing there…
Thousands of merchants now sell their goods on Amazon. That has given struggling retailers the kind of cost-effective, global reach they couldn’t get in a small town or even a medium-sized city.
I hope no one tells the president that, as leader in cloud services, Amazon is becoming a major U.S. contractor. The Seattle-based firm hopes to land a 10-year contract worth up to $10 billion. That’s on top of the $2.8 billion in federal sales analysts say it will bring in this year alone.
And yet, the president’s recent tweets seem to be a conscious decision to hurt Amazon’s investors.
This is extremely misguided for two reasons…
- This is a poor way for the president to put pressure on CEO Jeff Bezos for the highly negative coverage the White House gets from The Washington Post. Bezos owns the famously liberal paper.
- Amazon is one of the most important stocks in the world today. Millions of investors have it in the retirement portfolios. They saw the value of their shares fall by as much as 14% in less than three weeks – meaning Trump’s tweets cost them, temporarily at least, more than $60 billion in market value.
And that brings us around to what’s happening with cannabis…
History Repeats Itself
As we’ve been talking about since the fall of 2016, marijuana is quickly going mainstream, with women and baby boomers among the fastest growing groups of users.
That’s why we saw a huge rally in stock prices leading up to Election Day 2016 – when voters in eight states legalized marijuana.
It’s why we see big predictions – like the recent report from Cowen & Co., which forecasts that U.S. legal cannabis sales will hit $50 billion by 2026… and $75 billion by 2030.
And it’s why we saw another big rally leading up to the start of this year. The big catalyst this time around was California’s going fully legal on Jan. 1.
And no wonder… California is home to 37 million people – and a $2.5 trillion economy.
However, just three days after recreational use in California became legal, U.S. Attorney General Jeff Sessions attempted to clamp down on legal cannabis.
He rescinded the Cole Memo, which ordered federal agents to leave licensed marijuana companies alone in legalized states – even though distribution, cultivation, and even personal use are still listed as serious federal crimes.
Like with Trump’s attacks on Amazon, Sessions’ timing was no coincidence.
I believe Sessions knew full legalization in California meant we were at the tipping point of the mainstreaming of legal marijuana.
And he wanted to put his thumb on the scale.
It worked – for a little while…
But That’s About to Change
The renewed federal-state conflict has taken a major toll on cannabis stocks.
Just look at the bellwether Horizons Medical Marijuana Life Sciences ETF (TSX: HMMJ). Since Jan. 5, the day after Sessions rescinded the Cole Memo, HMMJ has plummeted 35%.
And Sessions hasn’t wasted an opportunity to bang the anti-weed drum during that stretch. Though he left it up to field offices to decide who to prosecute, he has loudly slammed legal cannabis again and again.
Like with Trump and Amazon, it certainly seems like Sessions was mindful that money was set to flow into cannabis companies from investors.
Now then, I believe the sector is set for a rebound for two reasons…
- As more time goes on and Sessions makes no major cannabis busts, folks will realize that in reality little has changed – legal marijuana is an unstoppable force.
- More states – including Arizona, Delaware, and New Jersey – are set to make some form of cannabis use legal this year, whether by legislative action or voter referendum. So as that happens, more cannabis shares will rally.
Investors will soon once again wake up to the big money to be made in a brand-new industry that is sweeping the nation and that will soon be worth $75 billion – from basically nothing just a few years ago.
— Michael Robinson
Source: Strategic Tech Investor