YGYI is way down from its Oct. 15th level. I don’t see how to put a reasoned valuation on this and other pot stocks except to say that they seem extremely overvalued. They don’t have a proprietary product. The barriers to entry from competitors are very low. They talk about a global opportunity for the Canadian stocks, but if other countries legalize, there will spring up companies in those countries doing the same thing. I wouldn’t buy these stocks anyway on ethical grounds. There’s going to be a lot of people walking out of bars at 1 or 2 a.m. drunk and stoned and getting into car accidents. Not good.
Let me re-iterate what I see as the headwinds for the market going forward - QT and rising interest rates, high stock price valuations, a slowdown in US corporate earnings, trade wars and tariffs, a slowing global economy, a $21.6 trillion national debt, and $1 trillion annual deficits. While I think that the Fed reducing its balance sheet is a good thing, I think it will have a deleterious effect on share prices. Also, the so-called “normalization” of interest rates should also have a negative impact on the economy leading to greater chances of inflation and recession. Corporate and personal debt will rise. What do corporations do when their costs go higher? They raise prices. And consumers will have less buying power.
The markets have come down substantially in October. I don’t doubt that there will possibly be a rebound, but I don’t see much reason that share prices will appreciate much higher from their recent record levels. Forward PE’s are high based on the historical norm of 15. There could be turmoil in Washington, D.C. if the Democrats win back the House. Also, the Mueller report will be coming out. It doesn’t look like there will be a resolution to the US-China trade war and the European economy is lagging. The housing market is slowing down putting carpenters out of work or having less work. Mortgage rates are higher meaning that there will be less home buying. I don’t see a silver lining in all this. The Fed apparently wants to slow down the economy, maybe putting us into a recession. I’m in favor of low interest rates but the powers that be apparently don’t see things the same way.
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