Cannabis stocks weren't smoking in 2018

From time to time we've published an index on cannabis stocks and on other speculative thematics - lithium, China consumer plays and cryptocurrency stocks.

We had another look at these indices, based on the average share price moves of baskets of stocks exposed to the relevant themes, to provide a client with some perspective on how they have performed compared to the continually bubbly narrative of newsletter writers.

Figure 1: Average share price performance of ASX-listed cannabis stocks since Jan 2016

Source: Sentieo, Equitable Investors

On our calculations, cannabis stocks fell 36% in 2018 - but that was better than cryptocurrency stocks (down 62%), lithium stocks (down 53%) and China consumer stocks (down 40%).

These stocks tell the story of market sentiment – they will run very hard when sentiment is strong and they will have the biggest declines when people start to worry.

Figure 2: Speculative thematic indices peaked in Dec 2017/Jan 2018

Source: Sentieo, Equitable Investors

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