Generally, I don’t talk politics in my newsletters…
I’m too busy looking for ideas to make my subscribers money. And I choose to focus on what unites my subscribers: Our goal of safely growing wealth.
But we can’t ignore the fact that we’ll likely have a new president in the White House come January 20, 2021.
Now, I’m not here to debate whether President-elect Biden defeated President Trump fair and square.
The Trump team claims there were irregularities during the ballot counts in some states. I’m willing to let it play out in the courts.
A President Trump win from here looks like a longshot. So far, there’s been little evidence of systematic or widespread voter fraud. In the end, the courts will decide.
Meanwhile, as smart investors, we must prepare for a Biden administration. And that means seeing how his policies will affect our investment ideas.
A Home Run for Cannabis
Over the last 18 months, the cannabis sector has been excruciating for investors. But with a Biden win, all of that is about to change…
Let me explain…
While most people were glued to the presidential election on November 3, five states – Mississippi, South Dakota, Montana, Arizona, and New Jersey – passed laws legalizing cannabis in some form or fashion.
That means the United States now has 38 states with legalized cannabis laws on the books. That’s right. Nearly 300 million Americans now have access to some form of legal cannabis.
Cannabis stocks soared on the news…
After the election, Canopy Growth and Tilray surged as much as 20% and 50%, respectively… and Aurora Cannabis jumped as high as 128%… Even after giving up some of those gains later in the week, all three are still up post-election.
Other cannabis stocks also rallied Monday, including global cannabis leader Curaleaf… Aphria… and Cronos, which is backed by tobacco giant Altria.
Now, Biden doesn’t personally support cannabis legalization at the federal level. But his official policy calls for nationwide cannabis decriminalization and rescheduling. So instead of criminal charges, he suggests fines for minor cannabis offenses.
This means a Biden administration will not get in the way of states that want to broaden their cannabis laws… and it couldn’t have come at a better time for any tax-starved states.
Cannabis sales and tax revenues have never been higher. In California, sales have averaged 53% higher than last year. Oregon posted a 58% increase in sales from last year. And Colorado is on track to see sales hit a record $2 billion – that’s four years earlier than previously expected.
But that’s just the start…
A report from Prohibition Partners projects the global cannabis market will swell to $103.9 billion by 2024. That’s a potential $10 billion-plus honeypot of tax revenue for states hit hard by the pandemic.
So Biden’s victory should be a home run for the legal cannabis industry.
Crypto on a Roll
Regular readers know I’ve been bullish on crypto since 2016. And that’s something that wouldn’t change no matter who won the election.
But I believe the forces behind the widespread crypto adoption story may soon accelerate under Biden.
It’s a good bet that a Democrat-led administration will likely push for massive deficit spending to help the economy recover from the pandemic.
The first stimulus bill pumped $7 trillion into the U.S. economy. A second bill under Biden (or Trump before he leaves office) will likely be much more.
Now, I’m not saying stimulus money will create runaway inflation in the United States. But I am saying that the Federal Reserve will dilute the value of the U.S. dollar to reduce the country’s debt burden.
This will send investors flocking to bitcoin. And since there can only ever be 21 million bitcoin, it’s a great hedge against a weakening U.S. dollar.
Legendary investors like Paul Tudor Jones say bitcoin is the hedge you want to own against reckless central bank money printing… And he has been 100% correct. Bitcoin is by far the best-performing asset in the world.
Since March, bitcoin is up 112%. By comparison, the S&P 500 is up 10% and gold 24%.
But even if Biden and a divided Congress can’t pass a stimulus package… crypto prices are going up as Wall Street wakes up to the massive fees it can rake in from offering crypto services. And investors will flock to bitcoin and other cryptos as they wake up to the vast asymmetric upside in crypto.
Last week, analysts from JPMorgan Chase reported that the Grayscale Bitcoin Trust is outperforming gold exchange-traded funds (ETFs). They surmise the trend is likely being driven by institutional investors like family offices.
I’ve been predicting this for years. It’s extremely bullish for bitcoin. And remember, what’s good for bitcoin is good for the rest of the crypto space.
What to Do Next
I said this about President Trump… And I’ll say it about President-elect Biden. Whatever their policies, we look at how they’ll affect our investment ideas. And a Biden administration looks bullish for legal cannabis and crypto.
If you haven’t played the cannabis trend yet, consider a small stake in the industry benchmark Horizons Marijuana Life Sciences Index ETF (HMLSF). It holds a basket of top legal cannabis names… And it’ll give you exposure to the entire space.
Friends, I know this has been an emotionally draining election for most Americans. But now is the time to put the past behind you and look to your financial future – regardless of who is in the White House.
Let the Game Come to You!
Editor, Palm Beach Daily