Can Marijuana Traders Handle Meltdown Of Marijuana Stocks?

Being bullish on this sector could lead to huge gains if correctly positioned, but it also could mean detrimental losses if the sector is misplayed.

A lot of traders are ‘all in’ on cannabis stocks. There is no reason not to be bullish on marijuana stocks, but traders must recognize the potential risks.

The valuations of companies are challenging to understand for every stock in the sector. This isn’t surprising, because canna-businesses are still in the very early stages of transforming from back-room operations to a publicly traded, big-money industry.

There is a ton of money flowing into the market, and much of it comes from novice investors that want to cash in on the ‘Green Rush.’

Investing in marijuana stocks is risky. Not only are valuations high (with off-the-charts positive sentiment), but with almost all of the stocks trading OTC (many “Pink”), disclosure is lacking.

Consequently, traders have to worry not only about the companies will be winners, but how realistic the valuations are. But these risks are inherent to all penny stock investing.

To read more, visit http://www.nasdaq.com/article/can-marijuana-traders-handle-a-stock-meltdown-cm342970

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