Could the Weed Industry Be The Next Dot-Com Bubble?
From 1995 to 2000 internet-based companies experienced extreme growth. Due to this rapid growth, a large amount of Tech Companies chose to go public and be traded on the stock exchange. Companies that we have forgotten about like Pet.com, Webvan.com, and Boo.com totally failed and shut down during the dot.com crash of 2000. So, how did this happen? Well, from 1990 to 1997 the percentage of computers in U.S. Households rallied from 15% to 35% making home computers a necessity and not just a luxury. As a result of this many investors were eager to invest in Tech Stocks. Going to the Stock Market had become a trend in the Tech Industry. At the height of the boom, it was possible for a promising dot-com company to become a public company via an IPO and raise a substantial amount of money even if it had never made a profit—or, in some cases, realized any material revenue. During the 1990’s many companies saw the advantages of getting rid of brick and mortar business models and adopting an internet presence. In theory, this was a wonderful idea, but most dot-com companies incurred net operating losses as they spent heavily on advertising and promotions to harness network effects to build market share or mind share as fast as possible, using the mottos "get big fast" and "get large or get lost". These companies offered their services or products for free or at a discount with the expectation that they could build enough brand awareness to charge profitable rates for their services in the future. In January 2000, there were 16 dot-com commercials during Super Bowl XXXIV, each costing $2 million for a 30-second spot. A series of the event lead to the downturn of the industry in March of 2000, unfortunately, many naysayers are comparing the tech bubble to the green rush.
The “Green Rush” is a term used to describe the growing marijuana industry within the United States as well as Canada. This applies to the growth and spread of dispensaries, the growing sales of smoking accessories, and things outside the world of cannabis culture, like marijuana-related stocks and bonds, as well as business convergences. Marijuana companies have been listed on the Canadian Stock Exchange since 2014. This has become a growing trend for cannabis companies whether or not they a proven to be profitable or not just like the tech industry in the ’90s. The key to investing in the “green rush” is to learn from our mistakes.
As we look to take advantage of the emerging but volatile industry the key is to invest in companies with a proven track record of profitability, expansion endeavors that reflect the opportunities of the market, and positive operating expenses. There are many marijuana companies that are penny stocks and have offered very little growth since entering the stock market. Unless these companies reflect your true risk tolerance, I would suggest staying clear of them and invest in stronger companies that may end up dominating the industry in the future.
Author : C Cimone Casson : ccimonecasson.com
An accomplished Financial Advisor for 20 years, Cimone began to examine the medicinal and economic benefits of CannabisIndustry and how it impacts communities. She recognized the CannabisIndustry as an opportunity to build wealth and healing for anyone willing to learn and put forth the effort. TO LEARN MORE ABOUT CIMONE & HER VENTURES HEAD TO: ccimonecasson.com