Shroom Boom

  • “Magic mushrooms” mimic marijuana industry
  • Psilocybin’s real-world applications
  • Groundswell of support for legalization
  • World’s first psychedelic ETF (what a trip)
  • Federal Reserve: Nothing to see here
  • “Where have all the small caps gone?”
  • MoviePass gets the Fyre Festival treatment

[Note from Dave: Just a quick word before I turn over today’s edition to Emily. As I mentioned yesterday, I’m at company headquarters in Baltimore this week to put the final touches on a special project that just can’t be coordinated over Zoom.

Long story short, if you’ve got the heebie-jeebies about a potential market crash — maybe you’re concerned about something in the news, or maybe it’s just a hunch you’ve got — we’re about to clue you in to a strategy offering ultimate downside protection without putting up a ton of capital.

Details to follow in the days to come. Just wanted to give you a heads-up. Emily, take it away…]

“In June of 2016, marijuana stocks were barely on the radar for most investors,” recalls pot stock authority Ray Blanco.

“There were a handful of states that had legalized recreational marijuana, but when it came to the entire industry, there was a lot of apprehension.” The main concern? “The federal government would seize the assets of neophyte cannabis companies,” Ray says.

And the fear was legitimate: While Trump played coy on the subject, U.S. Attorney General Jeff Sessions was a dyed-in-the-wool pot opponent who once said marijuana was only “slightly less awful” than heroin. (Sessions would later prove his cannabis animus when he repealed an Obama-era policy of federal detente on legal-weed states.)

But 2016 was just a warmup…

You could call 2017 “the year of cannabis for the stock market,” Ray says. Those were heady days when investors couldn’t get enough, and the appetite was such that penny pot stocks experienced extraordinary growth.

“Names including Aphria Inc. (NASDAQ: APHA), for example, shot up 2,000%,” Ray notes.

Pot Parabolic

Federal legalization was — and is — still the holy grail of the cannabis industry, but “investors bought up these names in anticipation of these companies making bank later on,” says Ray.

“I’m saying this now,” he continues, “because I believe I’ve uncovered the next stock trend that will hit the markets…

“I’m talking about psychedelics,” Ray says, “specifically those related to the psilocybin in ‘magic mushrooms.’ And you’ll find the psychedelic story echoes that of cannabis in 2016.”

With real-world applications for depression, PTSD, anxiety, cancer-treatment side effects and opioid addiction (and many others we don’t have time to list) cannabis is an obvious connection.

More similarities?

  • Bad news first: They’re both Schedule I drugs, meaning they’re controlled substances the federal government determines have no “currently accepted medical use” and a high potential for abuse. (However, Johns Hopkins, Stanford, UC Berkeley, NYU — to name a few prestigious American institutions — have centers dedicated to psychedelic research. So…)
  • The argument that pushed the legalization of cannabis — the abundance of therapeutic applications — also applies to psilocybin. (And we can’t overlook revenue for state coffers! So we see states legalizing nonaddictive, medically useful psilocybin in the same way many states have legalized cannabis.)
  • As with marijuana, there’s a groundswell of support to legalize “magic mushrooms” in the U.S. — both for medical and recreational use. (Hallucinogenic mushrooms have been legal to grow for personal use in New Mexico since 2005, and Oregon became the first state to legalize psilocybin for medical use late last year. Plus, several cities across the county, including D.C., have already decriminalized psilocybin mushrooms.)

It’s a reasonable conclusion then: Psilocybin-producing mushrooms might be the next cannabis… with revenue potential similar to the marijuana industry’s.

“This can only mean good things for investors,” Ray says. “There’s HUGE potential for this to take off… As more research is conducted and as more states begin to legalize psilocybin, psychedelic stocks can only benefit.

“The question now? How do you invest in ‘shroom’ stocks?” says Ray. “There are several small-cap companies out there that have a lot of potential.

“But if you want to get in on the action without getting burned on one company…”

Check out the world’s first ETF pegged to the psychedelic industry – the Horizons Psychedelic Stock Index ETF (NEO: PSYK).

According to the ETF’s website, PSYK is “designed to provide exposure to the performance of a basket of North American publicly listed life sciences companies having significant business activities in, or significant exposure to, the psychedelics industry.”

At this time, PSYK trades only on Canada’s NEO exchange. If you’re not comfortable with that, “you can still look at PSYK’s holdings and mimic what they have there.” The ETF, in fact, comprises 17 stocks so far, including mainstream pharmaceutical companies Johnson & Johnson (JNJ), AbbVie (ABBV) as well as Peter Thiel-backed Compass Pathways (CMPS).

Ray says: “Psychedelic stocks are following pot stocks’ trajectory” — circa 2016 — “and investors who buy when it’s still early days might see huge payouts from the market’s euphoria.”

[Ed. note: Psychedelics aren’t the only thing on Ray Blanco’s radar…

The EV sector has stunning promise for investors as one automaker after another commits to going fully electric in the next decade.

And without a doubt, EVs need batteries… One $2-stock Ray’s targeted — based on its innovative technology — has potential to land a major partnership with an EV giant.

Don’t wait to access Ray’s time-sensitive research.]

