VIDEO: “Sin Stocks” and The Virtues of Agnostic Investing
Welcome to my latest Weekly Weed Report video presentation. Below is a condensed transcript; my video contains charts and additional details.
Agnostic (noun): a person who believes that nothing is known or can be known of the existence or nature of God or of anything beyond material phenomena; a person who claims neither faith nor disbelief in God.
As investors, we must take the world as it is, not as we want it to be. Some investors refuse to put money into “sin sectors” such as tobacco, gambling, alcohol, firearms, or marijuana. So let your conscience be your guide.
But if, from an investment standpoint, you’re an agnostic who seeks market-beating gains over the long haul, consider marijuana.
In addition to growth, the marijuana sector also provides a portfolio hedge, because it tends to be resistant to inflation and economic cycles.
The Devil’s Weed…
Marijuana carries a lot of cultural baggage. The substance was demonized for decades. Most memorably, the 1930s spawned a slew of histrionic government propaganda films that warned the American public about the soul-destroying evils of cannabis.
These films are considered inadvertent comedy today, but back then, the message was taken quite seriously and the influence of this agit-prop lingers to this day.
The “War on Drugs,” launched by Richard Nixon in 1971, is today considered a failure built on lies, but until attitudes started to soften in the 1990s, it encompassed the prevailing wisdom.
Contemporary opponents of marijuana legalization regurgitate the disinformation spawned by the War on Drugs. They argue that marijuana is a gateway to harder drugs; corrodes self-discipline; fosters laziness and welfare dependency; leads to criminal behavior; causes organic brain damage…on and on. Empirical scientific research has debunked all of these myths.
As an investment analyst, I cover many sectors. For many years, aerospace/defense has been my specialty, and it still is. To better understand the makers of military aircraft, I even learned how to fly helicopters. Does that make me a war monger? Hardly.
I also cover marijuana as an investment sector because I came to the conclusion, during the early days of legalization in the late 1990s, that society’s shifting stance toward weed would present a massive investment opportunity. Does that make me a stoner? Of course not. Nor does investing in distillers make one a raging alcoholic, or in tobacco companies a chain smoker, or in casinos a degenerate gambler, or in firearms makers a gun nut.
Nixon’s henchman confesses…
How did the War on Drugs come about, anyway? John Ehrlichman, who served as Richard Nixon’s domestic advisor, said the following in a 1992 Harper’s magazine interview:
“You want to know what this [war on drugs] was really all about? The Nixon campaign in 1968, and the Nixon White House after that, had two enemies: the antiwar left and black people. You understand what I’m saying?
We knew we couldn’t make it illegal to be either against the war or black, but by getting the public to associate the hippies with marijuana and blacks with heroin, and then criminalizing both heavily, we could disrupt those communities. We could arrest their leaders, raid their homes, break up their meetings, and vilify them night after night on the evening news.
Did we know we were lying about the drugs? Of course we did.”
Ehrlichman was a key figure in events leading to the Watergate scandal, for which he was convicted of conspiracy, obstruction of justice, and perjury, and served a year and a half in prison.
The War on Drugs is effectively over and many lawmakers in both the Republican and Democratic parties are trying to repair its damage.
“Hard” drugs (e.g., heroin and cocaine) are likely to remain illegal, at least into the foreseeable future. That’s probably a good thing (although libertarians would beg to differ).
However, more and more states are legalizing marijuana and even psychedelics. The legislation to do so often contains measures to expunge criminal records, and invest in the individuals and communities most harmed by the war.
In the November 8 midterm elections, Maryland and Missouri voters approved of ballot initiatives to legalize recreational marijuana, bringing the total number of states to legalize recreational pot to 21. Colorado voted to legalize psilocybin, the psychoactive ingredient in “magic mushrooms.”
Meanwhile, an expanding body of medical research shows that marijuana, LSD, psilocybin, and other substances classified as Schedule I drugs under the Controlled Substances Act of 1970 actually convey nearly miraculous psychological and health benefits.
In a landmark study titled, “The Association between Cannabis Product Characteristics and Symptom Relief,” published in the journal Scientific Reports, University of New Mexico (UNM) researchers found that tetrahydrocannabinol (THC) and cannabidiol (CBD) contents were the most important factors for optimizing symptom relief for a wide variety of health conditions.
The UNM study is only one among thousands that have reached similar conclusions, about marijuana as well as psychedelics.
Are there potential drawbacks to marijuana legalization? Sure. Notably, driving under the influence of THC, the compound in cannabis that gets people “high,” is dangerous and will (rightfully) get you arrested. But these caveats apply to any mind-altering substance.
During Prohibition in America, from 1920 to 1933, it was illegal to make or buy alcoholic beverages. Time showed the folly of trying to legislate misguided “morality.” Prohibition fueled the rise of the Mafia. Likewise, the War on Drugs has fueled the rise of violent criminal gangs and cartels.
Whether you support legalization, whether you smoke pot, or whether you trip on acid…it’s all a moot point. The most successful investors are agnostic, regardless of the sector.
For all of these reasons and more, I’ve launched a brand-new service detailing how you can financially benefit from the legalization of cannabis.
Called Marijuana Profit Alert, my new publication provides specific, actionable advice on the best investments in the marijuana and psychedelics sectors. Click here to learn more.
John Persinos is the editorial director of Investing Daily. You can reach John at: email@example.com