Pot Stocks on the Mend After Bubble Breakdown

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Cannabis stocks ripped higher in the third quarter of 2018, underpinned by Canada’s national legalization in mid-October and Tilray, Inc.’s (TLRY) deal with the U.S. Drug Enforcement Administration to import pot for medical research. Dow component The Coca-Cola Company (KO) added to optimism at the time, talking with Vancouver-based Aurora Cannabis about a beverage containing CBD, the non-psychoactive but medically promising plant extract.

Bubble warnings were ignored during the rapid advance, encouraging a low-skilled trading crowd to jump on board, hoping for the next Amazon.com, Inc. (AMZN). Not surprisingly, pot stocks topped out quickly and turned sharply lower, trapping dumb money in a rapid decline reminiscent of the cryptocurrency plunge. Fortunately for remaining bulls, price action has improved

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