Are Experts Changing Their Minds About Marijuana Stocks?

213Financial experts in mainstream media have traditionally been wary of the growing marijuana industry, often advising people against investing in it even though it has shown long-term potential.

This opposition comes from the conventional wisdom that the industry is uncertain due to ongoing legal issues and the “time horizon” of its stocks (or the time it would take for the stocks to generate real profit). In addition, cannabis companies tend to have smaller market caps and even the more stable ones have “frightening price swings”, as pointed out by CNN Money.

However, this long-standing viewpoint against marijuana investments seems to be changing.

Certainly, one of the primary reasons for this is the recent string of cannabis legalization laws in the US. In fact, barely a week after Alaska, Oregon, and the District of Columbia passed their marijuana laws, Forbes magazine published an article on the “hottest publicly traded” cannabis companies in the country. In the article, writer Carol Tice cited finance and consulting firm Viridian Capital & Research, saying that pot stocks are up by 147%.

This was followed a few days ago by an article by Motley Fool, a financial services company noted for its staunch anti-marijuana stock views. The article, written by Sean Williams, speculated that iconic investor Warren Buffett may have included marijuana stocks in his portfolio and investing strategy.

“It’s worth considering” whether Buffett’s portfolio has room for marijuana stocks, because he likes products that have “lots of demand around them,” wrote Williams.

The Motley Fool article also backed its speculation with a long-term outlook from GreenWave Advisors. The financial firm released a recent report, predicting that if marijuana is legalized by the federal government, the legal cannabis market could be valued as much as $35 billion in 2020.

And even if there isn’t any favorable change on the part of the US Drug Enforcement Administration, GreenWave still forecasts that by 2020, 37 states will legalize cannabis for medical purposes and a dozen states will also legalize it for recreational use. In this scenario, the 2020 legal marijuana market could be worth $21 billion.

Right now, even the conjecture on Buffet’s portfolio could be another ray of light for potential marijuana investors. Buffet, being a supremely influential investor, is considered a bellwether in choosing stocks. He is known for having used his investing wisdom and skill to spectacularly raise his net value: from approximately $10,000 a couple of decades ago to a whopping north of $70 today.

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