Imagine if you had $100,000 in 2014. You could have invested in LP stocks of one of Canada’s first public-tradingcannabis companies. A company like Tweed or Aurora would have done just fine.
Then, if you’d cashed out by May 31st, 2019 (or perhaps later, but I’m cautious about autumn) you would have made about $2,000,000.
Two million dollars in five years. Not bad.
Also, not a bubble. At least that’s what investors and market analysts say. Not a bubble but genuine growth.
Growth they expect to continue well into the 2020s. Sure, there may be some setbacks here and there. The market always corrects. But systematic failure? A repeat of 2008 except worse?
Unlikely, they say.
But anyone who doesn’t see the massive financial crisis coming simply doesn’t understand the axiomatic foundations of economics.
One must produce before one consumes. One must save before one produces.
Nature provides us with very few consumer goods. Fruits, berries, nuts. Everything else requires tools, instruments or machines — capital goods.
As I’ve always said, you need capital to have capitalism.
Capital goods allow us to increase nature-given consumer goods beyond their natural level. Try growing cannabis without any tools and see how far you get. Is it possible? Yes, but clearly easier with capital goods like electricity.
Capital goods also allow us to bring about entirely new consumer goods. Things we’ve created that didn’t exist before. Cars, guns, computers, phones, bricks, nails, steel structures, electric guitars, houses, etc.
Constructing these consumer goods requires some time. This is why interest rates are important. They coordinate production over time.
Except when the central bank dictates rates like a Soviet planner.
But like any bubble, somewhere out there, someone is cashing out on all their LP stocks and retiring.
They probably already had a lot of capital to invest. Like spending $50,000 on penny stocks then walking away with $500 million five years later. Impossible? Not in a bubble economy.
If you’re smart with your money, there are plenty of ways to set up your retirement. You can even borrow money to do it.
Y’know, since interest rates have ceased to reflect true scarcity. They have been artificially low for ten years. That’s likely going to end, but then again, it might not. A crisis might give central banks the excuse to cut interest rates lower.
With low-interest rates making borrowing cheap, anyone could have gotten in the LP game. Look at Aurora. From 2014 to 2019 they saw a 2000% gain in their stock price. Enough to borrow $10,000 and turn it into $200,000.