Five market head-shakers, from cannabis for your dog to Amazon’s amazing research budget
One reason I love the market is that there is never really a dull moment. There is always something going on — whether it is company news, politics, global events, or a takeover — there is always something to analyze and/or react to.
The market also is a great giver of tidbits of information, and, occasionally, laughter. Then there are the times when you just have to shake your head, at the sheer craziness of it all.
So, without any set agenda, let’s take a look at five Market Fun Facts this week:
You will soon be able to get your dog stoned
CannTrust Holdings Inc. (TRST on TSX) at first looks like just another marijuana company, with a high (ha!) market cap ($628 million) and low sales ($20 million last year). However, it has entered into a partnership with Grey Wolf Animal Health to “develop ground-breaking cannabis products to support the well-being of pets.” I don’t know about you, but I am quite sure my dog doesn’t need to be more relaxed. Sure, I know there are some health applications for pets, and I love animals just like you. But TRST shares rose 7 per cent the day following this announcement, which simply highlights how excited investors are about the entire marijuana sector, even “pot for pets.”
Amazon’s (AMZN on NASDAQ) is spending a fortune on research
According to Recode, Amazon spent US$23 billion on research in 2017, more than any other U.S. company. That’s more than the entire market value of CGI Group (GIB.A on TSX). It is more than the entire market cap of Open Text (OTEX on TSX) and Blackberry (BB on TSX) combined. In fact, Amazon’s research spend was more than the market value of any Canadian tech company. With so much capital committed to research, is it any wonder why Amazon has been so successful? Canadian companies might take a lesson here: worry less about quarterly earnings, and worry more about staying competitive. Spend some money on research!
Two centuries of free Netflix!
If you owned 1,000 shares of Netflix (NFLX on NASDAQ) on April 17, the amount of paper profit you made that day would have paid for more than 200 years of a Netflix membership. Netflix shares rose US$28 that day. The gain on 1,000 shares would have been US$28,000. At $13.99 (Canadian) per month, after currency conversion, you would get 2,541 months of Netflix from one day’s worth of stock market gains in Netflix’s shares. That’s 211 years. There is a pretty good chance you would finally be able to watch most of your shows in that time.
There are more than 1,600 cryptocurrencies in existence right now
Have you actually ever used one for an actual transaction? Cryptocurrencies are very easy to create. You can now (maybe) pay your dentist in Dentacoin. There is a real estate crypto. There are at least five marijuana crypto currencies. What’s common about all these crypto currencies? Well, when they are first sold they are sold for ‘real’ money. That should perhaps tell you something. The market has exploded, but it does have signs of a bubble, or even signs of a pyramid scheme.
Stock market math is fun
As most investors (sadly) know, when you own a dog of a stock, you can lose 100 per cent of your money. But when you own a winner, there is no upside limit. Thus, owning one giant winner can make up for dozens of dogs. Everyone knows about the giant 10,000 per cent gains in stocks like Apple, Netflix and Amazon over the past couple of decades. But how about Canadian stocks? We have, for example, Evrim Resources (EVM on Venture) up 428 per cent this year; or Antibe Therapeutics (ATE on Venture) up 183 per cent year-to-date. Of course, these need to be considered very risky, but these stocks show some of the best stock market performance in all of Canada this year, and highlight how investment math works in your favour. Own a few long-term winners and your portfolio might be set for life. The key, as we’ve mentioned in the past, is not selling too early.
Peter Hodson, CFA, is Founder and Head of Research of 5i Research Inc., an independent research network providing conflict-free advice to individual investors (http://www.5iresearch.ca).