THE TRADER’S WAY WITH CANNABIS PAYDAYS

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The “Trader’s Way” with Cannabis Paydays

By: Adam O’Dell

Some people will tell you it’s the little things you do, consistently over time, that will lead you to success.

Others say extraordinary success requires a big action at just the right time, or what’s called “striking while the iron is hot.”

I think both approaches are right.

If you don’t save money consistently, you’ll never have any money to invest, and you’ll never get ahead. This is one of those little things you must do consistently and with discipline.

On the other hand, putting the same little amount of money into the stock market each and every month, resolving to get rich slowly, has never made much sense to me. Sometimes the market is fruitful. Sometimes it isn’t. And on rare occasions, it can offer unique, once-in-a-lifetime opportunities.

The trick to “striking while the iron is hot” is first to identify when a particular market, industry or business is offering you an extraordinarily lucrative opportunity… then pounce on it!

That’s what Cannabis Paydays is all about.

Believe it or not, I was still in high school when the dot-com boom was in full swing. I also missed out on the mid-2000s property boom because I was still early in my career, building up savings.

And while I’ve made really good money on the bull market that began in 2009, the whole time I’ve been waiting patiently for a major, massively lucrative, once-in-a-lifetime opportunity to pounce on.

Now, I’m convinced the cannabis industry is that big chance.

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Our Mission The goal of Cannabis Paydays is simple: We’re going to plant as many “seed” investments in the cannabis space as reasonably possible… then nurture them, and watch them grow.

As in nature, some of them won’t grow at all. Others will grow at a healthy clip. And some — the lucky ones — will grow to extraordinary heights.

Cannabis Industry: The Opportunity Now The cannabis industry is no longer a sleeper trend. It’s catching on and gaining momentum.

That’s no surprise given the projected size of the industry and the growth rates it’ll likely achieve as it marches into the arena of mainstream commerce.

The scope of the cannabis industry is massive, encompassing everything from recreational and medical marijuana to patented, big-pharma drugs and skincare creams, to building materials and fabrics.

The possibilities are endless when it comes to cannabis. Even pet products are in the works, since you know we love to spoil our pets!

My point is, this isn’t a niche market. There isn’t one end-user of cannabis…

There are many different types of people who will use cannabis, or cannabis-derived products, in different ways.

And while the stigma surrounding marijuana as an “illicit” drug has, up to this point, prevented it from being recognized as a legitimate commercial product, public opinion has been rapidly changing. Recent polls show a majority of Americans are in support of legalizing the drug.

The fact that cannabis has been demonized by anti-drug groups — and the government — for decades only makes the opportunity more lucrative. I can’t think of another legitimate industry or product that’s been held back so strongly, for so long, for essentially no good reason. And it’s obvious from here that once the artificial barriers to market entry get removed, the floodgates will open and all you’ll be able to hear is a big whooooosh of money flying in.

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But Will It Be “Easy” Money? I should temper your expectations just a bit…

The cannabis industry will be lucrative. But that doesn’t mean everyone wins.

Cannabis-focused businesses are still businesses, after all. They face competition, cost-control pressures, and the ebb and flow of the economic and business cycles — just as any business does.

There will be a lot of winners — cannabis companies that display remarkable dominance, and ones that merely benefit from the “rising tide” phenomenon. But I must warn you, there will also be plenty of losers in the space. Many ships will sink.

Some cannabis companies will end up overextending themselves — either in the debt loads they take on or in the scope of the market they attempt to capture. Other cannabis companies will be revealed as pure frauds, merely clinging to the latest hot trend. No matter the reason, plenty of companies will go out of business.

Even as an investor in the cannabis space, there’s no guarantee you’ll grow rich from this lucrative high-growth industry.

The cannabis market is different: If you’re used to looking at a company’s fundamentals — such as balance sheets and income statement metrics — you’ll probably find yourself confused when it comes to cannabis companies.

