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Inside the Market How the ‘greatest single mistake’ for investors relates to marijuana stocks

A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web

Pfizer Inc., allegedly a high-quality stock with consistent earnings, guided earnings lower Tuesday morning in what’s become and unfortunate trend,

“Notable companies that have lowered guidance so far this month: Apple, Samsung, LG, Delta, Skyworks, Macy’s, Kohl’s, American Airlines, Constellation Brands, Lindt, Goodyear, Ford, Signet Jewelers, Bunge, Stanley Black & Decker, Intel, Nvidia, Caterpillar, Whirlpool, 3M, Pfizer” – Twitter

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“Nvidia targets fall as outlook cut ‘worse than we expected’” – Bloomberg

“Lockheed Martin shares slip after slight earnings miss, weak 2019 forecast” – CNBC

“Pfizer’s earnings outlook disappoints as Viagra loses patent protection and Lyrica faces same fate” – CNBC

“Breakingviews - U.S. Huawei charges test trade deal appetite” – Reuters

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U.S. officials filed charges against Chinese telecom equipment providers Huawei Monday. The allegations point to an incentive plan encouraging employees to acquire technology information from customers. The story won’t help U.S./China trade negotiations at all,

“The indictment claims that Huawei ‘operated Skycom as an unofficial subsidiary to obtain otherwise prohibited US-origin goods, technology and services, including bank services, for Huawei’s Iran-based business while concealing the link to Huawei’ … Huawei also faces charges for alleged theft of trade secrets. The DoJ claims that the company “began a concerted effort to a concerted effort to steal information on a T-Mobile phone-testing robot dubbed ‘Tappy,’ in 2012 with its engineers secretly taking photographs of ‘Tappy’ in 2013… Separately, the DoJ claimed that Huawei in July 2013 set up “a formal schedule for rewarding employees for stealing information from competitors based on the confidential value of the information obtained””

“Huawei indictments: the key points” – Financial Times (paywall)

“China expresses serious concern about U.S. charges on Huawei” - Reuters

“U.S. alleges Meng Wanzhou part of 10-year conspiracy by Huawei to skirt sanctions” – Report on Business

“‘U.S. versus China’: In Huawei indictments, traces of a broader conflict” - Report on Business

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Ritholtz Wealth Management‘s Irrelevant Investor site published “The Single Greatest Error” with investment advice that, for me, directly applies to cannabis stocks,

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"The idea that you should buy what you know goes something like this - ‘I cannot believe how much money I spend at Costco. Hey wait a minute, why don’t I buy some stock in this company?’ This line of thinking was made famous by Peter Lynch, the former head of Fidelity’s Magellan Fund. Lynch, however, said this concept was taken out of context and oversimplified. He told the Wall Street Journal, ‘I’ve never said, If you go to a mall, see a Starbucks and say it’s good coffee, you should call Fidelity brokerage and buy the stock.’ ‘What you know' can be a great place to start, but that shouldn’t replace actual analysis. ‘If you can’t understand the balance sheet, Lynch said, 'you probably shouldn’t own it.’”

Applied to cannabis stocks, this means you can like the product and still find the related stocks too expensive.

“The Single Greatest Error” – Irrelevant Investor

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Many of the companies lowering profit forecasts are blaming the slowdown in the Chinese economy, (my emphasis)

“On Monday, two US giants in their fields—Caterpillar and Nvidia—spoke of this gravitational pull. In their respective earnings reports, executives joined a host of others in blaming lacklustre growth in the most recent quarter on the sharp economic slowdown currently hamstringing China. The same day, ECB president Mario Draghi tethered the Eurozone’s economic outlook to that of China’s expansive stimulus measures of late. .. According to Jen and Freire, the linkages drawn by these chief executives and policymakers can be quantified. Using a series of network theory algorithms, Jen and Freire found that China’s influence on the world is now as sizable as the combined influence of the US and EU.”

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“The global economy's second sun” – FT Alphaville (free with registration)

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Tweet of the Day:

Diversion: “Nearly $2 billion in dirty money may have flowed through B.C. casinos, far more than official estimates” – Global News

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