Marijuana Stocks Financial Analysts Credibility Is Highly Questionable 2 comments Apr 28, 2014 10:45 AM What Should We Learn From The Recent SEC's Trading Halts of CANN, PHOT, And PTOG Shares? How Not To Fall Victim To Online Marijuana-Market Analysts's Rose Garden Promises. Are The Self-Claimed MJ Market Financial Analysts For Real And Do They Have More Insights In This New And Volatile Marijuana Market Than The Novice Investors Have? Can You Trust Their Guidance, Or Are They In Fact Scamming You Out Of Your Hard Earned Money With Their Membership Fees? Don't Believe What They Claim They Will Do For You On Their Websites. Verify Their Track Records Before Handing Them The $600+/- Per Year Membership Fee. Like many who are reading this article, I am a novice investor myself. The Green Rush in the Marijuana Business Sector has created that Once-in-A-Lifetime opportunity most of us novice investors have been waiting for, to be a part of, to promote, to support by investing in them, and yes, capitalize on its financial rewards. Those of us ordinary investors, without much of knowledge or experience in investing in the MJ sector, are looking forward to the day that the legalized use of Marijuana for medical and recreational reasons, in the US and other parts of the world, to succeed. At the same time we are not naïve to think that along the path of our endeavor we are not going to fall victim to many scammers of all types who will be crouching around every bend on the road, waiting to take advantage of every wrong investment turn that we might take. We are also aware that the choppy waters of investing in the current medical and recreational Marijuana sector environment are filled with confusion, lack of established direction, uncertainties with the validity of the information floating around the Cannabis businesses, and in the worst case that we may not be able to survive the shark infested volatile waves of the Marijuana Penny Stocks. Majority of us, at some point in our past investment decisions, have experienced one or all of these challenges in our stock trading times when we pressed that "Place Order" key. Speaking only for myself, with every "Place Order" key that I pressed, I fantasized my family and I getting closer to the goals and ideal life that I had envisioned and planned for and I now I had this golden opportunity to get us closer and closer to the above-standard lifestyle, one by one, little by little, and sometimes even in large and larger trades. Concurrently though, each of those times my mind was also filled with fears and uncertainties as to "if I was making the most stupid move" and thinking of "the possibility of losing most or all of my hard earned money, consequently falling behind and farther and farther from my overall goals. To me it was only natural to experience those extreme thoughts and feelings.
Well, after this long and not-so-philosophical introduction, I should say that the real purpose for this article is not to analyze, promote, or demote any of the current Marijuana businesses in this sector. I would be the first one to admit that I don't know "enough" about any of these current players to even begin to evaluate, validate, or invalidate. Rather my main purposes for this (and future) articles are to shed light on some of the so called Expert Marijuana Market Financial Analysis, or "Cannabis Financial Market Analysts", or "Marijuana Stocks Technical Traders".
In this Green Rush fever that has been taking the country by storm since two years ago, one or more new MJ Market Analysis Businesses have been growing under the investors' feet almost every month, if not every week or so. They are growing fast, they are becoming extremely popular among the novice MJ sector investors, and they are getting rich, they are getting really, really rich rather quickly but on the back of their paying members. And guess what, these Analysts don't even have to, or want to invest their own money in the MJ businesses that they analyze and promote, at least not directly or with the knowledge of their members. They rather play it safe and use their "Paper Money Portfolio" to invest in this sector as the investment model for thir members to follow.
I know this because once I was a member of three of these MJ Market Analysis Businesses, all at the same time. As I was and still am a novice investor in the MJ sector, I desperately needed to tap into the experienced brains of these analysts, to learn from their analytic opinions and their vast sea of knowledge and experiences in the MJ business sector, so they had claimed to have had in their website advertisements.
For the purpose of this article I like to focus on one particular online MJ Market Financial Analysis Business that I am most familiar with and through which I learned the biggest lesson of my lifetime so far as an investor, though a bit too late. In my future articles I try to expose the lessons that I learned (very similar in nature but concurrently) with the other two businesses I was a member of.