“Yesterday’s Fed meeting maintained the status quo. It plans to maintain interest rate and QE policies for many months into the future,” says senior analyst Dan Amoss.

Basically, nothing to see here… business as usual. Money printer go brrr…

“The elephant in the room,” he says, “the SLR issue — or supplemental leverage ratio regulation on banks — is that trillions of dollars’ worth of future Treasury bonds, priced at real yields of zero or negative, will need to find a home.

“Who’s going to hold this hot potato?” Dan asks. Dave will have more on SLRs Monday…

The Dow’s up 140 points to 33,155 today; on the other hand, the tech-heavy Nasdaq is down 1.5% to 13,320…

We’re seeing that choppy action in tech stocks analyst Greg Guenthner warned us about early this week. As for the final major U.S. index we track — the S&P 500 — it’s down 17 points to 3,955.

And oil’s slumping almost 6% today, down to a hair under $61 for a barrel of West Texas crude. But gold is up $6 to $1,733.10 per ounce, and silver’s up about 1% above $26.

Flagship Bitcoin’s in the green at the time of writing — up 2.3% to $59,232.58. Next stop $60,000?

Now for your weekly reminder that the stock market and the economy aren’t the same thing…

The Labor Department reports first-time unemployment claims jumped to 770,000 for the week ending March 13, contrary to economists’ expectation of 700,000…

A little more horrible

Needless to say, that number is still stubbornly above the worst of the Great Recession.

As if unemployment claims couldn’t be further removed from the rest of the economy, the “Philly Fed” survey of mid-Atlantic manufacturing showed that growth is still strong, with a reading of 51.8.

Or the highest reading since April 1973, when “Tie a Yellow Ribbon Round the Ole Oak Tree” topped the charts…

“Where have all the small caps gone?” asks quantitative analyst Jonas Elmerraji.

“They’ve been disappearing at an alarming rate,” he says. “Today, there are about 25% fewer small-cap stocks on the market than there were about a decade ago.

“Part of the reason is that there are fewer stocks in general. There are about half as many U.S. stock listings today versus the peak in 1996.

“And a research piece published by Morgan Stanley last year points out that 90% of the stocks that have disappeared are small- and microcap companies,” Jonas says.

“Since companies have unprecedented access to capital from private-equity and venture-capital investors,” says Jonas, “it pays to stay private…

“Morgan Stanley notes the environment over the last decade or two has made it so it’s a better payoff for a small company to be acquired by a bigger company than to go public via an IPO.”

But the biggest loser, of course, is the retail investor. “When small companies stay private longer and then skip going public, individual investors miss out on participating in the upside,” says Jonas. “Instead, all of the gains go to venture-capital funds and other private-equity investors.”

Jonas says: “There’s light at the end of the tunnel…

“Cheaper IPO alternatives like direct listings mean it makes sense again for small companies to go public without paying a heavy toll to Wall Street.”

SPACs, too, might be reversing the shrinking number of public companies, enticing individual investors to pay more attention to companies with market caps below $1 billion.

In fact, Jonas notes: “Few investors realize that last year, there were more than 400 companies that went public!” he says. “Retail investors should be cheering! There’s no question having a bigger pool of investments to choose from is a good thing.

“And 2021 already looks like it’ll be a worthy follow-up, with many high-profile and some lesser-known companies already filing SEC paperwork to become publicly traded.

“The return of the small-cap stock opens up huge opportunities for investors,” Jonas says. “Stay tuned…”

They’re Baaack! Maybe?

The bankrupt subscription movie-theater experiment MoviePass is teasing a comeback on its website Moviepass.ventures. But this is curious: Their former domain — Moviepass.com — displays the same shutdown notice it posted two years ago.

“The company — famous for once offering unlimited movie tickets for the too-good-to-be-true price of $10 a month — shut down in September 2019 after it could no longer afford the deals it was offering subscribers,” says The New York Post.

Hmm…

Movie Pass

“Moviepass.ventures was only registered as a web domain this month after Mark Wahlberg’s production company, Unrealistic Ideas, announced an upcoming docuseries on MoviePass.”

What a farce it was… And now we have Marky Mark himself trying to resurrect it? At least in documentary form with his appropriately named company: Unrealistic Ideas, indeed.

We’re guessing a documentary might be given the Fyre Festival treatment… or even the Theranos treatment?

Speaking of, we understand Steve Jobs-wannabe Elizabeth Holmes got a trial extension for the end of August. She’s expecting a baby in July… around the time of her original trial date. Mazel tov…

Best regards,

Emily Clancy
The 5 Min. Forecast

P.S. Ray Blanco says the media are missing a crucial part of Tesla’s story…

Ray believes a tiny $2-battery company, founded by a former Tesla battery engineer, holds the key to Tesla’s dominance…

A technology that is already protected by patent application No. 3069168.

According to Ray, if Elon Musk announces a partnership with this tiny company… there is no telling how high this under-the-radar stock might go.

Which is why he went live in an urgent summit to give you the breakdown of the situation he sees unfolding.

This is by FAR the most urgent stock research Ray’s ever issued…

Emily Clancy

Emily Clancy

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