Investing In Marijuana Stocks 101

business

The cannabis industry is hotter than ever. Investments have already surpassed $3 billion this year, Viridian Capital Advisors estimates. And, according to New Frontier Data, sales are expected to exceed $9.5 billion in 2018.

Retail investors must do their due diligence, though it’s laborious and time-consuming, most people usually don’t have access to the resources needed to make an informed assessment of a company. But there are options and workarounds to help new investors pull a seat up to the table. 

One of them is investing in ETFs that make it easy to invest in cannabis stocks that have already been pre-selected by teams of analysts who’ve conducted the necessary due diligence and decided to include certain companies in these ETFs. Another option is to look to investment advisors and stock pickers who have a track record of giving reliable insights on which stocks are overvalued and which ones deserve your attention. 

We’d like to also impart the following four rules for new marijuana investors. 

 

#1: Time spent researching is a good investment

Check the filings and other documents required by regulatory agencies, like Health Canada, as well as third-party publications to take the financial temperature of the company. 

 

#2: Don’t overspend

Never put in more than you can afford to lose. Strong returns are not your birthright, and cannabis stocks are volatile and sometimes unpredictable.

 

#3: Set a timeline

Creating standards around when to buy and when to sell are crucial because when you’re in the middle of gaining or losing returns, emotionally-driven decisions are less informed ones. 

Your rule might look like: “if the stock falls below X or surges above Y, I’ll sell.”

 

#4: Explore both broker options

Brick and mortar brokers are reliable, but online brokers can be incredibly enticing for their sophistication. A word of warning that online stock brokers run the risk of being overwhelmed at precisely the wrong times—when a market-related event has investors excitedly buying or selling. 

 

And remember that investing in cannabis is not limited to growers or retailers because there are plenty of fiscally-attractive, powerful companies providing ancillary services to the industry that used to operate outside the marijuana industry such as, Scotts Miracle Grow is now considered a cannabis stock.

May 26, 2018

by Parker Wallace

Profile photo of Parker Wallace
Parker is a cannabis enthusiast to the core who shares a keen interest in listening to what others have to say and understanding what’s important to them. Those who know Parker know that his passion for health and wellness runs deep, and his love of Canada even deeper!

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