Sure, some of them are already listed on major U.S. and Canadian exchanges, and are therefore subject to reporting laws and regulations. But many of the smaller companies are not, making fundamental analysis tricky at best. So-called “value investors” will probably find it hard to stomach cannabis companies’ fundamentals altogether — as is typical of past growth-industry booms.

And if you’re a “boots-on-the-ground” investor — one who somehow has the time, expertise, and access to learn a company’s inner workings the way Warren Buffett and Charlie Munger would — here, too, I think you’ll find making money in the cannabis space a challenge.

The industry is so fast-moving, still very private, and altogether opaque.

Sure, you could attempt to evaluate a cannabis company the same way you would Johnson & Johnson (NYSE: JNJ), since many will compete in JNJ’s markets.

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But I don’t think you’ll find the same amount and quality of information you’d require to make good decisions.

Embracing the “Trader’s Way” If we aren’t looking at a cannabis company’s fundamentals — since many don’t even share the data — and if I’m not schlepping around to visit the founders and executives of dozens of cannabis companies just to hear them pitch me on how great they think they are, then what are we doing to identify the best investment “seeds” to plant in the cannabis space?

I’ll be relying on tools and techniques that have proven capable of identifying every massively bullish trend you can think of —from the Dutch tulip mania to the Nifty 50 in the 60s and 70s… the dot-com boom in the late 90s and lucrative run-ups in individual stocks like Amazon (AMZN), Disney (DIS), McDonald’s (MCD), Walmart (WMT), and Netflix (NFLX)…

I hold price above all else. A stock’s price is more important to me than its fundamentals, its management team, its story, and even more than what anyone has to say about the economy.

Why? Because only price pays!

Meaning, the only way you can make money on an investment or trade is if you can sell it for a higher price than you paid for it.

Truly, from a pragmatic standpoint, nothing else matters!

Now, I realize this sounds controversial. The “ivory tower” side of finance loves to preach market efficiency and the importance of fundamentals, such as valuation metrics. But I assure you… traders have been making money on price action alone for decades!

My first experience with this concept came in the early 2000s, when I began trading foreign currency markets (aka “forex”). It was the first market I’d ever traded… and I knew pretty much nothing about finance, investing, or even foreign currencies.

Back then, the retail forex market was like the wild west. You could open a retail account with a few hundred bucks and get 200-to-1 leverage! That few hundred bucks could (and often would) disappear in the blink of an eye. But you could also double or

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triple it up on a good day. Now, I didn’t understand at that time what drives currency markets. I just wanted to make money trading, so I taught myself how to trade.

And soon enough, I began learning the keys to trading volatile, speculative markets —what I now think of as the “Trader’s Way.”

I learned a systematic approach is the best way to stay disciplined and consistent.

I learned that trading with the trend increases your odds of success and decreases risk.

I learned that momentum is one of the best “tells” of a market that’s about to explode higher.

And perhaps most important of all, I learned risk-management and trade-management techniques that are typically overlooked by the average long-term investor.

No doubt, these skills served me well in the volatile forex markets… when I traded futures contracts for a trend-following fund years later… and, more recently, in my Cycle 9 Alert and 10X Profits trading services.

As we look to pounce on opportunities cropping up left and right in the cannabis space, I’m confident they’ll be key to minimizing risk and landing massive profits.

Let’s Look at the Proof Trend-following and momentum strategies have been exhaustively proven to work — on stocks, bonds, currencies, and commodities — for decades, if not centuries (as some studies show).

At the same time, high-growth industries have always been ripe with opportunity, promising investment profits that far exceed that of a mature, diversified market — so long as you can identify when to get in and when to get out!

That’s where a systematic, trend-and-momentum approach comes in…

We’re fishing in the cannabis space, so to speak, because it’s a high-growth industry that I expect to blossom over the next several years. And we’re going to use my systematic trend-and-momentum model to tell us which stocks to get in, when to get into them, and when to get out.

