Marijuana stocks are smoking; Jamie Dimon; household incomes
Shares of Tilray, a Canadian based company that trades in the United States under the ticker symbol TLRY, have skyrocketed from an Initial Public Offering price of under $20 per share to over $125 during the day this past Thursday, a move that is eerily reminiscent of how shares of cryptocurrency ETFs traded earlier this year only to then implode. This can be represented by shares of Bitcoin Investment Trust (symbol GBTC), an ETF whose share price skyrocketed from under $2 in 2017 to over $38 earlier this year only to subsequent fall back to early $8/share once the speculative bubble bust.
To put things into perspective Tilray, a medical cannabis company, reported a second quarter loss of $12.8 million (US$) on revenue of just $9.7 million as compared to a loss of $2.4 million on revenue of $4.7 million one year ago. Despite this more than 100% y/y revenue growth as well as encouraging business opportunities we believe that at its approximate market capitalization of more than $10 billion, shares are fraught with risk as the business model is subject to execution risk as well as increasing competition. Our advice to all investors in Tilray as well as the promising cannabis sector is “caveat emptor” or buyer beware.
We have often trumpeted JPM Morgan CEO Jamie Dimon within this column. In fact, as recently as 2017 we noted that “In our opinion JP Morgan CEO Jamie Dimon represents what is good about corporate America and indeed somebody to emulate. As with Warren Buffett, when he has something to say, Dimon is somebody that commands respect as well as the attention of the investing public. The reader might believe Dimon’s views to be self-serving. We do not. In our opinion, Jamie Dimon has no need to opine about issues he does not believe to be true.”
Although we most certainly still unequivocally believe this, even according to himself, Dimon planted his foot in his mouth this past week when, in response to a question regarding as to whether or not he could defeat President Trump in an election Dimon boasted “I think I could beat Trump.” Now, we have no problem with this response and in fact respect his confidence in his own abilities – if it stopped there. However, Dimon did not citing that “I’m as tough as he is. I’m smarter than he is. I would be fine. He could punch me all he wants, it wouldn’t work with me. I’d fight right back.” Dimon closed with “And by the way this wealth New Yorker (referring to himself) actually earned his money. It wasn’t a gift from Daddy.”
Shortly after the comment, Dimon walked it back tweeting that he “should not have said it. I’m not running for President. Proves I wouldn’t make a good politician. I get frustrated because I want all sides to come together to help solve big problems.” We agree with all of the above. (For full disclosure, at the time of the writing of this column Fagan Associates held more than 66,000 shares of JP Morgan for the benefit of their clients.)
According to a recently released report from the U.S. Census Bureau, median household income rose 1.76% to $61,372 in 2017 from $60,309 one year prior. However, this rate of growth slowed from 3.2% and 5.2% during calendar years 2016 and 2015, respectively. The poverty rate decreased to 12.3% in 2017 from 12.7% in 2016. During 2017 “real median earnings of all male workers increased 3.0% from 2016, while real median earnings for their female counterparts saw no statistically significant change between 2016 and 2017.”
Please note that all data is for general information purposes only and not meant as specific recommendations. The opinions of the authors are not a recommendation to buy or sell the stock, bond market or any security contained therein. Securities contain risks and fluctuations in principal will occur. Please research any investment thoroughly prior to committing money or consult with your financial advisor. Please note that Fagan Associates, Inc. or related persons buy or sell for itself securities that it also recommends to clients. Consult with your financial advisor prior to making any changes to your portfolio. To contact Fagan Associates, Please call (518) 279-1044.