The medical marijuana/cannabis industry has become legalized in many countries around the world and that trend is only gaining momentum. While the last year has been an extreme roller coaster ride for most investors in the cannabis market, we can feel confident that this trend is still at the early stages, well established and on an upward momentum longer term.  The rise and fall in stock prices at the end of 2013 and the beginning of 2014 was a result of hot money coming in and out of the sector, illiquid markets and tight share structures.  But what we didn't see during that time is the participation from the institutional and professional money crowd.

To be successful at investing, most sophisticated investors like to follow trends and get invested early while the trend is gaining momentum. Once you have maximum participation from the retail investing crowd, we can be assured the trend for that sector had pretty much peaked and will soon reverse.

Starting the middle of this year, we have seen participation by professional money managers, brokerage companies and accredited investors. These investors usually don't buy stocks in the open like most retail investors do. Remember they are sophisticated when it comes to investing and they understand the best way to get invested in a longer trend, which is usually via private placements. The professional money managers know to get invested with the best companies at the earlier stages where financing is needed and they can acquire big blocks of shares via private placements and bought deals. 

When it comes to managing funds, these professionals usually stay invested for the longer haul with a 3 to 5 year time horizon. They usually take a longer term view for investing when it comes to secular trends where they can maximize their profits. Their investment strategy is to buy early and exit their positions and sell shares to the retail investor at the peak of the bull market when excitement is extremely high.