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Now, I know this approach works. But I’ve done extensive historical analysis — specific to the cannabis industry and outside of it — to ensure the system is designed to meet our demands.

I’ve looked at my system’s performance over the last 15 years on a basket of 50 cannabis stocks. The stocks range from big to small, very liquid to less liquid, and all across the spectrum of end-use markets.

There are currently more than 50 cannabis stocks in the universe, and many more will come online in the coming months. So I’ll certainly be running my algorithm on all stocks that have some tie to the cannabis space, as I work to identify live recommendations.

But for the purposes of proving out my system, testing on a basket of 50 cannabis stocks gives us a good idea of what to expect.

And let’s just say the opportunity is there — in a BIG way!

My historical analysis shows my system’s buy signal was triggered a little over 500 times in the 15-year span…

The average trade result was +856% (including winners and losers).

And while there were a greater number of negative trades than positive ones — a common feature of many investment strategies, particularly trend-following — the average winning trade was 53 times greater in size than the average losing trade.

That’s because my system is designed to follow the golden rule of the “Trader’s Way”: Cut your losses short and let your profits run.

Look, we’re going into the cannabis space to identify moonshots — stocks that have the potential to return 10-times your money, or more! And that’s why we need to follow a strategy that’s already proven itself capable of identifying prior moonshots, even outside the newly-forming cannabis industry.

A moonshot is a moonshot. It shouldn’t really matter to us whether we make 1,000% on a cannabis stock or 1,000% on a retail stock — 1,000% is 1,000% any way you slice it. And they all have a few things in common… You see, I’ve learned that most go-it-alone investors have a hard time identifying and capitalizing on even one moonshot stock move in their lifetime.

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One reason is that a company’s fundamentals and growth story are always uncertain in the early years, particularly for stocks that trade at low prices and don’t garner any attention from Wall Street analysts. Another is that even after identifying a hot growth stock with massive potential, most investors chicken out and sell too early, locking in nice gains of 100% or 200% or more… while giving up their chance to make a 1,000%-plus return, as the stock eventually develops into a true moonshot.

That’s why I think a systematic approach to identifying moonshots is best. And I expect the algorithm I developed to identify a number of them ahead.

But I also wanted to make sure it was capable of identifying the trend and momentum characteristics of prior moonshots, particularly in their early years when they were still flying under the radar.

Good news is, my strategy would have worked wonders on past moonshots!

Consider just a handful of the early buy signals it would have generated on what are now household names:

• Disney (DIS) in September 1968, for $2.64 • McDonald’s (MCD) in May 1969, for $0.28 • Altria (MO) in March 1971, for $0.14 • Intel (INTC) in January 1972, for $0.02 • Coca-Cola Co. (KO) in May 1975, for $0.96 • Wal-Mart (WMT) in May 1978, for $0.09 • Apple (AAPL) in October 1982, for $0.43 • Amazon (AMZN) in September 1997, for $3.14 • Netflix (NFLX) in November 2002, for $0.72

This is just a small sampling, but I think you get the picture. My systematic, trend-and-momentum strategy could have worked to identify some of the most recognizable and lucrative moonshots of our lifetime! All while these names were still flying under the radar, and trading for pennies.

And even though you could have held each of those stocks through present day (and made an absolute fortune), you don’t even need to wait nearly that long to lock in huge gains on early-access moonshots.

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Each of the stocks listed above went on to generate 1,000% returns or more in a matter of months or years… not decades or lifetimes!

It took Amazon just 14 months to go up 10 times following my strategy’s September 1997 buy signal!

Apple went ten times up in around three years (2004-2007) during the last bull market.

Intel took a bit longer to get going. But when it did, my strategy’s buy signal identified three consecutive 1,000% winners in the stock! It went from $0.02 to $0.22. Then from $0.22 to $2.45. Then from $2.45 to $30.06.

