His face was hidden in shadow, but his words were clear...
"Follow the money."
This cryptic advice from the legendary Watergate informant "Deep Throat" sent journalists Bob Woodward and Carl Bernstein in the right direction. Soon, they followed money transfers that unveiled the corruption in the Nixon administration.
The phrase is from a scene in the 1976 political thriller All the President's Men about the real-life Watergate scandal that brought down President Richard Nixon.
Today, "Follow the money" is a mantra for journalists and investigators all over the world. When reporters start an investigation, they want to locate a paper trail.
As smart investors, we tend to do the opposite of following the money. We stay away from what we refer to as the "dumb money." We're not following the herd.
We're contrarians. We often take the other side of those bets. We've explained before why being a contrarian is profitable.
But there are times in investing when you do want to follow the money. Take insider buying, for example.
Legendary fund manager and author Peter Lynch describes it best in his book One Up on Wall Street...
There's no better tip-off to the probable success of a stock than that people in the company are putting their own money into it...
There's only one reason that insiders buy: They think the stock price is undervalued and will eventually go up.
Following the money after a few executives buy large amounts of shares of their own company is usually a smart move. After all, nobody knows the company better than the folks who run it.
Today, we think it's a good idea to follow the money, but not from company insiders – from corporate America.
A few of the biggest firms in the world are moving money into one growing industry... and it's intriguing. We're talking about legal cannabis.
Over the past few months, major blue-chip companies have made bets on the future of marijuana. The deals have been big, too, with an attempt to consolidate the industry.
It started in August 2018, when beer giant Molson Coors Brewing (TAP) announced a partnership with Quebec-based cannabis grower HEXO (HEXO.TO) to develop cannabis-infused beverages.
Two weeks later, alcohol conglomerate Constellation Brands (STZ) shelled out $4 billion for 37% of Canadian marijuana grower Canopy Growth (CGC).
And finally, in early December, cigarette maker Altria (MO) got into the game. It paid $1.8 billion for a 45% stake in leading cannabinoid company Cronos (CRON). This firm primarily invests in Canadian medical-marijuana companies.
All you have to do is follow the money to know that cannabis is more than a wild speculation... These major alcohol and nicotine companies are pouring in billions of dollars to get a piece of the action.
Similar to how it's a wise idea to follow suit after insiders buy their own shares, these alcohol and tobacco companies know the cannabis space better than most. They're very similar companies. They operate under similar regulations and have successfully navigated them for years.
If these giants are moving money into the marijuana industry, it's time to pay attention.
There's also no doubt this industry is still in its infancy and has plenty of room to run. According to Grand View Research, medical and recreational cannabis sales are projected to skyrocket to $146.4 billion by the end of 2025. It may eventually surpass both the soda and tobacco industries.
And think of all the possibilities for growth. It may not be long before cannabis infused beverages could become mainstream. We've even seen beauty products using cannabis. One day, we could see companies like Grubhub or Uber Eats delivering cannabis to your doorstep.
While I'm not an expert in the cannabis space by any stretch of the imagination, I have all the faith in the world in Stansberry Research's newest analyst, Thomas Carroll.
According to Thomas, we're about to see an incredible shakeup in the world of cannabis investing. And 99% of Americans could miss their best chance to invest in cannabis before the biggest gains are gone.
Don't be part of that 99%.
Make sure you tune in next Wednesday, March 27, at 8 p.m. Eastern time as Thomas details the steps to prepare yourself for the moneymaking opportunity of a lifetime... before it's too late.
What We're Reading...
- Something different: Ethiopian crash crew's voices may unlock high-stakes Boeing inquiry.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
March 20, 2019