From October 11, 2011 to January 24, 2014 CannaVEST Corp($CANV) went from $.05/share to $85.55/share (171,000% increase). Knowing this that means if I were to have invested $1000 at the low and sold at the high i would have had $1,710,000 (1000 * 1710), correct? I feel like that is an astronomically high return.


Your math is correct. These kind of returns are possible in the capital markets.

(By the way, Google Finance shows something completely different for $CANV than my trading console in ThinkorSwim, ToS shows a high of $201, but I believe there may have been some reverse splits that are not accurately reflected in either of these charts)

The problems with this strategy are liquidity and timing.

Let's talk about liquidity, because that is a greater factor here than the random psychological factors that would have affected you LONG LONG before your $1,000 allowance was worth a million dollars.

If you bought $1000 worth of this stock at $.05 share, this would have been 20,000 shares. The week of October 11th, 2011, during the ENTIRE WEEK only 5,000 shares were traded.

From this alone, you can see that it would have been impossible for you to even acquire 20,000 shares, for yourself at $.05 because there was nobody to sell them to you.

We can't even look at the next week, because there WERE NO TRADES WHATSOEVER, so we have to skip all the way to November 11th, where indeed over 30,000 shares were traded. But this pushed the price all the way up to $2.00, again, there was no way you could have gotten 20,000 shares at $.05

So now, lets talk about liquidation of your shares. After several other highs and lows in the $20s and $30s, are you telling me that after holding this stock for 2 years you WOULDN'T have taken a $500,000 profit at $25.00 ? We are talking about someone that is investing with $1,000 here. I have my doubts that there was no time between October 2011 and January 2014 that you didn't think "hm this extra $100,000 would be really useful right now.. sell!"

Lets say you actually held your $1,000 to $85.55 there were EXACTLY TWO DAYS where that was the top of the market, and in those two days the volume was ~24,000 shares one day and ~11,000 shares the next day. This is BARELY enough time for you to sell your shares, because you would have been the majority of the volume, most likely QUADRUPLING the sell side quotes. As soon as the market saw your sell order there would be a massive selloff of people trying to sell before you do, because they could barely get their shares filled (not enough buyers) let alone someone with five times the amount of shares that day.

Yes, you could have made a lot of money. Doing that simplistic math does not tell you the whole story.

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    +1. It's sort of like asking "I saw that the roulette ball landed on 0. Does that mean if I had bet on 0 I could have won a lot of money?" – BrenBarn Nov 15 '14 at 8:02
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    A bit different from roulette as the cost of buy in increases with the number of competitors, and the payout decreases similarly. – RoboKaren Nov 15 '14 at 19:06
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    Some trading trainers, and me personally working on some computer learning things, have a "minimum volume threshold" for exactly this reason. – RobotHumans Nov 23 '14 at 7:55

And now it is at about $3. Many times "skeletons" are bought and inflated for various reasons. Some are legitimate (for example a private business merging into a defunct but public corporation to avoid wasting resources on going public), some are not (mainly pump-and-dump scams that are using "skeletons").

I don't know what was the case here (probably speculation based on the new marijuana laws in the US), but clearly the inflated price was completely unjustified since it went crashing down.

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