My system’s buy signal would have identified those trades — back to back to back!

Truly, these were some incredible rides! A systematic trader’s approach to hitching a ride on moonshots can be incredibly lucrative!

Of course, these were moonshots that came about in a different time and in various industries. We’re targeting the cannabis industry because that’s where the growth is… explosive growth that should produce many moonshots ahead!

The Future of Cannabis Investing While looking back in time is always an important exercise, we must live and operate in the present — which inevitably leads us to the future.

So I can’t say that the present and future days of the cannabis industry will be like the past. Remember, we’re forecasting massive growth ahead. That’s the reason we’re jumping into the space!

Artificial barriers are continually being removed at state and federal levels. Early movers are gaining market share and figuring out profitability. Year-over-year revenue growth is generally positive and allows for double-digit growth-rate projections over the coming years. We’re learning about more and more end-use markets for cannabis, where practically none existed just a few years ago.

And even though cannabis stocks have enjoyed a few early waves of hype buying, we’ve come nowhere close to reaching their full potential… that’s still ahead of us.

I don’t know precisely what the future holds for the cannabis industry, but I think it’s going to be a spectacular ride with plenty of once-in-a-lifetime opportunities.

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And I’m ready to pounce on it with my systematic “Trader’s Way.”

What to Expect from Cannabis Paydays Now, let’s get down to some of the nuts and bolts…

How many trades will we be making?

I can’t give you a total number or rate right now, but my goal is to recommend as many “seed” investments in cannabis companies as my system identifies. Essentially, as many as possible.

I’m convinced the cannabis industry will produce many moonshots, even though it’ll be tough to figure out too far in advance which ones will soar and which will sputter.

That’s why we’ll cast a wide net, planting as many “seed” investments in as many cannabis companies as is reasonably possible.

How much money should I invest in each trade?

Again, I can’t give you an exact number. That’s a personal decision you must make within the bounds of your financial situation and comfort zone.

I’ll make no bones about it: This is a highly speculative endeavor.

We will employ risk-management techniques, but none are fail-proof and I will always point to prudent position sizing as the best way to limit risk. That means investing a small amount in each trade — however small is comfortable to you.

You should follow the speculative trader’s rule: only risk funds you can afford to lose.

And you should invest small enough amount to allow for the initiation of a number of positions — perhaps a dozen or two at a time. The exact number will be highly dependent on the path the industry takes.

What risk-management techniques will we use?

Prudent position sizing, for one. We’ll also use “stop-losses,” which I’ll provide instructions on in individual trade alerts.

In my historical analysis of the system’s performance, I learned that while a stop-loss method didn’t prevent larger losses on all trades, it did work well on a vast majority of souring positions — effectively meeting the “cut your losses short” goal of our mantra.

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This is helpful since holding a souring position too long is a typical mistake of go-it-alone investors.

That only prolongs the psychological agony you tend to feel from bad trades, erodes your confidence in making new trades, and ties up capital on ho-hum opportunities, while new and better opportunities are popping up elsewhere.

I’m sure you’ve heard the saying: Don’t throw good money after bad. That embodies the same philosophy as “cutting your losses short,” which we’ll seek to do as necessary.

What about taking profits?

This will take some coaching.

You see, everyone I’ve ever traded with gets the same itch when we find ourselves holding a profit. Everything inside you is screaming, “Take it! Lock it in!”

This may end up being one of the biggest challenges for you — resisting the urge to take profits too soon, perhaps when a play is up a few hundred percent, rather than remaining disciplined to “letting your profits run.”

I showed you earlier how Intel traded from $0.02 to $0.22, handing out a 1,000% return in short order… Well, imagine how you’d feel if you’d identified Intel as an up-and-coming growth stock and if you’d actually bought it at $0.02, and if you’d sold it for $0.06 A nice triple! You might think…

But how would you feel later when you watch (on the sidelines) as it goes on from $0.06 to $0.12… to $0.22… to $2.45… then to more than $30?

