Update on Terra Tech and Advanced Micro Devices
5th January 2018 |
The US government is set up so that power is divided; there are limits on the ability of the federal administration to dictate how the day-to-day lives of people are governed. That responsibility is supposed to fall to the individual states and counties.
This system creates considerable friction between Washington and the states over who has control of what.
That debate went into high gear over the last 24 hours because Jeff Sessions, the attorney general, decided to enforce the nation’s federal laws on the enforcement of cannabis sales. That sets the federal government in direct opposition to a number of states not least Colorado, Massachusetts and, as of 1 January, California.
Already senators and other lawmakers from those states are threatening to delay passage of bills if the federal government enforces anti-cannabis laws within states where people have voted to permit medicinal or recreational use.
The problem for cannabis companies is that while business is booming they are constantly in fear of enforcement of federal laws, even if the chances of that happening against the wishes of permissive states are low.
A number of Canadian-listed shares pulled back sharply on Thursday. Our holding of Terra Tech, which is highly exposed to US production, consumption and growing, was subject to highly acute bouts of volatility over the last couple of trading sessions.
My personal belief is that we have seen the worst of selling pressure but I will be monitoring this condition very closely.
Meanwhile, the wise heads at Google discovered a vulnerability in Intel chips which affect just about every computer, mobile device and tablet manufactured in the last decade. Fortunately, we hold Advanced Micro Devices (AMD), which has tended to have a much greater focus on security. Due to the fact it uses different architecture, AMD chips are almost unaffected by the problems which has been responsible for the share bouncing this week.
Rather than focus on the technicalities of the problem, which I am sure you can read elsewhere (for example, here is a link to AMD’s information page), I want to focus on the long-term outlook for the share.
The biggest point from a medium-term investor’s perspective can be found in this long-term chart.
The share ranged for a decade below $10 until 2017, and has been ranging above it for the last 12 months. This is the first consolidation in the context of a recovery and the fact the price is bouncing from the $10 area is all to the positive and helps to reassert the overall bullish environment.
Until next time,
Eoin Treacy
Investment Director, Frontier Tech Investor
