Unleash the Power of a Small Plant

I am a passionate devotee of freedom in all its forms.

That’s why I am encouraged to see the recent shift in American public opinion favoring the legalization of cannabis/marijuana. To date, marijuana is legal for adults in 11 states and the District of Columbia, while medical marijuana is legal in 34.

With President-elect Joe Biden announcing that he favors the decriminalization of cannabis on the federal level, the path has opened for pot stocks to rise again. Those stocks generally had been in a slump since 2019 due to overproduction and a lack of profitable cannabis companies.

Thus, it is time to turn our attention to an exchange-traded fund (ETF) that has appeared in one of my trading services. The ETFMG Alternative Harvest ETF (NYSEARCA:MJ) tracks a market-cap-weighted index of global firms engaged in the legal cultivation, production, marketing or distribution of cannabis, cannabinoids or tobacco products.

Some of this fund’s top holdings include Aphria Inc. (NASDAQ: APHA), GW Pharmaceuticals PLC Sponsored ADR (NASDAQ: GWPH), Canopy Growth Corporation (NASDAQ: CGC), Aurora Cannabis Inc. (NYSE:ACB), Cronos Group Inc. (NASDAQ:CRON), GrowGeneration Corp. (NASDAQ:GRWG), Tilray, Inc. (NASDAQ:TLRY) and HEXO Corp. (NYSE: HEXO).

This fund’s performance has been relatively strong, even when including the damage done by the COVID-19 pandemic. As of Dec. 15, MJ has jumped 17.08% in the past month and 34.71% for the past three months. However, it currently is down 6.40% year to date to show how much it had fallen before its recent rebound.

Chart courtesy of www.stockcharts.com

The fund has amassed $986.33 million in assets under management and has an expense ratio of 0.75%.

While MJ does provide an investor with a chance to tap into the world of cannabis, this kind of ETF may not be appropriate for all portfolios. Thus, interested investors always should conduct their due diligence and decide whether the fund is suitable for their investing goals.

Finally, whether by reading this e-letter, subscribing to my trading services or meeting me in person, you likely know that I am a staunch advocate of freedom and I respect the personal views of others about whether to use or invest in cannabis. I further think that any legal substance that consenting adults choose to use is entirely their prerogative.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Intelligence Report, Investing Edge, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.