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Investor Alert

Oct. 11, 2019, 2:09 p.m. EDT

Here’s your game plan after marijuana stocks got throttled Thursday

Now’s the time to practice discipline and consider which stocks to buy at the right entry points

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By Nigam Arora

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• The inference is that the same factors are applicable to other popular marijuana stocks such as Canopy Growth Corp. /zigman2/quotes/200603886/composite CGC +0.27% , Cronos Group /zigman2/quotes/206842762/composite CRON +0.90% , Aphria /zigman2/quotes/207425803/composite APHA +0.85%  and Aurora Cannabis /zigman2/quotes/210559470/composite ACB -0.41% .

• Recently, in a surprise announcement, MedMen Enterprises /zigman2/quotes/201940908/delayed MMNFF +1.00%  abandoned its buyout of PharmaCann, whose price was originally set at $600 million. It was the biggest marijuana deal in the U.S. at that time. MedMen’s CFO was ousted. Those developments created a negative environment prior to Hexo’s announcement.

• The vaping-illness crisis is adding to negative sentiment, especially for a stock like Greenlane Holdings /zigman2/quotes/211319667/composite GNLN -7.29% . For full disclosure, an Arora Report service has a highly profitable short position in Greenlane.

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 Nigam Arora.

Additional warning

It is worth repeating Tilray stock’s 75% decline. Many, if not most, marijuana investors have losses in their portfolios. The year-end is approaching. At The Arora Report, we expect significant tax-loss selling in marijuana stocks between now and Dec. 31 unless there is good news that buoys the industry.

What to do now

The plan is to opportunistically pick the points when the selling is the greatest and buy select marijuana stocks. It is important that investors bring sophistication to their marijuana investing by implementing concepts such as long-term core positions and short-term trade-around positions. We also plan to selectively short-sell if there are “up” spikes.

Marijuana investors ought to learn the skill advocated by Arora’s 14th Law of Investing and Trading: “To be successful at investing and trading, become a master of position sizing.”

Disclosure: Subscribers to The Arora Report may have positions in the securities mentioned in this article or may take positions at any time. <INTERNAL-PAGE URL="/author/nigam-arora">Nigam Arora</INTERNAL-PAGE> 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.

/zigman2/quotes/200603886/composite
US : U.S.: NYSE
$ 18.65
+0.05 +0.27%
Volume: 2.98M
Dec. 6, 2019 6:30p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$6.50 billion
Rev. per Employee
$115,039
loading...
/zigman2/quotes/206842762/composite
US : U.S.: Nasdaq
$ 6.71
+0.06 +0.90%
Volume: 2.56M
Dec. 6, 2019 4:00p
P/E Ratio
7.64
Dividend Yield
N/A
Market Cap
$2.31 billion
Rev. per Employee
$55,248
loading...
/zigman2/quotes/207425803/composite
US : U.S.: NYSE
$ 4.72
+0.04 +0.85%
Volume: 1.62M
Dec. 6, 2019 6:30p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$1.19 billion
Rev. per Employee
$147,410
loading...
/zigman2/quotes/210559470/composite
US : U.S.: NYSE
$ 2.43
-0.01 -0.41%
Volume: 13.81M
Dec. 6, 2019 6:30p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$2.55 billion
Rev. per Employee
$94,401
loading...
/zigman2/quotes/201940908/delayed
US : U.S.: OTC
$ 0.41
+0.0040 +1.00%
Volume: 1.39M
Dec. 6, 2019 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$67.45 million
Rev. per Employee
$49,729
loading...
/zigman2/quotes/211319667/composite
US : U.S.: Nasdaq
$ 2.67
-0.21 -7.29%
Volume: 462,988
Dec. 6, 2019 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$26.69 million
Rev. per Employee
N/A
loading...

Nigam Arora is an engineer, nuclear physicist, author, and entrepreneur and the founder of two Inc. 500 fastest growing companies. He is also the developer of the ZYX Change Method to profit from change by investing. The premise is that most money is made by predicting change before the crowd. Arora is the chief investment officer at The Arora Report and the editor of four newsletters that track the ZYX Change Method. Nigam can be reached at Nigam@TheAroraReport.com

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