Not naming this particular Cannabis Financial Analyst by his actual business title/name, I think it is about time for all the current and new novice investors-to-be in the MJ sector who are reading this article to be aware of how this and similar businesses operate and how they should avoid signing up for membership with them, unless and until, they have completely read and understood the history behind these businesses, their analysts trading success rates, their personal and business track records as investors in the MJ business sector. Not to mention, fully understanding and verifying their founder's beliefs and stands on the Marijuana and Cannabis in general. The members (and to-be members) need to fully understand what they are getting for their monthly or annual membership fees and don't get tricked into signing up for their membership by falling for their glamorous websites and convincing logos that are only meant to closely connect themselves with the Cannabis Stocks sector, even if they were conservative investors or analysts in the Dow Jones or NASDAQ indices just a few month back before they decided to jump on the MJ bandwagon.
This particular business in focus is set up to mimic, what you may call, an "Investment Community" in the Marijuana Business Sector and it claims to have had 100% success in its Paper Money MJ stocks investments. The majorities of its members are unskilled and uneducated, investment-wise speaking. They, like many other investors, have some money to invest and of course they are hoping for a high and quick return on their investment in this Green Rush Fever.
In this community the members get to chat and discuss trading day's activities, share investment ideas with each other, support and give investment advice to each other as well. Obviously not many of them (if any of them) are qualified to give trading advice to others, hence without knowing it some members take huge risks by taking unqualified investment advice from others and consequently stand to lose a lot of their investment money. At this time I asked myself the most obvious question "Where is the real Analyst in this community to help his paying members to decide when or how to trade?" Why he does not discourage unqualified investment advices in the blogs and the forums in his website? After all he is the leading MJ market expert Analyst in the legal Marijuana companies. Well, let's get to that a bit later, but first thing first.
In my last count there were about 1500 paying members in this community (that was before I terminated my membership). Each member was paying an average of $40/month (though I recently read in one of the promotional emails I received from this community, that the new membership fee was going up to $50 per month, so hurry up and join). Doing a simple math, the calculations results reveal a shocking annual income of about $720,000-$900,000 for this business just by collecting membership fees, not too far from a million dollar income for a business that has been in existence for less than a year. No wonder why with this kind of secured and guaranteed income the expert Analyst doesn't want to risk his hefty income investing directly in the very MJ stocks that he encourages its paying members to invest in. As I mentioned above, the analyst is using the paper money for placing trades in his favorite MJ companies while his novice paying members more or less follow his paper money investment model with their real money. Another irony with how this community is set up is that in all cases the analyst expresses his vaguely, indecisive, unconvincing, and filled with hesitance, positive or negative opinions about the MJ companies of his choosing. However he never makes any direct buy/hold/sell recommendations for his members. The style in which this Analyst guides his members to invest reminds me of the scenario when the first sheep in the herd jumps over the creek and the rest of the sheep jump over after him, not knowing or understanding why they are jumping. They jump only because the leader did and he failed to inform them as to how wide or deep the creek was. A few minutes later the same first sheep changes his mind and again jumps without a reason what so ever, and the herd follows suit. Well, as you may have guessed it, this method of leading is very similar to how this Analyst operates, except in the case of this Analyst, it is done totally by design and premeditated. His premeditated guidance approach has one purpose and one purpose only, "the Analyst cannot be held accountable if some or all of his followers fall in the creek and drawn and lose all their investment money simply because he would claim that:
· He never made any direct BUY/HOLD/SELL recommendations and that the investor was the one who pressed the "Place Order" key, not him.
· He told his members that he changed his forecast analysis on the companies that he invested the paper money in two or three times during the day; therefore the members should have not followed his first two or three analysis.
· That he established two to four support and two to three resistance levels (with huge ranges between the support and resistance prices) for almost every stock that he follows and promotes in his daily analysis. Therefore his price predictions were right and within those ranges.
With the ambiguity of this magnitude, how could anybody possibly pin him up to the wall and question his leadership and investment judgments? If the stock that the paper money is invested in does well, then fine, the novice members who invested similarly do well, hence the analyst is praised for his talent and professional skills in the community blogs all day long. So far all is good and life goes on, and everybody is happy. I see nothing wrong with that scenario. Now, if the paper money investment portfolio doesn't do well and the stocks that he is invested in sink down to the basement level, you guessed it, the real money investors portfolio will sink as well (provided the herd jumped over the creek again when the lead sheep did with the paper money). Ok, I don't see anything wrong with this scenario either. We all know that investing in stock market is risky and investing in MJ stocks is way more riskier , and, and, investing in the MJ Penny Stocks, financially speaking, is downright volatile if not extremely dangerous. Even the self-claimed expert analysts in the "Cannabis Financial Analysts Community" can be wrong sometimes and lose their paper money value as the members lose their real money. If you are still with me then hang in there for a little while longer. I promise it will come to an end soon but with some ear and eye opening closing statement.
