RE:RE:Any positive news coming? All investments have risk. That doesn't make it gambling. Don't pick your own stocks unless you have the expertise to "weed out" (pun intended) the good from the bad. Then you have to measure current valuation against best informed forecast of growth in the industry, for starters.
Industry selection
We have a brand new, emerging industry in a well established consumer market for an "addictive" product. Is there Industry Growth and sustainability potential? Check! Double or triple check !!!
Country Selection
Canada is at the forefront of legalization and enjoys a major first mover advantage. If you selected the cannabis industry then Canada is the place to be. Check!
Company Selection
The biggest risk in a new industry is not gaining enough market share to support the build out of large scale and more cost effective production. The strategy is: get bigger than your competition, therefore have the lowest costs, then starve out the competion with lower prices. However competition has sprung up everywhere and it has been fierce.
However one of the biggest risks to aggressively growing a company is growing too fast and getting stuck with too much inert capital investments, overbearing debt and excessive overhead in order to turn a profit. Companies can quickly become insolvent and collapse under the weight of debts and losses. Hexo, Canopy and others are poster childs here.
What we have seen in this new industry is that the aggressive marker share grabbers have in fact overbuilt and are financially collapsing under the weight of overinvestment and debt while shockingly losing market share after their initial gains. Dropping market prices for cannabis are just killing them quicker.
The game has changed. Its a batten down the hatches with cost controls, with more measured and targeted growth ambitions, and with lots of patience while the overbuilt big player eliminate themselves from the market. The still existing over competition in the industry will drive prices even lower to levels that will kill off all but the most cost-controlled and responisble-growth companies.
The surviving companies that didn't blow their financial brains out on growh and focused on a profitable business model willl eventually emerge as very big winners in the industry. The big players' customers will have to bring their business to the surviving companies and that's where we get insanely profitable imo.
Its like we are seeing a sped up version of the dying off of the dinosaur and only the nible, small mammals end up inheriting the resources of the earth to themselves.
My company selection within this industry, Delta 9, was based on the above. An early-establish, conservative and profit focused company in an expoding new industry in first-mover country. Major insider ownership was another reason.
For industry dominence and profitability, its now a matter of outlasting the competition until they disappear.
My main mistake was at the industry level. I underestimated the resilience of the black market and their ability to hold on to their market share, primarily by out-pricing the legal market. This is the industry's fly in the ointment until the government irradicates the illegal grows.
I also could not ever imagine that the Federal government would be complicite in dragging down the legal industry with their riddiculous excise tax expessed as a dollar per gram instead of a fixed percentage. A $1 per gram excise tax was already excessive when grams sold for $10-$12/gram representing about 10% tax or less, but now that $1 per gram excise tax represents approximately 30% excise tax.
Long story short, Patience will be rewarded here.