Chart of the week: cannabis is getting too high

"Every investment mania sprouts from a bud of genuine logic," says John Foley on Breakingviews. Pot is becoming more socially acceptable US drinks giant Constellation Brands (NYSE: STZ) is to invest $4bn in a marijuana company in Canada, where recreational cannabis will be legalised next month.

The first exchange-traded fund (ETF) to track marijuana producers, the Horizons Marijuana Life Sciences Index ETF (TSX: HMMJ), passed C$1bn in September, doubling its value in a year but the sector is getting ahead of itself. The excitement is based on potential US consumption, but as cannabis isn't legal on a federal basis, authorities could clamp down on pot as they did with online gambling in 2006.

Viewpoint

"For the past 70 years, Britain has been the master of currency depreciations. In 1948, £1 bought just over $4 and 13.4 of the new Deutsche Marks. Today a pound buys only $1.30 and the equivalent of DM2.20. The UK's performance in devaluing its currency has been world class. This has not been matched by its economic record. Over that 70-year period, only Canada had a weaker growth of gross domestic product per head among the G7 economies Since the advent of the euro in 1999 UK living standards have improved just slightly slower than the average member of the single currency Although depreciation relieved some balance of payments crises in 1949, 1967 and 1992, cheaper sterling is no route to prosperity The overwhelming effect of the past two depreciations has been in raising prices faster than wages, reducing living standards."

Chris Giles, Financial Times