'The next great American industry'
Bonds are risky and many investors have all the stocks they want. So, what should one do with a little cash available for a diversification play? Try this: dump your REITS and look for a way to get in on the pot boom. Real estate investment trusts, which lost 40 percent in 2008, roared back, gaining 31 percent the next year. Returns have been strong ever since, due to rising rents. But the big money's already been made, and REITS are up just 8 percent this year, far behind the S&P 500. Now an expected rise in interest rates threatens to further undermine REIT returns.
So that brings us to pot. ... Okay, call it the legal cannabis industry, which is likely to grow by 64 percent this year and to reach $10 billion in five years, according to a recent report. Another recent poll, from Gallup, showed 58 percent of Americans supporting legalization, which was approved in several jurisdictions in Tuesday's elections. At the moment, direct investment in grass growing is tricky, but there may be money to be made in related industries like security systems and software. There are plenty of risks. Then again, outsized returns are often tied to outsized risks.
"This is the next great American industry ... Mark Twain had a great quote. He said that when there is a gold rush on, it's a good time to be in the pick and shovel business."—Troy Dayton, co-founder and CEO of the ArcView Group, a pot-industry market research firm.
—By Jeff Brown, Special to CNBC.com