THE TRADER’S WAY - csresearch.s3.amazonaws.com

THE TRADER¡¯S WAY

WITH CANNABIS PAYDAYS

The ¡°Trader¡¯s Way¡± with

Cannabis Paydays

By: Adam O¡¯Dell

Some people will tell you it¡¯s the little things you do, consistently over time, that will

lead you to success.

Others say extraordinary success requires a big action at just the right time, or what¡¯s

called ¡°striking while the iron is hot.¡±

I think both approaches are right.

If you don¡¯t save money consistently, you¡¯ll never have any money to invest, and you¡¯ll

never get ahead. This is one of those little things you must do consistently and with

discipline.

On the other hand, putting the same little amount of money into the stock market each

and every month, resolving to get rich slowly, has never made much sense to me.

Sometimes the market is fruitful. Sometimes it isn¡¯t. And on rare occasions, it can offer

unique, once-in-a-lifetime opportunities.

The trick to ¡°striking while the iron is hot¡± is first to identify when a particular market,

industry or business is offering you an extraordinarily lucrative opportunity¡­ then

pounce on it!

That¡¯s what Cannabis Paydays is all about.

Believe it or not, I was still in high school when the dot-com boom was in full swing. I

also missed out on the mid-2000s property boom because I was still early in my

career, building up savings.

And while I¡¯ve made really good money on the bull market that began in 2009, the

whole time I¡¯ve been waiting patiently for a major, massively lucrative, once-in-alifetime opportunity to pounce on.

Now, I¡¯m convinced the cannabis industry is that big chance.

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Our Mission

The goal of Cannabis Paydays is simple: We¡¯re going to plant as many ¡°seed¡±

investments in the cannabis space as reasonably possible¡­ then nurture them, and

watch them grow.

As in nature, some of them won¡¯t grow at all. Others will grow at a healthy clip. And

some ¡ª the lucky ones ¡ª will grow to extraordinary heights.

Cannabis Industry: The Opportunity Now

The cannabis industry is no longer a sleeper trend. It¡¯s catching on and gaining

momentum.

That¡¯s no surprise given the projected size of the industry and the growth rates it¡¯ll

likely achieve as it marches into the arena of mainstream commerce.

The scope of the cannabis industry is massive, encompassing everything from

recreational and medical marijuana to patented, big-pharma drugs and skincare

creams, to building materials and fabrics.

The possibilities are endless when it comes to cannabis. Even pet products are in the

works, since you know we love to spoil our pets!

My point is, this isn¡¯t a niche market. There isn¡¯t one end-user of cannabis¡­

There are many different types of people who will use cannabis, or cannabis-derived

products, in different ways.

And while the stigma surrounding marijuana as an ¡°illicit¡± drug has, up to this point,

prevented it from being recognized as a legitimate commercial product, public opinion

has been rapidly changing. Recent polls show a majority of Americans are in support of

legalizing the drug.

The fact that cannabis has been demonized by anti-drug groups ¡ª and the

government ¡ª for decades only makes the opportunity more lucrative. I can¡¯t think of

another legitimate industry or product that¡¯s been held back so strongly, for so long,

for essentially no good reason. And it¡¯s obvious from here that once the artificial

barriers to market entry get removed, the floodgates will open and all you¡¯ll be able to

hear is a big whooooosh of money flying in.

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But Will It Be ¡°Easy¡± Money?

I should temper your expectations just a bit¡­

The cannabis industry will be lucrative. But that doesn¡¯t mean everyone wins.

Cannabis-focused businesses are still businesses, after all. They face competition,

cost-control pressures, and the ebb and flow of the economic and business cycles ¡ª

just as any business does.

There will be a lot of winners ¡ª cannabis companies that display remarkable

dominance, and ones that merely benefit from the ¡°rising tide¡± phenomenon. But I

must warn you, there will also be plenty of losers in the space. Many ships will sink.

Some cannabis companies will end up overextending themselves ¡ª either in the debt

loads they take on or in the scope of the market they attempt to capture. Other

cannabis companies will be revealed as pure frauds, merely clinging to the latest hot

trend. No matter the reason, plenty of companies will go out of business.

Even as an investor in the cannabis space, there¡¯s no guarantee you¡¯ll grow rich from

this lucrative high-growth industry.

The cannabis market is different: If you¡¯re used to looking at a company¡¯s

fundamentals ¡ª such as balance sheets and income statement metrics ¡ª you¡¯ll

probably find yourself confused when it comes to cannabis companies.

Sure, some of them are already listed on major U.S. and Canadian exchanges, and are

therefore subject to reporting laws and regulations. But many of the smaller companies

are not, making fundamental analysis tricky at best. So-called ¡°value investors¡± will

probably find it hard to stomach cannabis companies¡¯ fundamentals altogether ¡ª as is

typical of past growth-industry booms.

And if you¡¯re a ¡°boots-on-the-ground¡± investor ¡ª one who somehow has the time,

expertise, and access to learn a company¡¯s inner workings the way Warren Buffett and

Charlie Munger would ¡ª here, too, I think you¡¯ll find making money in the cannabis

space a challenge.

The industry is so fast-moving, still very private, and altogether opaque.

Sure, you could attempt to evaluate a cannabis company the same way you would

Johnson & Johnson (NYSE: JNJ), since many will compete in JNJ¡¯s markets.

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But I don¡¯t think you¡¯ll find the same amount and quality of information you¡¯d require to

make good decisions.

Embracing the ¡°Trader¡¯s Way¡±

If we aren¡¯t looking at a cannabis company¡¯s fundamentals ¡ª since many don¡¯t even

share the data ¡ª and if I¡¯m not schlepping around to visit the founders and executives

of dozens of cannabis companies just to hear them pitch me on how great they think

they are, then what are we doing to identify the best investment ¡°seeds¡± to plant in the

cannabis space?

I¡¯ll be relying on tools and techniques that have proven capable of identifying every

massively bullish trend you can think of ¡ªfrom the Dutch tulip mania to the Nifty 50 in

the 60s and 70s¡­ the dot-com boom in the late 90s and lucrative run-ups in individual

stocks like Amazon (AMZN), Disney (DIS), McDonald¡¯s (MCD), Walmart (WMT), and

Netflix (NFLX)¡­

I hold price above all else. A stock¡¯s price is more important to me than its

fundamentals, its management team, its story, and even more than what anyone has to

say about the economy.

Why? Because only price pays!

Meaning, the only way you can make money on an investment or trade is if you can sell

it for a higher price than you paid for it.

Truly, from a pragmatic standpoint, nothing else matters!

Now, I realize this sounds controversial. The ¡°ivory tower¡± side of finance loves to

preach market efficiency and the importance of fundamentals, such as valuation

metrics. But I assure you¡­ traders have been making money on price action alone for

decades!

My first experience with this concept came in the early 2000s, when I began trading

foreign currency markets (aka ¡°forex¡±). It was the first market I¡¯d ever traded¡­ and I

knew pretty much nothing about finance, investing, or even foreign currencies.

Back then, the retail forex market was like the wild west. You could open a retail

account with a few hundred bucks and get 200-to-1 leverage! That few hundred bucks

could (and often would) disappear in the blink of an eye. But you could also double or

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