Filter THIS! That which doesn’t kill us…

“There is nothing new under the sun.” — Ecclesiastes 

When we first met during my webinar one month ago, I noted some of the similarities between Biotech stocks and Internet stocks when they began emerging, and Marijuana stocks today. 

This past week or three is nothing new. 

Whether in a particular stock, its sector, or the broader market overall, price is all about the ongoing balancing act between supply and demand. How many shares are available, at what prices, and how much are buyers willing to pay.  

Expensive price entices sellers, and cheaper price attracts buyers. Simultaneously, rising price attracts buyers, and falling price entices sellers. Price rising steeply reflects eager buying and creates more of it. That is, until there is no more left to create, not at the suddenly higher prices where potential buyers increasingly believe they”re too late, and earlier buyers start selling so heavily that they push price back down.

And that”s when price falls hard. That”s because buyers become sellers, and price reversing down dampens interest among prospective buyers.

Nothing is perfect. This constant tugging and pulling doesn”t happen in a vacuum. Missteps, miscommunications and misappropriations that happen every single day in every single sector are magnified in such a young sector.

Of course, I speak of GrowLife (PHOT), which was halted yesterday.

Actually, “exacerbate” isn”t correct. The sector”s reaction was exactly what it should have been. It is the other mature industries where the reactions to scandal are skewed — by being muted. Imagine GM ignoring faulty brakes, or MF Global”s collapse, if either of their sectors were at the Marijuana sector”s stage. 

That”s the price this sector pays for still being in its infancy. Unfortunately, it”s the price we all pay for participating in this sector at this stage. I”m okay with that, and I own PHOT as an investment (previously disclosed). The Marijuana sector”s difference — like Biotech and Internet before it — is the attraction of new money and new investors.

Whatever comes of the SEC”s investigation into PHOT will only make the sector stronger. Possible findings range from being cleared, fined for dumb accounting mistakes, or charged as bad actors. Let”s get the truth, and let”s move on. The industry becomes more transparent, investors and prospective investors grow more comfortable that there”s a cop on the beat, and other companies behave better. 

Yes, prices are dropping during the Marijuana sector”s self-improvement phase. (The broader market sell-off doesn”t help matters.) Some companies might drop out, altogether, as they should. For the rest of them — and for those traders and investors exercising prudent risk management — that which doesn”t kill them, makes them stronger.

Filter THIS! …is a pre-open missive that tells you one thing, the most important thing, if you had to filter your view of today”s marijuana stocks price action through just one thing — okay, sometimes two — what would that one thing be?