We’ve got a bit of turbulence in the market right now. Sometimes investors respond by taking their money and hiding until things pass over. While there may be extreme circumstances where that could be ok, or even advisable, more sophisticated investors know profit opportunities exist in almost any market, but a turbulent market can be particularly good for investors who buy and sell carefully.
I’ve been hearing from many readers in the last week or so. That’s great and I very much welcome the opportunity to hear your opinions, respond to questions, help solve problems or whatever else may come up.
Many of the notes were in response to two articles published here in Cabot Wealth Daily. The first was “Harris Is Better than Trump for Cannabis Stocks” by Michael Brush, Chief Analyst of Cabot Cannabis Investor. It would be disingenuous to say it was a complete surprise that this article evoked some response. Mentioning any political figure, and especially including “is better” immediately after the name can easily set off people’s radar. And it did.
The article is about the implications of the presidential campaign for cannabis investors, suggesting that a Harris win in November will likely drive growth in the cannabis sector. What the article did NOT do is suggest that this is a reason to vote for or against any particular candidate.
That didn’t stop some readers from inferring political intent, and we heard from people on both sides of the political spectrum. My responses to these readers were variations on the following:
Thank you for your note.
I understand your concern but disagree with your conclusion that Michael Brush is promoting a political ideology. He is not. And, in fact, Michael is strongly apolitical.
I understand partisan political concerns are running high these days so I’m not surprised by your note but I assure you that your assessment is not correct.
What you interpret as partisanship is his frank assessment of the implications of the election for cannabis industry investors. Nowhere does he say that should determine how you vote or even that it should influence your vote. But if you are a cannabis sector investor, or contemplating becoming one, you certainly should know what opportunities this election may or may not create.
Publishing that sort of investment research and insights is what Cabot does and has been doing successfully since 1970.
Historically market performance is not connected to which party is in power, so politics is largely irrelevant, and I always suggest skepticism when people tell you otherwise.
Policies, on the other hand, can certainly drive the fate of specific sectors. That is what Michael was getting at in this article in stating that a Harris win would likely improve the investment outlook for the cannabis sector. This sort of nonpartisan analysis is what our customers have relied upon us for more than 50 years.
I hope that clarifies what this article is, and what it is not. I appreciate that you follow our work and look forward to continuing to help you be a more successful investor.
For your investing success,
Ed
I have mentioned on more than one occasion that at Cabot we don’t mix investing with politics. And we’re experts on investing while we leave the politics to the politicians and the pundits.
Washington Powerful Get Rich Unfairly
The second article that we heard from many of you on was one I wrote – “Ban Government Officials from Trading Stocks.”
I won’t repeat the article here, but suffice it to say, the leaders of our government – in Congress, in the White House, and in the Supreme Court – are in a position to influence the business environment to favor or hinder industry sectors and even specific companies so they have an inherent conflict of interest when they are personally trading individual stocks.
Furthermore, these officials are privy to information about companies, economic policies, regulations, and world events that are not available to the general public, creating the opportunity for trading on that insider knowledge to enrich themselves at the expense of the general public that does not have such privileged access.
For these reasons, an astonishing 87% of Americans, across the political spectrum, believe they should be banned from trading individual stocks.
At the end of my article, I asked you to share your thoughts on this situation. The responses I received were overwhelmingly in agreement. Some were very brief:
“Agree”
And this:
“Totally agree with you.”
Others were a little more involved:
“I agree with you. There is a reason why politicians fight so hard to keep their seats. It is not because they want to do the right thing for the country.”
In this case, we see in addition to presenting conflicts of interest, there is a cost to the reputation and credibility of these leaders by even leaving this door open.
Some were rather more angry about the situation:
“I agree 111%, that all trading should be prohibited amongst these Elites!!!”
One reader had a more nuanced approach:
“I couldn’t agree more. Elected officials should not be able to profit from their privileged information.
“Rules should be:
- First and foremost, they should abide by the same insider trading rules as any exec at any company (so it would prevent them from telling their friends and family as well).
- No individual stock, period
- If they want to trade ETFs, that’s fine, but they need to disclose it at least 1 business day BEFORE the trade, not after like now.
“And thank you again for your valuable newsletters and insights, I appreciate them very much.”
And this:
“I’m not against Congress members trading in individual companies. I’m more for putting a limit on how much they can invest so it’s not brought into politics.”
One reader had an entirely different approach, placing more restrictions on their trading rather than banning individual trading completely:
“Congress people should be allowed to own shares, just like the rest of us. However, their precise holdings need to be part of the public record. Also, their ability to trade on inside information needs to be severely restricted. Thus, if the law were mine to write, congresspeople would only have four windows of opportunity to adjust their portfolios per year, four one-week intervals that would be the same for everybody and known in advance to the public. Maybe they would be required to announce in advance the precise changes they would be making, also. Fines for violation would be draconian: half the value of the trade.”
I didn’t hear from anyone defending the current “system” that is rife with abuse and, at the very least, the appearance of conflicts of interest. The closest I got was from a reader who seemed resigned to the status quo. She said:
“You cannot stop it all. Their mother, wife or son will do it for them.”
It is an election year. Politicians of all stripes are out talking with voters. It’s a perfect time to speak up and make clear your thoughts.
A big thank you to everyone who took the time to share their thoughts and opinions. As Cabot Wealth Network prepares to begin its 55th year in business, we remain committed to providing you with the very best possible service. In addition to the outstanding research, insights and analysis that are the backbone of what we do, that means listening to and communicating with our customers, and that is as clear today as it was in 1970 when my friend Carlton Lutts started this business.
For your investing success,
Ed Coburn
President & Publisher
Cabot Wealth Network
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