Marijuana Investing in 2018 – How To
With so much money being made via marijuana investing, it’s only natural that more and more people are looking to get in on the action. This is, after all, one of the most potent emergent industries around. But in such a volatile industry, unaware investors are liable to lose a good chunk of their money if they’re not careful.
In the spirit of that caution, I’ve drawn up three key pieces of information to consider before you go full hog on a marijuana stock.
These are three general rules that—while not guaranteeing that a marijuana stock will be a winner—at the very least, will prevent you from getting fleeced by some of the less promising stock picks out there.
Marijuana Investing Prerequisites
The first thing I would tell anyone who wants to get into the marijuana market is that they had better have the nerve for it.
Emergent industries are volatile. Volatility is how those massive gains are generated in such short order, but also has the downside of stocks being prone to losing big just as fast.
With that in mind, investors keen on the marijuana industry have to be able to ride the waves—both good and bad.
What that means is that when things are down, investors need to be able to stomach those short-term losses and ride out the tough times. Otherwise, you’ll find yourself selling low and buying high—hardly a winning strategy.
On the flip side, when things are going up, that doesn’t mean they’ll stay on that trajectory for perpetuity.
Investors who are unprepared for the marijuana market are going to buy marijuana stocks during the boom times and sell when corrections hit, leaving them without much to show for their troubles other than a lighter bank account.
The key to marijuana investing is sticking through the tough times and waiting for those strong rushes to come. It’s a simple enough marijuana investing strategy, but it’s one that is harder to follow in practice than in theory. After all, this means at times watching your gains disappear. But panic selling is almost never the answer.
And that applies to short-term and long-term marijuana investing. Reading the market is critical to a winning strategy.
Safe/Legal Marijuana Stocks
For the truly capable marijuana investing experts, having a strong grasp of the legal situation of the stocks you’re investing in is crucial.
That doesn’t mean reading every statute that pertains to marijuana in a given country, but it does mean understanding the broad strokes of marijuana laws in whatever country your stock of choice operates in.
Risky stocks in the marijuana market abound, and much of that risk comes from the fluid legal situation surrounding marijuana in so many countries.
The U.S. is a perfect example of a country where the legality of marijuana is not only shifting, but is at times nonsensical. After all, marijuana is both legal in the majority of states in the U.S. in one form or another, while still being banned on a federal level.
Knowing the basics about the marijuana laws where your stock operates is critical to making a smart decision on the marijuana stock market.
Marijuana investing involves playing an active role in following the news and keeping abreast of any new developments.
Marijuana Penny Stocks and Marijuana Stock Scams
The last—and perhaps most important—bit of advice I’ll dole out here has to do with marijuana stock scams, which are usually disguised as marijuana penny stocks.
As with any emergent industry that is gaining a lot of notoriety, marijuana penny stocks are among the most vulnerable to less-than-legitimate companies popping up in an effort to attract investment dollars, feeding off the hype but offering little by way of substance.
The advice here is to avoid these stocks. How do you identify these bad players with marijuana investing?
I’ve covered this before in depth, but one of the easiest ways to ensure you aren’t being taken for a ride is to find a company that is listed on a major, legitimate stock exchange.
While there’s only one pure-play marijuana stock on a major international exchange, many Canadian companies are listed on the Toronto Stock Exchange (TSE) or the Canadian Venture Exchange (CVE).
The TSE is a legitimate exchange that vets its companies, meaning that a TSE ticker is a pretty good indicator that the company is on the up-and-up. The CVE has similar credentials, although it is a little laxer compared to the TSE.
Still, having a listing on either is a good sign. When engaging in marijuana investing, companies that strictly trade over the counter and do not have listings on major exchanges ought to be avoided. You might be missing out a great marijuana penny stock, sure, but the risk that it’s a dud is simply not worth it, especially when there are so many strong legitimate companies out there.
Marijuana investing isn’t necessarily easy, but it can be one of the most rewarding buys you’ll make all year.
“How to invest in marijuana stocks?” is a question that has many answers. In this piece, we’ve covered just a few key facets to be aware of.