Ann: Becoming a substantial holder, page-17

"I truly believe the cannabis stocks are overvalued"

@gred I don't disagree that the ASX MM stocks are overvalued, considering their current states of play, with outgoings exceeding incomings in most if not all cases. I started to form that opinion a month ago.

"This suddenly increase of price is not sustainable."

Again I agree in principle, except facts are that most of the MM stocks, with the exception of ZLD, have had their sp's comeback considerably from their Feb/Mar highs (unintentional pun). Regarding the coys that have had CR's recently, again with the exception of ZLD, have had their sp's come back or come close to the CR prices. Personally, I draw some comfort in that for two reasons. Firstly the average Joe gets a chance to buy at or close to the levels the Sophs got in on. Secondly, it makes it difficult for the Sophs to cash out quickly with big profit margins, thus they have to play the waiting game with the rest of us if they want to make big (percentage) margins on their investment. IMO, retail investors (ave Joes) rushing in & buying up (pushing sp up) or placing buy orders at between 20 and as high as 100% above CR price (propping sp) is only helping the Soph's line their pockets by giving them the ability to cash out at big (%) margins. And if the big boys do cash out at big profits, what happens next? Well, there's certainly no motivation for them to hold the sp up after they get their big drinks. In my opinion, watch out below, when the music stops. Now that is a scenario where I could see the sp falling quite some way below the CR price.

"So I personally think it is not a good idea to enter at this price."

Now here's where our opinions differ, IMO at this price, it is the perfect time to buy CPH and in the last couple of days I've done so. I'm not making outrageous statements that the sp will be $2 soon, but logically with the known facts of CR price and current sp trading, I can't see the sp dropping too much below present sp. (Ofcourse, this is my opinion and I don't suggest anyone base their buying/selling decisions on my advice.)

"Whatever goes up must come down."

I generally operate on this assumption, but there are always exceptions to this rule. Thus far, ZLD has been one. IMO I reckon you can't be too rigid with this belief. For example, if all the MM sector had of kept trading at 20, 50 and 100% above CR prices and the sp's across the entire MM sector continued to rise, then you'd have to reassess. Sometimes sentiment does override fundamentals and/or common-sense and you have to accept it. Fortunately, the sp's of most of the MM stocks have come back down to earth (CR prices) and there are currently opportunities to buy into 3 or 4 'possibles'. Emphasis on 'possibles', because while I like the potential of the MM sector in 2017-18, I've not lost sight of the fact that they can't all succeed. Thus, I've adopted the strategy of spreading my investment capital over a number of what I consider to be 'well priced' MM stocks. Bearing in mind, that in this case to me, 'well priced' does involve a consideration of risk versus reward. Be blowed if I'll pay 20-100% above the Soph's, but the opportunity to buy in at or around the CR price is as good a price as any to start. Afterall, the company's Directors and the Sophs agreed that was a fair price. OK that's fair enough for me.
***