My goal of investing is to make my money work for me. One method of trying to achieve this is by investing in industries that I think will be big long term.
For instance, had someone bought shares of Apple or Amazon when they were just starting out, their initial investment would have gained 350x and 30x respectively. As a percentage gain, that’s 35,000% and 3,000%. Insanely incredible!
If you put $130,000 into Apple back in 1981, you’d have bought each share for 50 cents and it’d be worth $45 Million today. Takes a lot of patience to hold a stock for nearly 40 years.
The same $130k put into Amazon in 2001 would have seen each $55 share grow to $175. That portfolio would currently be worth $3.9 million (18 years later).
If going all-in on one stock is too risky (is there such a thing?), investors can buy an ETF or index fund. “Index funds hold every stock in an index such as the S&P 500, including big-name companies such as Apple, Microsoft and Google. Because this type of fund is highly diversified, it stays relatively constant and avoids the risk that comes with picking individual stocks.” — cnbc
“An ETF, or exchange-traded fund, is a marketable security that tracks a stock index, a commodity, bonds, or a basket of assets. Although similar in many ways, ETFs differ from mutual funds because shares trade like common stock on an exchange. The price of an ETF’s shares will change throughout the day as they are bought and sold.
The largest ETFs typically have higher average daily volume and lower fees than mutual fund shares which makes them an attractive alternative for individual investors.
While most ETFs track stock indexes, there are also ETFs that invest in commodity markets, currencies, bonds, and other asset classes. Many ETFs also have options available for investors to use income, speculation, or hedging strategies.
“Getting stocks at low prices increases the likelihood of earning a profit in the long run. Value investors question a market index and usually avoid popular stocks in hopes of beating the market.” — investopedia
Simply put, index funds contain shares of many different companies in a specific growing sector. The First Trust NYSE Arca Biotechnology Index Fund (FBT) for instance, came about in 2006. The fund holds shares of early biotech companies, mostly in pharmaceuticals.
Invesco QQQ ETF (QQQ) and the SPDR S&P 500 trust (SPY) are exchange-traded funds that are very popular and are heavily invested in tech companies such as Apple, Amazon, Microsoft, Facebook, Google, etc.
The QQQ ETF took 20 years to gain 350%. Spy gained 700% in 26 years. That’s an average gain of 525% in 23 years. Five times your money in about 20 years is excellent but not as good as 350x had you picked the winner out of the group (Apple).
Either way, whether stock picking or buying index funds, the profits come from buying during the early stages.
Currently, industries such as blockchain, cannabis, robotics, electric cars, and big data analytics are emerging. There are ETFs and index funds for all of them and can help determine which direction your investment is likely to go.
I went all-in on one cannabis stock. It’s more risky, but the pay-off could be much bigger than just investing in a cannabis ETF.
“The Green Organic Dutchman also received an investment from ETF Managers Group, LLC (ETFMG). Announced today, they bought over 13 Million shares(a 5.05% stake) for their “Alternative Harvest” ETF.
Under ticker symbol MJ, the Alternative Harvest ETF is “the first pot-focused ETF to trade in the U.S. The fund tracks an index of stocks across the globe that are engaged in the legal cultivation, production, marketing or distribution of cannabis products for either medical or non-medical purposes.” — etf
It’s great news that the Alternative Harvest ETF bought shares of TGOD to add to their fund. It shows they have confidence in the company.
The fact that there’s now cannabis ETFs shows that there’s industry progression and investment interest. If the math ends up like the QQQ ETF, buying MJ now and holding for 23 years would multiply by 525%. A $32.5k investment would be worth $170,625.
Now, suppose you happened to buy the best performing stock of MJ before it was even added to the ETF (just like buying Apple before it got added to QQQ). You’d be up 35,000% or 350x. $32.5k at that rate would be worth north of $11 million.
The difference in gains between the ETF and the best performing stock of the ETF is exponential. Note: the example of holding a single stock was over a 40 year period. The QQQ ETF was held for only 20 years.
This all proves there’s big money to be made in emerging markets. The earlier you’re invested, the greater the return. Below is my all-in stock (TGODF) which is also now in the Alternative Harvest ETF (MJ).
I’m betting the cannabis sector as a whole will continue to grow (using (MJ) as an indicator of success), but TGODF will outperform in the long run. I can compare the two charts to see how each is performing.
Because the MJ ETF holds several popular cannabis stocks (Tilray, Canopy, Cronos, TGOD, etc.), it’s a good indication of which direction the cannabis sector is going (up 50% since 2015).
Individually, TGODF is up 20% since it’s IPO at $2.75 on May 2nd, 2018. It’s got some major catching up to do with the rest of the sector. The others received a lot of televised hype and pumped quite a bit because of it. For that reason, I avoided them and invested in The Green Organic Dutchman instead. It’s the dark horse.
Because I averaged down on sell-offs, my shares have increased in quantity and price. When graphed, my TGOD account balance forms a big ass saucer. “A saucer is a technical charting pattern that forms when a security’s price has reached a low and begins trending upward.” — investopedia
Saucers or “Rounded bottoms — especially when they occur on daily and weekly charts, lasting several months or more — often signal a strong trend change. Trends may last for a long time. In stock and currency markets trends can last five years or more. Therefore, the rounded doesn’t have an accurate long-term price target. Rather, the pattern lets traders know a major new trend could be starting.” — investopedia
My TGODF shares are currently down 27% from my average. The good news is, a saucer has formed (bullish), and the cannabis sector as a whole is up as indicated by the MJ ETF.
You know you’re onto something when Martha Stewart wants in! “Martha Stewart partners with Canadian cannabis firm.” — washingtonpost
Time will tell if it would have been more profitable to invest in MJ instead of TGODF. Regardless, they’re both up since going public.
Spot the trend before it happens! I think years from now, the cannabis industry is going to worth exponentially more than it is now.
You don’t have to like or use marijuana to invest in the growing industry, just like you don’t have drive an electric vehicle to invest in Tesla. If you think Tesla will be big in the future, you’d invest in them early. Cannabis will be a huge market years from now and I’ll be glad I bought when I did.