#13 - NoMo Easy Money - Welcome to the Correction
In this episode we discuss the new reality of the Cannabis Market - corrected values and the end of easy money
1) The Correction -- How did we get here?
- Natural transition from a hype-driven to a results-driven environment
- Using real estate developments as an example (selling the sizzle vs the steak)
- How the overall sales numbers are WAY off the projections ($4.6B vs $1B)
2) What is Easy Money?
- Lack of due diligence; "sizzle" driven investing
- Emotion driven investing style
- Focus on upside instead of risk mitigation (Greed > Fear)
3) The Effects of Easy Money
- Asset prices / Company Valuations start to rise rapidly
- How this has happened in Real Estate since 2008
- Attracting shady players ("promotes")
- Speculative behaviour of investors chasing comparable gains
4) What Next? What does this mean for investors?
- Resetting values can be attractive for investors
- "Cashed up" players can take advantage of this downturn through M&A
- Investors need to pay closer attention to margins: gross and net
- Cash and Cashflow are extremely important
- Focus on companies who have a proven ability to execute and make money
- How a failing company can create an investing opportunity in a winning company
Bonus: Manish and Abi make a $3 Billion Dollar Bet for 2020