Investing Tips: Market Declines and Marijuana Stocks

Oct 17, 2018

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Canadian investors are having a pretty eventful time in the markets right now, as the legalization of marijuana is happening today as I record this episode. Also, let's not forget the hit that the markets took last week.

For a long time now we've seen very little volatility in the markets, and it's been a relatively smooth and enjoyable ride. Well finally, last week, we finally got to experience how markets can behave (in the negative sense), and I think how you felt during this period is a good sample of how much you can stomach volatility, and stay invested, when you have some media making it look like the sky is falling.

We can and will experience drops even worse than that in the future, but I think it's a good self-discovery event where you learn if for example, that 100% stock, 0% bond portfolio allocation is something that you really can have and still sleep well at night.

Because of the marijuana legalization and the recent dip in the markets, I thought it would be great to have another Investing Tips Episode like we did last month, where I speak with 5i Research's CEO, Ryan Modesto about what him and his research team are seeing in the markets with the recent declines, as well as address the subject of marijuana stocks and investing in that industry.

Future episodes, giveaways and guides:

Of course, don't miss future episodes, giveaways, and free in-depth guides by signing up for free to the Build Wealth Canada newsletter over at buildwealthcanada.ca. There you'll receive some exclusive educational content that's only available to Build Wealth Canada newsletter subscribers, there's never any spam, and it's totally free.

It's also the best way to ask questions that you want to be answered on future episodes of the show, and suggests any guests that you'd like to come on the show. That link again to sign up for free is buildwealthcanada.ca.

Bonus: Free one-year subscription to Canadian MoneySaver Magazine

Alright now before we start the interview, today's guest, 5i CEO Ryan Modesto is also offering a 1-year free digital subscription to Canadian Moneysaver Magazine (Canada's largest personal finance magazine) when you sign up for free 30-day access to 5i Research.

There you'll receive over 70 company reports (perfect if you like to sometimes invest in individual stocks), three model portfolios, and answers to over 75,000 investing questions, along with the ability to ask your own directly to Ryan and his analysts.

Ryan and his team at 5i don't sell any investments, and don't get any commissions or bonuses from suggesting stocks and ETFs. Because of this, I've been a long time partner with them as they are one of the VERY few companies in Canada, that are truly conflict-free and unbiased when it comes to their research and suggestions on stocks and ETFs.

You can get free 30-day access to all their research and resources over at buildwealthcanada.ca/research, and as a "thank you" for trying them out, you'll receive a free 1-year digital subscription to Canadian MoneySaver Magazine, Canada's largest personal finance magazine.

I encourage you to check 5i out, it's a great place get some truly unbiased insights on your investments (whether it's stocks or ETFs), and you'll learn an absolute ton.

Questions Covered

Let's start off with a market update. The markets have clearly been hit pretty hard lately. What's the 5i Research team seeing, and should we be worried?
With the legalization of marijuana in Canada, the industry is expected to experience rapid growth. For investors interested in investing in this industry, what should they be looking out for?
I sometimes hear investors say things like "I think industry x is going to grow in the future, so I'm going to invest in it". For example, the cannabis industry, or AI, robotics, etc. What is the error in using that reasoning as your sole decision to invest in an industry? (i.e. the potential growth already being factored into the price)
What is the difference between common and preferred stocks, what should an investor consider when choosing between the two, and should a company offer both?

Resources Covered:

The marijuana industry report mentioned is available by signing up to the free 30-day 5i access over at buildwealthcanada.ca/research. As a bonus, you'll also receive a 1-year free digital subscription to Canadian MoneySaver Magazine.
The preferred shares article mentioned can be found at https://www.5iresearch.ca/blog/are-preferred-shares-the-worst-of-both-worlds