Pot Stocks, The Health of America, and Responsible Investing

(image credit to warrior trading news)

If you have spent much time on Reddit message boards or paying attention to capital markets you may have seen that “Pot Stocks” recently took off. A combination of M&A within the industry, anticipated liberalization, and high short interested loaded the spring that sent the market caps for several of these companies surging. Many of you know the “Golden Rule.” Whomever has the gold makes the rules. Basically, these companies were given a big pile of gold this week.

The gold is in the form of appreciation in their market capitalization. Companies with higher market capitalizations get better credit ratings and in turn get favorable loans. They can use their stock as currency/collateral for these loans. Larger companies attract more investors which help support their price, ergot their underlying value. Also, companies can issue shares at high evaluations and use this cash for operations and growth.

I’ve spent the majority of my life not understanding how companies are valued and raise money. It is only recently that I began to understand that potential profits and future revenue attract capital like a super magnet. These companies are not profitable, and their revenues are minuscule yet they carry market capitalizations in the billions. All of this…