CANNAINVESTOR Magazine December / January 2016 - Page 121


We know the investment environment is turbulent right now for the legal Cannabis Industry and much like looters during a disaster, those looking to profit from lapses in judgment are circling like sharks. They monitor volume closely until it enters a period of low support and the last fool appears to be not far off. They exit their position and the cycle repeats as they move to their next stock. Greed is often a strong motivator for the ethically void to say whatever it takes on forums to give that share price and volume a nudge. Seemingly unrelated, A&W introduced 1/3 pound burger in the early 1980’s and almost as fast quickly removed it from their menu. Alfred Taubman, who owned A&W at the time, wrote in his book “Threshold Resistance”:

More than half of the participants in the Yankelovich focus groups questioned the price of our burger. "Why," they asked, "should we pay the same amount for a third of a pound of meat as we do for a quarter-pound of meat at McDonald's? You're overcharging us." Honestly. People thought a third of a pound was less than a quarter of a pound. After all, three is less than four!

Taubman’s conclusion - “Americans suck at fractions”. Those with such poor math skills looking to invest for the first time in the early stages of a soon to be multi-billion dollar industry are often targeted by swindlers using probability theory and psychology to manipulate them. Which is better - a company with a 5% Net Margin increase sales by $1-million OR reduce costs by $60,000? Most gravitate to the increased sales when in fact reducing costs by $60,000 is referred to a sales equivalency of increasing sales by $1.2-million ($60,000 / 0.05).

Many such posters plainly state that they have decades of experience of nothing but success – we are taught as toddlers to respect our elders and our betters - it is all psychology and game theory where “elders” refers to the decades of experience and “betters” to their stated track record of proven success. The more people they can manipulate the more successful they are.