Something to consider ! Have the Marijuana Stocks been in a “Bubble”.
My Opinion is this :
I don't think there has been an overt paranoic manipulation by "somebody" or coordinated "short attacks" but a simple
MARKET CORRECTION of a MJ bubble.
That explains why even the APH company insiders who recently have been buying at higher share levels have been caught off guard by the power of the market which is the final arbiter of sp.
Five Steps of a Bubble
1. Displacement and Stealth
2. Boom and Awareness
3. Euphoria and Mania
4. Profit Taking and Blow-Off
5. Panic
Although there are various interpretations of the cycle, the general pattern of bubble activity remains fairly consistent.
1. Displacement: A displacement occurs when investors get enamored by a "new paradigm" such as The End of Marijuana Prohibition. This began with the Liberals election promise to legalize and the new regulation by Health Canada to allow open capital market pot production starting in 2014.
Stealth. Those on Bay Street and Chuck Rifici and Bruce Linton who understand the new fundamentals realize an emerging opportunity for substantial future appreciation, but at a risk since their assumptions are so far unproven. So the "smart money" with deep pockets gets invested in the asset class, often quietly and cautiously. This category of investor tends to have better access to information and a higher capacity to understand the wider economic context that would trigger asset inflation. Prices gradually increase, but often completely unnoticed by the general population. Larger and larger positions are established as the smart money start to better understand that the fundamentals are well grounded and that this asset class is likely to experience significant future valuations.
2. Boom: Prices is Pot Start ups rise slowly at first with APH and CGC at $ 1.00, following a displacement, but then gain momemtum as more and more retail participants enter the market, setting the stage for the boom phase. During this phase, the asset in question attracts widespread media coverage. Fear of missing out on what could be an once-in-a-lifetime opportunity spurs more speculation, drawing an increasing number of participants into the fold. April 2015 to April 2016. Aging baby boomers Mom and Pop investors and Grandmothers and novice investors and general users of Cannabis who want to "own what they use".
Awareness. Many non MJ investors and TRADERS start to notice the momentum, bringing additional money in and pushing prices higher. There can be a short-lived sell off phase taking place as a few investors cash in their first profits (there could also be several sell off phases, each beginning at an higher level than the previous one). The smart money takes this opportunity to reinforce its existing positions. In the later stages of this phase the media starts to notice with positive reports about how this new boom benefits the economy by "creating" wealth; those getting in becoming increasingly "unsophisticated".
3. Euphoria: During this phase, caution is thrown to the wind, as asset prices skyrocket. The "greater fool theory" who will buy my overvalued shares plays out everywhere.
Valuations reach extreme levels during this phase. For example, in the run from October 2016 to November 16, 2016 at the peak of the buying. Canopy increased $ 100 million market per day THEN BY THE HOUR.
During the euphoric phase, new “potential valuation” measures and unrealistic future metrics with no earnings are touted to justify the relentless rise in asset prices.
Mania. Everyone is noticing that prices are going up and the public jumps in for this "investment opportunity of a lifetime". The expectations about future appreciation becomes a "no brainer" and a linear inference mentality sets in; future prices are an extrapolation of past price appreciation, which of course goes against any conventional wisdom. This phase is however not about logic, but a lot about psychology. Floods of money come in creating even greater expectations and pushing prices to stratospheric levels. The higher the price, the more investments pour in. Fairly unnoticed from the general public caught in this new frenzy, the smart money as well as many institutional investors are quietly pulling out and selling their assets. Unbiased opinion about the fundamentals becomes increasingly difficult to find as many players are heavily invested and have every interest to keep asset inflation going. The market gradually becomes more exuberant as "paper fortunes" are made from regular "investors" and greed sets in. Everyone tries to jump in and new entrants have absolutely no understanding of the market, its dynamic and fundamentals. Prices are simply bid up with all financial means possible, particularly leverage and debt. If the bubble is linked with lax sources of credit, then it will endure far longer than many observers would expect, therefore discrediting many rational assessments that the situation is unsustainable. At some point statements are made about entirely new fundamentals implying that a "permanent high plateau" has been reached to justify future price increases; the bubble is about to collapse.
4. Profit Taking: By this time, the "smart money" – heeding the warning signs – is generally selling out positions and taking profits. But estimating the exact time when a bubble is due to collapse can be a difficult exercise and extremely hazardous to one's financial health because, as John Maynard Keynes put it, "the markets can stay irrational longer than you can stay solvent."
Starting in February 14, 2017 for WEED and April 11, 2017 for APH and then all MJ stocks they get out.
Note : It only takes a relatively minor event to burst a bubble, but once it is burst, the bubble cannot "inflate" again for some time
Blow-off. A moment of epiphany (a trigger) arrives and everyone roughly at the same time realize that the situation has changed. Confidence and expectations encounter a paradigm shift, not without a phase of denial where many try to reassure the public that this is just a temporary setback. Some are fooled, but not for long. Many try to unload their assets, but takers are few; everyone is expecting further price declines. The house of cards collapses under its own weight and late comers (commonly the general public) are left holding depreciating assets while the smart money has pulled out a long time ago. Prices plummet at a rate much faster than the one that inflated the bubble. Many over-leveraged asset owners go bankrupt, triggering additional waves of sales. There is even the possibility that the valuation undershoots the long term mean, implying a significant buying opportunity. However, the general public at this point considers this sector as "the worst possible investment one can make". This is the time when the smart money starts acquiring assets at low prices.
5. Panic:April 11 to May 2017. In the panic stage, asset prices reverse course and descend as rapidly as they had ascended. Investors and speculators, faced with margin calls and plunging values of their holdings, now want to liquidate them at any price. As share supply overwhelms demand, asset prices slide sharply.
Bubbles can be very damaging, especially for those who arrived late with the hope of getting something for nothing such as rich overnight and early retirement and buying expensive homes and cars. But it is very deflationary as large quantities of capital vanish in the wave of bankruptcies and financial defaults they trigger.