The point is, you can’t make the big money if you’re always closing trades for little money. And this principle will very much apply to our aim of identifying moonshot cannabis stocks.

How often will I receive Cannabis Paydays and what will each issue look like?

You can expect to receive an email every week — typically on Friday. But as this is a fast-moving market, I may also send additional issues or trade alerts any given day.

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Trade alerts will include specific instructions to either buy into a new position or close out an existing position. As always, my recommendations will give you everything you need to consider and implement the trade.

Otherwise, I’ll certainly work to keep us informed on the cannabis industry, in general, and the “moving and shaking” being done by individual companies within the space. This may take the form of basic industry briefings and updates, as well as deeper dives into company-specific developments and trends.

I want to be clear, though. While we’ll monitor and evaluate this budding industry’s story, and while we’ll learn about and track the progress (or failures) of individual companies, at times highlighting their fundamental and business positions, we will predominately be making trades based on my systematic model’s buy signals, which ignore subjective factors and instead only consider what can be measured: price, trend, and momentum.

I personally enjoy following along with the industry news and even learning about the ins and outs of individual companies. We just have to make sure we’re approaching this investment space with calculating objectivity rather than merely buying into the hype.

My system — and our commitment to the “Trader’s Way” — will help us do just that. And that’ll allow us to watch the industry with curious amusement, all the while planting “seed” investments that promise the opportunity of extraordinary growth!

Choosing a Broker Chances are that you already have a brokerage account. But in case you don’t, here’s a few well-known brokers that to get you started with Cannabis Paydays:

• TD Ameritrade: www.tdameritrade.com — 1-800-454-9272• Interactive Brokers: www.interactivebrokers.com —

1-877-442-2757• Charles Schwab: www.schwab.com — 1-800-435-4000• Fidelity: www.fidelity.com — 1-800-343-3548• E-Trade: www.etrade.com — 1-877-921-2434• Trade King: www.tradeking.com — 1-877-495-5464• Trade Monster: www.trademonster.com — 1-877-598-3190

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Since some of the stocks we’ll be trading are small, you may run into roadblocks when attempting to make new purchases. This is highly dependent on your broker though.

Schwab and Interactive Brokers, for instance, either didn’t list some of the stocks or tried to dissuade readers from buying the stock altogether. However, TD Ameritrade had no issues with trades.

So, if you encounter any issues with the trades in our portfolio, contact your brokerage firm and tell them the exchange and ticker symbol that the holdings trade under.

Keep in mind that certain stocks might be unavailable in your state due to Blue Sky laws, while other stocks might not be available on some brokerage platforms.

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About the Editor Adam O’Dell is the Chief Investment Strategist at Dent Research.

Around the office, he’s known as the math guy for his ability to analyze market data and identify major stocks moves. It doesn’t hurt that he has a math and science background, having first attended medical school at West Virginia University before deciding to tackle the world of investing.

Back in 2011, he left a high-paying job consulting for some of the world’s wealthiest people to join the Dent Research team. Co-founders Harry Dent and Rodney Johnson specifically brought him on board to leverage his technical trading background… and to find ways to trade the markets that nobody else had thought of yet.

Since joining the team, he’s developed the highly successful options trading research service — Cycle 9 Alert — and his easy-to-implement 10X Profits market-timing model, which uses two simple positions to gain risk-on and risk-off exposure. Adam also runs Secrets of a 7 Figure Trader, an educational service aimed at teaching aspiring investors the value of systematic trading strategies.

And now Adam is applying his expertise and “Trader’s Way” to the fast-growing cannabis industry with Cannabis Paydays.

Have a question or comment? Contact a member of our customer service team toll free at 888-211-2215, Monday through Friday between 9 a.m. and 8 p.m. EST, or write to us at cannabispaydays@dentresearch.com.

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