2018 GRAND SALAMI STOCK PICKS
The concluding section of THE 2018 MARIJUANA MANIA THESIS described a specific methodological key to picking the very best performing stocks by % gain inside of a marijuana sector mania.
THE SUBSECTOR SUPERMANIA
The key to the biggest returns during a MJ MANIA
When reviewing the stocks ranked by % gain from highest to lowest in THE 2014 MJ MANIA, it became apparent that stocks in the same subsector did not trade independently of one another, but instead tended to trade in specific clustering patterns stratified by performance. The mania was so strong in 2014 that nearly every marijuana stock achieved tremendous gains; however, it was readily apparent that certain subsectors vastly outperformed others. Vaporizer stocks generally experienced superior returns, in comparison to other subsectors such as lighting, security and financing. Stocks whose primary business plan revolved around vaporizers, along with stocks who merely announced they were entering the vaporizer industry became absolute rockstar Kangaroos hopped up on Adderall. Everybody who witnessed the unfolding of the mania remembers the singular posterchild encapsulating the utter ridiculousness of it all as the vaporizer play SPLI meteorically rose 75000% in 10 weeks.
The utter dominance of the vaporizer subsector during the 2014 MJ Mania calls out for a new term: SUPERMANIA.
Although stocks residing in the Supermania subsector generally possess the greatest potential to experience the rarefied air of 99th percentile returns, the clustering of stocks within a given subsector by performance was not so clean and absolute that every single vaporizer stock achieved the most superior returns. Many of them did not.
Only the very best of breed stocks within the vaporizer Supermania vastly outperformed nearly every other stock in the MJ universe to achieve Superman-like returns.
We saw a similar phenomenon during the 2016 MJ Mania where the best performing subsector this time around was the all-purpose cannabis stocks. There were more than a dozen of them and as a subsector they handily outperformed the MJ sector as a whole.
But only the top stocks in that subsector – MCOA, AMMJ, and CNAB -- participated in the SUPERMANIA.
In early 2017, a SUPERMANIA in cannabinoid pharmaceutical stocks occurred, and once again only the very best of breed stocks in that subsector participated in it -- OWCP and CNBX.
So it seems the key to picking the very best stocks in the 2018 MJ MANIA will be to first predict which subsector will experience the SUPERMANIA, followed by identifying the best of breed stocks in that subsector.
The final sentence describes the very essence of the task at hand.
“So it seems the key to picking the very best stocks in the 2018 MJ MANIA will be to first predict which subsector will experience the SUPERMANIA, followed by identifying the best of breed stocks in that subsector."
After spending an inordinate amount of time reading articles and reports, attending exhibits and conferences, speaking with industry connections, participating in all kinds of discussion forums, studying data from a wide variety of websites and social media, and many hours of just plain old thinking, I arrived at the most probable subsector to experience a Supermania during THE 2018 MARIJUANA MANIA.
PROJECTED 2018 SUPERMANIA:
(HEMP AND CBD BEVERAGES)
Now that we’ve pinpointed the Supermania, the next step is to identify the best of breed stocks in that subsector.
The top two tickers in this group possess the highest SALAMI scores by a wide margin and are clearly the best stocks in the Cannabinoid-Infused Beverage subsector.
Despite such a decisive margin, a number of questions ran through my mind.
What if the Hemp and CBD Beverage subsector does not experience a Supermania next year?
What if there is no specific Supermania in 2018?
Shouldn’t I also do a SALAMI analysis on the marijuana sector without taking into account the projected SUPERMANIA to see how these two stocks stack up against the rest of the field?
Or should I stick with my conclusion and maintain the adjustments made in the sentiment-based SALAMI factor scores and IPA subscale scores -- like I did with THE 2016 GRAND SALAMI selections of MCOA, AMMJ and CNAB -- to account for the projected SUPERMANIA?
Being someone who attempts to eliminate as many uncertainties as possible, it was an easy decision for me to run both analyses.
The results were very telling.
In each analysis, the same two stocks achieved the highest final SALAMI scores.
The verdict was crystal clear.
VATE and SIPC would enter THE 2018 GRAND SALAMI.