Referring to those that follow these techniques as “ investors ” and “ traders ” can often lead to heated arguments as Traders ( including day traders and short sellers ) consider themselves as “ investors ”. However , that term is generally used to classify a strategy to buy and hold investments to accumulate wealth over a period of time whereas trading involves frequent buying and selling in an attempt to outperform the returns that would be generated through accumulating wealth over a period of time . The lines between the two may seem blurred in this industry because a successful Retail Investor may have a buy and hold strategy at the “ industry level ” yet due to Ecoforming may be trading shares as well as opening and exiting positions of individual companies with greater frequency . In other words , such a Retail Investor may buy and hold at the macro level that is quite profitable and accomplished successfully by trading at the micro level .
Fundamental Analysis uses many techniques to derive the value of a company because of its focus on the company ’ s core business and its future potential . These techniques also apply at the sector and industry levels . At a basic level , Technical Analysis uses charts and other data about a stock to detect repeating patterns and the successful trader times with near precision when to take a position ( long or short ) and when to close that position . To see this in action , look up the stock price leading up to and after a private placement or bought deal that includes the right to acquire shares at low prices for participants . The primary shortcoming of Technical Analysis in this industry is the lack of trading history for many companies and the continuously changing landscape . However , both techniques can be very successfully about the same stock at the exact same price entry point as the successful long term Retail Investor .
Example : $ 1,000 invested in Pineapple Express ( PNPL ) in June 2015 was worth well over $ 2,000,000 mid-day on March 31 , 2016 ! A $ 2,000,000 investment on March 31 was worth just over $ 450,000 on May 3 ! Any trader that went short when the stock peaked may have made over $ 30 a share since that date .
This paradoxical reality , I believe , is once again rooted in the Ecoforming of the industry as the entire environment of this industry is being transformed dramatically before our eyes seemingly weekly . The
NASDAQ ruling denying MassRoots to be listed because of what “ could ” happen will be a watershed moment in time but for now has sent shockwaves . The Retail Investor is far nimbler than the Institutional Investor and can enter and exit positions with ease .
Market leaders by product or sector will eventually emerge . Does anyone not think that the giants of the Alcohol , Pharmaceutical , Tobacco are not watching this industry ’ s framework unfold ?
Consolidation through M & A activity occurs in almost every industry and this will be no different . In 2002 , Graeme K . Deans , Fritz Kroeger , and Stefan Zeisel published in the Harvard Business Review their work on “ The Consolidation Curve ”. Most industries go through four stages : Opening , Scale , Focus , Balance and Alliance . This summary below is succinct and I invite you to read their work as it is readily available online . Suffice to suggest , this industry , overall , is more likely that not in its infancy within Stage 1 .
A conclusion of their work was that a key driver to a company ’ s success depends on just how quickly and successfully they navigate through these four stages . Those that fail to or are slow will drop out ( ie : fail ) or be acquired . These stages are unavoidable in most industries just as you need to go through puberty before becoming an adult – it cannot be avoided ! These four stages of the Consolidation Curve may explain why so many companies in this industry are not profitable and even struggling to survive despite often having first-market advantage . These four stages are a simple truth and are ideal for the astute Retail Investor . For example , Retail Investors in Bedrocan and Tweed did well when both companies became a part of the Canopy Growth Corporation ( a holding company ).
It may be easier to think of this industry as an “ ecosystem ”. The industry is a dynamic , vibrant and living system that , like all ecosystems , will evolve . Adaptation skills will determine what survives and thrives and what does not . This view of the industry is not at all unlike the “ consolidation curve ” and they are complimentary . The Retail Investor is an integral part of this Ecosystem and also requires an adaptive mindset to be better positioned to identify those companies that are most likely to succeed and to accept the loss of others .
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