Oversupply and a Bubble Forming. Now What?

Somewhere early in the year 2000 my mother-in-law was moving things out of a vacation home in Mariposa CA. I volunteered my help. So together with Anthony; a young and fit assistant from the Starving Students Movers we started lumping furniture. During a coffee break where we enjoyed delicious Starbucks Latte, Anthony started sharing his stock investment strategy. Wait...what? Investment strategy? (Disclaimer: I'm invested in Starbucks at this moment.)

Anthony couldn't have been much more than 21 and it turns out he really was a student - a student taking a videotape course in "How To Retire BeforeYou're Thirty" and was day trading. He explained his trading philosophy: high growth Internet stocks. He had amassed a small fortune already and he did it all with credit cards and margin debt.

I started to wonder if I was missing out and perhaps being too cautious with my own investments. After a little more thought on my drive home, I called my broker and cashed completely out of the market. With the Tech Crash hitting just weeks later, I had discovered a new technical indicator that would define my investing strategy from then on. I called it, "the Starving Students Bubble Indicator (SSBI):

"When a Starving Student gives you stock tips, get the hell out of the market because it’s overbought."

Wine Distributors: Legalized Pot vs Prohibition

 

Thirty-seven states have liberalized the 1970 Federal Controlled Substance Act with respect to marijuana use. Thirty-five now allow medical marijuana. Two states; Colorado and Washington have fully legalized recreational and medical marijuana use. Oregon, Alaska, and Washington D.C. are expected to do so in 2014.

 

Two weeks ago I spoke to a large group of high-level sales people and distributors. I enjoy talking to this particular group because I get real-time unfiltered intelligence from very experienced business people. Outside of all the expected discussion of supply, demand, sales tactics, competition, pricing and the like, there was a surprise discussion on the impact of legalized marijuana on wine sales.