Ok, let me take you to where I like to touch on the core issue for this article. Having endured all the above readings so far, let's assume that you are a novice or a skilled investor and you cannot wait to invest in the fast moving MJ Gold Rush opportunity. You cannot wait, but you also rather getting in on it with minimized risk of losing and maximized return on your investment, like all the other investors wish to do. Since you are new to this market sector you search online and find the website of one of the expert professional MJ market analyst businesses. You like what you read on their website and Voilá, you are now a member of this community and can enjoy the benefits of tapping into the expert analyst's broad range of experiences in this market. Now, as a new member, and after reading all the benefits that you will get with your paid membership, your first expectations are? Let me guess, you expect the expert analyst will advise you to make the best and most sound investment decision in this volatile MJ market sector. Remember, he accepted your membership money and in return he promised you the rose garden in his website. In my own case, I was expectinhg, at a minimum, that this expert Analyst have had researched the finances, the management, the income statements, and the business model of the companies that he was following, analyzing, promoting/demoting, and investing his paper money in as a guide. Also, he should have had evaluated those companies against the other players in the overall MJ market as well and picked the best of them to follow. In other words he must have spent a whole lot more time evaluating, disseminating, and distinguishing valued companies from worthless companies. He must have armed himself with full knowledge and information on the only companies that were worthy of investing in to minimize possible risks and maximized the rate of return on my investment. After all why did he start this business if he didn't know who the players were in this market? Because the true value of the MJ companies is still very fluid and until this market finds a solid and established foundation, he must have continued focusing his attention only and fully on the companies that have found their solid footings and didn't get distracted by every new company that entered the sector every week of every month without evaluating/analyzing them first. I also expected that once this expert Analyst had chosen the few or handful good companies in the sector that were worthy of his trust and that he could have risked his good reputation buy putting it on the line for them, then he would come out with a very clear, sound, and confident words of buy/hold/sell advice without any ambiguity. Well, if that is also your long answer as well, then hang on for more.
As I mentioned in the above paragraphs, although you and I and many others who are new to investing in the stock market, especially in the MJ sector, we are fully aware of the risks that we are taking but we are willing to take those risks while our wishes are to minimize the potential risks. That is the most important reason as to why we hire and pay an expert analyst to do all the due diligence necessary on our behalf. After all if an analyst is bringing in $720,000-$900.000 of annual income, just from collecting membership fees, one would expect that he has done an excessive due diligent work for his paying customers by reading, digesting, translating, and concluding his findings in the companies' SEC filings and report to his members with a solid trading action recommendation and not a cowardly words of cautions. As you and I know, there are numerous financial forms that every SEC-reporting publicly traded company is required to file, given it is the 10-K report forms, 8-K report forms, Forms 3, 4, and 5, Schedule 13D form, and most importantly the Form 144 (please visit www.SEC.gov website to find out more about the purpose of these forms). Of course it is possible that we can do our own readings; however it may not be more than 5 minutes into the second page of the report before we get lost in confusion trying to understand the relevant information in these forms, which are full of financial terms, acronyms, weird numbers and the statements that seem to be written for only those expert analysts to understand.
Ok, now, what if your hired analyst fails to read and inform you of the significance of those reports and their impacts on the price of the stock that he guided you to invest in (indirectly, of course)? Even worse, what if the contents of those reports were falsely reported and did not match the public information, before or after filing, and had serious misinformation in them for the purpose of boosting their stock's price? Well, up to that point you and I had been led by the leading sheep to jump over the creek and we did. Some or most of us decided to jump because our beloved hired expert analyst jumped with his paper money. Ok, now what?
You wake up one morning feeling great that your investment in those companies is in good hands and you go on to get online and open your online investment brokerage account page,,,,, and BANG,,,,, the shares of one of the companies that you are heavily invested in is not trading that morning. It won't be too long before you find out that the SEC has halted trading those shares. I can only guess what would be the first four-letter word that would come to your mind and through your lips in a nanosecond.
