Get Positioned for the Shroom Boom

Over the last few years, I started playing a lot of pinball.

As a kid, I loved going to the arcade and playing the shooters, but pinball never did it for me.

Maybe it was too hard and there wasn’t a clear way to win.

Maybe that’s why I like it now.

In Baltimore, we’ve got a big pinball community, with several bars sporting a dozen or more machines. We’ve got leagues, teams, clubs, tournaments… It’s a large and growing scene.

In the 1940s and 1950s, pinball machines were outlawed in many U.S. cities for fear of gambling. As The Daily Beast wrote, “They were no better than slot machines, the moral crusaders believed. Even worse, with their bright lights, vibrant colors, and fun sounds, they were a corrupting influence on the youth.”

The new machines have a better build quality than the old ones, in my opinion, but some of those classic machines can’t be beat.

There’s one theme that stands out on the old machines, though…

That’s the anti-drug messaging…

You might see “Just Say No” scroll across the screen as a part of the Reagan administration’s anti-drug campaign. Sometimes artists even had to paint Nancy Reagan into the artwork.

"Just Say No" and D.A.R.E. were everywhere.

It may come as a surprise, but unlike pinball machines in the '50s, psychedelics were legal. That’s things like psilocybin (the active ingredient in magic mushrooms), MDMA (the active ingredient in so-called ecstasy), LSD, ketamine, mescaline, and DMT… all legal and all being heavily studied in controlled scientific environments for potential therapeutic benefits.

But once these psychedelics escaped the lab, so to speak, and became part of the counterculture, the U.S. government saw them as a threat and swiftly banned them in the '80s as part of the failed war on drugs.

So while some people may have been saved from taking one too many mushrooms, research was completely halted.

So instead of psychedelics, we got Oxycontin, and we all know how that ended.

Now researchers are crying out, saying we made a huge mistake and that psychedelics are the answer to many of our collective medical problems.

If that’s true, this story is bigger than I can fit into these pages.

It’s why some investors are placing their bets now, ahead of the pack.

As always, we try to get to the good grass first.

There a couple of factors working in favor of psychedelics at the moment.

First, they've become part of the mainstream public consciousness through things like Netflix and podcasts.

In 2018, Michael Pollan published a best-selling book, How to Change Your Mind: What the New Science of Psychedelics Teaches Us About Consciousness, Dying, Addiction, Depression, and Transcendence. It was subsequently turned into a hit Netflix series.

And Joe Rogan — the most popular podcaster of all time — has hosted multiple experts on psychedelics, including Rick Doblin, the founder of the Multidisciplinary Association for Psychedelic Studies (MAPS). Now, you’ll want to remember that acronym. The company describes itself as a “non-profit research and educational organization that develops medical, legal, and cultural contexts for people to benefit from the careful uses of psychedelics and marijuana.” MAPS is at the forefront of research into MDMA treatment for veterans with PTSD.

Over the last six months, the mainstream press has even started to cover the subject, which would have seemed unheard of just a few years ago. CNBC, Forbes, InvestorPlace, and The Wall Street Journal have all run stories about psychedelics.

Helping boost the momentum are high-net-worth individuals like Elon Musk publicly supporting magic mushrooms.

Uses

We can’t talk about these drugs without a clear understanding of the research.

For a long time, it was just anecdotal evidence that psychedelics helped people get a better understanding of how the world works and a better sense of self, which allowed many to shrug off depressive states.

However, it’s no longer just anecdotal evidence supporting the health benefits of psychoactive compounds. Studies are showing that compounds like psilocybin help new brain cells form connections with older brain cells. This means psilocybin helps with neuroplasticity, or the ability of the brain to change, grow, and evolve through life experiences. This is why many are lauding mushrooms as a healing drug.

Psilocybin is being studied as a treatment for depression, anxiety, alcoholism, smoking cessation, and cancer-related distress. Shrooms are also being used by tech entrepreneurs as a “designer drug.” Millionaires are saying microdosing shrooms (taking a very small amount) gives them an edge over the competition.

And now that MDMA is being used to treat PTSD, things are getting really interesting. Get this — it’s not being used just to treat symptoms like the drugs that Big Pharma creates. It’s actually eliminating PTSD long term, in some cases.

Wall Street loves this industry too, by the way.

Top Stocks

Here’s the pitch…

We’ve got a new class of drugs that are going through regulatory testing as we speak and whose negative stigma is going away.

They can be used in virtually every area of a person’s health: mental health, pain, performance…

This is set to grow into a trillion-dollar industry in the next five years — probably much sooner.

It represents the opposite industry as weed. Weed came in as a health play, but ultimately failed and is primarily being used recreationally.

Some are saying investing now is like buying pharma in the 1920s or the internet in the 1990s.

Only time will tell.

It’s a big industry. According to the NIH, 5% of adults have PTSD in any given year and more than 8% of U.S. adults have experienced a depressive episode.

Right now we’re excruciatingly close to some of these drugs being FDA approved.

The closest is MDMA for its ability to treat PTSD.

For now, I want to leave you with the top stocks in the space.

The catalysts for upside growth include clinical trial data from MAPS and a possible FDA approval of MDMA.

A lot of companies are starting to consolidate, as money is tight.

Mainstream plays:

• ATAI Life Sciences (NASDAQ: ATAI)
• Compass Pathways (NASDAQ: CMPS)
• GH Research (NASDAQ: GHRS)
• Cybin (NYSE: CYBN)

High-risk plays:

• Bright Minds Biosciences (NASDAQ: DRUG)
• Awakn Life Sciences (OTC: AWKN)
• Mindset Pharma (OTC: MSSTF)

Recreational play:

• Red Light Holland (OTC: TRUFF)

And if you want exposure to the industry as a whole, you can’t go wrong with the AdvisorShares Psychedelics ETF (NYSE: PSIL). However, it’s lost more than 80% of its value since its inception a couple of years ago.

As you can tell, I’m fascinated by this area of research.

And we’ve really just scratched the surface.

It’s one of the only sectors that’s so cheap it doesn’t bother me to hold and ride out the volatility.

I'll be sure to keep you posted on any movement.

In the meantime…

Stay frosty,

Alexander Boulden
Editor, Wealth Daily

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After Alexander’s passion for economics and investing drew him to one of the largest financial publishers in the world, where he rubbed elbows with former Chicago Board Options Exchange floor traders, Wall Street hedge fund managers, and International Monetary Fund analysts, he decided to take up the pen and guide others through this new age of investing.

Alexander is the investment director of Insider Stakeout — a weekly investment advisory service dedicated to tracking the smartest money on the planet so that his readers can achieve life-altering, market-beating returns. He also serves at the managing editor for R.I.C.H. Report, a comprehensive service that uses the highest-quality investment research and strategies that guides its members in growing their wealth on top of preserving it.

Check out his editor’s page here.

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