Follow these when you start Investing in Marijuana
Keep this in mind: doing research and becoming informed, is one of your best benefits, in knowing when crazy buy offs, will happen!
Tip #1: Natural Politic, al Swing
There are many market, political, and legal factors at work, but it is still viable to make a realistic prediction about where this industry is headed, up.
The second that you think you have it figured out is likely the one where you’ll have the rug pulled out from under you. So remember that this industry is indeed highly speculative, which means that it can be risky for uninformed investors.
This industry is highly speculative. It just is. No one knows what its ceiling may be, if it has a ceiling, or which stocks will perform will and which won’t. No matter what your experience and expertise in the field.
Tip #2: There is a Green Rush
Watch out for scams. The gold rush was a period in history rife with fool’s gold and all manner of scams and fraudulent claims. That can be the trouble with speculative industries like this, which is why you should keep a keen eye out for any potential scams.
Don’t believe us? Look at what FINRA, the Financial Industry Regulatory Agency, warned about last year.
The press release: “The con artists behind marijuana stock scams may try to entice investors with optimistic and potentially false and misleading information that in turn creates unwarranted demand for shares of small, thinly traded companies that often have little or no history of financial success.”
Tip #3: This is a Long Term Investment
Keep your allocations small. If there is a lot of potential in these stocks and in this industry, you should have no problem allocating a small portion of your portfolio to marijuana investments. This mitigates your risk while also giving you the potential to get a great return on your investment; in essence, it’s the best of both worlds.
Yes, if you bet big, you always stand to win big, but that doesn’t mean that betting big is always the best strategy. If that were true, anyone could have success at the casino.
Tip #4: Vested Investments Show Trends
Don’t put all of your eggs in one basket. Although it’s enticing to invest in this industry, that doesn’t mean that any one particular stock will do it for you. It can be helpful to spread your investment across a few different stocks—you never know which stock will be the one to surprise you. If you do your investment research right, you should notice that more than one stock strikes you as one with good potential.
You don’t necessarily have to pick between them! You can spread your investments around, just as you do in constructing your own financial and investment portfolio.
Tip #5: MORE is on the Horizon
Don’t forget about Canada! With all of the hubbub about marijuana legalization and decriminalization in the United States, it’s easy to forget that there are plenty of Canadian companies worth considering.
Keep in mind that Canadian laws may become less restrictive in the future, particularly to medical marijuana, and that there are many legitimate businesses that may play a part in this business environment. Ignoring the Canadian presence of marijuana companies while focusing exclusively on the United States may be a strategy for your ultimate investment decision, but it shouldn’t be how you go about researching the industry.
Watching the Industry in 2014
So what’s next? Where should you look to see how the industry develops? Which companies share the industry’s destiny?
You can start by learning what are considered the “hottest” marijuana stocks. InvestorPlace.com has a good guide for the hottest marijuana stocks on the market, as does Marketwatch and the Motley Fool.
Together, these stocks certainly should occupy the main portion of your list of the “who’s who” to watch. In addition to watching the Marijuana Index, watching these stocks will do a lot to educate you about the expanding world of marijuana and its place in the worldwide market.
Don’t make the mistake of dismissing these marijuana stocks as part of a fad. With two states—and now Washington D.C.—decriminalizing marijuana, there may only be room for improvement. Many states still have their laws on the books, but the shift in attitude is certainly one to pay attention to. This is not a fad that should be relegated to mere “2014” thoughts. No, marijuana may have a larger part to play in the economy of 2015, 2016, and beyond.
What else is Weird about this Industry?
Is investing in marijuana for you? That might depend on you. Are you the sort of investor who, in the 1840s, might have struck out west because of the promises of gold? Many people made it rich because of the gold rush; many weren’t so lucky.
Marijuana is not the same as gold. And 2014 is not the same as 1848. But the similarities should intrigue you. They should entice you at least to take a look at the Marijuana Index, the hot stocks mentioned here, and wonder: does marijuana have a place in your portfolio? If it does, it’s time to get to work—the sooner you enter this industry, the better your stocks may perform.
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