Big Green Stocks Give Small Investors a Huge Edge

Professional investors are taking note of the massive profit opportunities that exist in the legal-marijuana space right now. And they want to bet big on the legal-marijuana trend.

Unfortunately, most can’t jump on this bandwagon right now. They face many constraints that keep them from going after the potentially enormous profits that this market offers.

That means, in a rare twist, the little guys have the odds on their side.

These past eight weeks, we’ve been on a fact-finding journey along the marijuana trail together. That journey recently culminated in a four-day trip to Denver, Colo. … the epicenter of the legal-marijuana movement in the U.S.

Throughout this journey, I’ve been able to give you a firsthand look at the industry that’s being whispered about in hallways all around Wall Street. Quietly, the word has spread on the Street that legal marijuana as an investment could be bigger than the internet.

I set out on this mission after determining that many “family offices” — the preferred investment platforms for many of the world’s mega-millionaires and billionaires — were quietly funding pot businesses.

I wanted to know whether marijuana represented a real investment opportunity … or if it was just another fad.

My takeaway is that there’s an incredible opportunity right in front of us … right now.

And what’s even better, you — as an everyday investor — have a real advantage over the big boys when it comes to investing in the legal-marijuana space.

Lurking in the weed, there’s an incredible investment opportunity for smaller investors … but they must act now!

Believe it or not, you should have an easier time getting in on the ground floor of this potentially enormous investment opportunity.

There are three primary reasons why the super-rich and other mega-investors are attracted to the marijuana industry:

1. The companies in the pot business are cheap relative to their growth profiles.
2. There is the potential to earn eye-popping returns without the use of much leverage.
3. And the stock prices of companies in the marijuana industry don’t move in lockstep with mainstream equities.

It’s for these three reasons that the pros also want to get into pot.

And, reasons #2 and #3 have them especially excited.

That’s because it’s extremely rare to find investment opportunities where you can earn the kind of returns this space offers without using a ton of leverage.

But, here’s what really appeals to the big boys about investing in pot …

The industry offers a strong return profile. The pros realize they can make money in a way that is uncorrelated to the stock market. And believe me, big investors CRAVE uncorrelated returns!

What are uncorrelated returns? Well, here’s a simple explanation …

Many investors think they are well-diversified by simply holding a wide array of stocks and bonds — or a basket of securities — in their portfolio. But they are not!

That’s because the returns on most publicly traded stocks and bonds are highly correlated to the markets, and to each other. So, if the underlying stock market falls by 50%, like it did in 2008, then your basket is likely to do the same.

But if you own “uncorrelated” investments in your portfolio, your holdings have a chance to go up in a declining market.

Simply put, this means that your portfolio can zig when the market zags. And all savvy investors seek this magic moneymaking formula, especially the big, institutional investors.

And here’s where the little guy has such a huge advantage …

Most large investors have a problem jumping on the Big Green bandwagon.

That’s because most of the publicly traded pot companies have small market caps. So, most of these marijuana companies simply do not have enough float (or capacity) to handle large investments without significantly distorting their underlying stock price.

Moreover, large institutional investors, by definition, must shell out big bucks to impact the returns on their large buckets of money.

So, when mega-investors get into the pot business, they must make private investments. And those don’t come with the benefits of liquidity or daily pricing.

Thus, they’re locked into illiquid, long-term investments without the freedom to act nimbly to take advantage of short-term pricing inefficiencies. Furthermore, it’s difficult for them to reduce their risk by prudently spreading their marijuana investments across the entire pot industry.

But everyday investors don’t face these constraints. They have access to some 282 publicly traded companies — with more coming to market every day. So, they can pick from a broad array of stocks.

That means, in a rare twist, the little guys have the odds on their side. Consequently, they can turn the tables on the big boys because the mega-investors can’t make significant moves in the public markets … just yet.

What’s more, my personal research trip to Denver convinced me that The New York Times had it right when it said the marijuana industry is: “The Next Gold Rush”. Plus Forbes magazine said: “The U.S. economy doesn’t spawn an entirely new industry very often, and legal pot may well be the best ground-floor opportunity we’ve seen since the early days of the Internet.”

To learn more about it, click here.

Best wishes,
Bill Hall

P.S. Consider this: In 2012, there were 712 marijuana dispensaries in the U.S. Today, there are over 5,000. That’s a 600% increase in just five years. At the end of 2014, 35 edible cannabis products were legally available in the U.S. Today, nearly 600 edibles are sold legally — nearly 20 times more. And that number isn’t just growing almost by the day … the growth is accelerating wildly. Read more here about this unprecedented growth.

Bill Hall is the editor of the Safe Money Report. He is a Certified Public Accountant (CPA), Chartered Financial Analyst (CFA) and Certified Financial Planner (CFP). Besides his editorial duties with Weiss Research, Bill is the managing director of Plimsoll Mark Capital, a firm that provides financial, tax and investment advice to wealthy families all over the world.