Well, at this point you are a bit confused, nervous, unsettled, and scrambling to find out what really happened over night without any warning signs the day before. So you log into your "Cannabis Financial Analysts" website and quickly visit the members' blogs section and shortly you figure out that your morning nightmare in fact is not a nightmare. The SEC has suspended the trading of the securities of the X-company that the analyst's paper money and your real money is invested in, and that you are not alone. There are tens if not hundreds of members like you who are scratching their heads in maze and confusion, not knowing what just happened to them so unexpectedly.
Ok, if that is not a true shocker enough, then this is: What if in those confusing moments, minutes, hours and even days following the halt you are not able to find your expert analyst to ask him to provide some explanations, or possibly ask him some questions? The same Analyst who up to the last days leading to the trading halt of your securities by the SEC was praising that company and how good he felt about their management team, their financial strength, their business direction, their market transparency, etc. etc….
Now, if you thought that your two dimensional nightmare was going to diminish by his quick and proactive response, then you are up for a bigger surprise because soon it will turn into a three dimensional nightmare when you try to get in contact with him and go to any of the blogs on the site and post your question directly to him and nervously wait in anticipation of receiving a reply with answers from the expert Analyst. Surprisingly not only you don't hear from him (because, like yourself, he doesn't know what really happened and what caused the SEC to take this dramatic action against his/your favorite MJ Company since he did not really read any of the company's financial filings and documents), instead you run into some of his favorite members with whom he has developed very close and strong relationships (if not real friendships).They respond to you on his behalf and they are not pretty responses. They are aggressive, rude, mean and some even threatening, just because you questioned the leader…their leader. They fully and unquestionably trust and believe their Analyst leader and they fight for him with all they have if you show your opinion of him being different from theirs.
Ok, if that has not depressed you enough, then hear this out. The next day you see that the price per share of your halted stock shows as $0.00 (OTCQB:ZERO) value in your brokerage account, then your head starts spinning while the depression sinks into you, and yet the community's expert Analyst is unreachable, untouchable, cannot be held responsible, and yet he has not lost even a penny of his own money, rather contrary he is still getting richer and richer every passing day, collecting membership money from old and new members.
You may say, ok not every analyst has that kind of time to search, investigate, read, digest, evaluate all the information, documents and financial filings for each and every company, therefore this kind of thing can happen without their knowing or anticipation. My answer to that is, $40-50/month membership fee may not seem to be so much money, therefor individual members can't expect a one on one advisement session with him, however as a whole if he is the lead Analyst of his investment community and he is making almost a million dollar a year from his paying members, then he is obligated to do all that, even if he has to hire a couple of market analysts to assist him with all that work. Besides, this expert Analyst had prior warning before SEC halted the trading of PHOT's shares. Just two weeks before that he informed his members of SEC's action against another of his favorite companies, CANN. As an expert MJ Market Analyst who has been followed by, praised by, admired, and celebrated by his more than1500 or so members, one would expect him to be a much stronger leader and act properly on the information he receives and quickly and clearly inform his members with absolute confidence in his voice and communication with them. Having two trading halts of two of his favorite companies in this sector, back to back, does not give me or anybody a whole lot of confidence in his skills, his knowledge of this market, his investment judgement, and his ability to advise others. Therefore if he was caught off guard twice, then there are no guarantees that there won't be a third or more halts on his watch while he has fallen asleep at the wheel. So, the question is, what more does he know about this volatile market that the novice investors, such as you and I, don't?
Conclusions:
Basically in my opinion there are no true MJ Sector Financial Market Analysts in this volatile market who is knowledgeable enough, proactive enough, or is willing to work hard, diligently, and intelligently enough to protect our investment in this new field of investment opportunity. If you decide to join a membership club in any of these so called expert MJ Trading Market Financial Analysts companies, first ask for a couple of months of free membership until you find out how they truly run their business. Once you decide to become a paying member then please don't make it a permanent community for yourself and don't get too comfortable and stay with them for too long. Participating in these communities, where they are filled with a lot of distractions, given it is their blogs, chat rooms, forums, videos, interviews, most of which mean nothing except massive pumping of some stocks by the lead Analyst and the members. Membership in these communities will become addictive at best, where as an investor you will spend your days, evenings, weekends, and holidays chatting and exchanging trading information with others which at the end will come back to bite you in many ways. You will do better without them and your children, your spouse, family and friends will appreciate you a lot more than those strangers in the chat rooms. Chances are you'll end up profiting from your investment in this sector a lot more on your own since you know as much if not more about this sector than your membership community's expert Analyst.
