Review: A new market high: First ETF to target marijuana stocks

The financial services industry can be incredibly creative when it comes to money. And one of their favorites is to launch products around the hot new trends – whether they are actually useful isn’t really important.

And marijuana legalization is definitely one of the hot new trends – especially in Canada where a marijuana ETF just came out on the Toronto stock exchange. But as you might imagine for such a young industry, this thing has problems as an actual investment.

The most glaring of these issues is that the ETF only holds fourteen stocks (three of which are biotech firms that happen to create synthetic THC). Fourteen stocks does not an asset class make. It doesn’t even make a sector.

This ETF is really a way to bet on Canadian government policy toward marijuana. It might be great for speculation, but it certainly isn’t even close to useful for actual investment.

As we’ve discussed before there are all sorts of crazy indexes out there (I’m looking at you, Dow Jones 2008 Summer Games Index). Just because someone can name and define something doesn’t mean there’s anything there – even if the returns look great.

Investing is about more than just following the latest trends or chasing returns. To find out what you should be paying attention to, download our ebook

 

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