Investing In Marijuana Stocks? Here Are Three Things You Need To Know

Investing In Marijuana Stocks?

Here Are Three Things You Want To Know

Everybody’s becoming rich from bud stocks! Or at least that’s what a good deal of the headlines will cause you to think. But make no mistake, while plenty of fortunes have been made over the last few decades, there are also plenty of folks who have lost their tops by investing in the wrong cannabis stocks.

In actuality, I could easily argue that the cannabis market represents one of the greatest investment opportunities of the 21st century.  Only ask those investors who took my advice when I recommended they buy shares of Canopy Growth Corporation (TSX: WEED) when it was trading for $1.60 a share.

Last week, WEED hit a new 52-week high of $48.72. That’s a gain of 2,945%, turning a simple $5,000 investment into $150,000.  And this isn’t the only cannabis stock I recommended that helped people make a lot of money.  In actuality, of the 15 bud stocks I’ve recommended since 2015, twelve have delivered earnings of more than 100%, with three delivering gains of more than 1,200%.

Now understand, I’m not writing this to chest-pound, but instead to show you that I have a long history of helping investors make a lot of cash in the cannabis space, and I wish to help you, too.  And that’s why I put together this list of 3 things you need to know before investing in cannabis stocks.  So let’s begin.

Recognizing The Cannabis Stock Market

Investing In Marijuana Stocks? Investing In Cannabis Stocks? Here Are 3 Things You Need To Know

Courtesy of Green Rush Daily

One of the best parts of investment advice I was ever given was by a mining analyst who trained me in my early years.  This guy made tens of millions of dollars in the mining space, so when he offered this advice, I took it to heart.  He explained, quite simply, whatever you decide to put money into, become an expert in it.

Seems simple enough, but to be honest, I don’t know many successful investors who don’t live and die by this rule.  In actuality, I find that many investors do more research on the televisions and cars they buy than they do on the cannabis stocks in which they invest.  That is pretty crazy when you think about it.

In any event, I will ’t make you an investment expert from the cannabis industry, I can supply you with the foundation for which you can build your knowledge base by sharing the current condition of the market.

Canadian Marijuana Stocks

As you probably heard, Canada has declared that on October 17, this bold and gorgeous plant that we love and respect so much will become completely legal throughout the whole country.  Although Canada isn’t the first nation to completely legalize cannabis (that honour goes to Uruguay), it has become ground zero for cannabis investors.  In actuality, the most effective cannabis businesses in the world call Canada home. Investors who got exposure to this market before the decision was made to completely legalize cannabis in Canada are currently sitting on mountains of cash.  So much, in fact, that those new to the area of bud stocks are rushing into Canada to get a piece of the action.

And make no mistake, as we get closer and closer to October 17, quite a number of these Canadian bud stocks will continue to shine.  But when it comes to investing, you can’t rely on what is only on the surface.

The reality is, while the Canadian cannabis market is incredibly lucrative, many of these bud stocks are incredibly overvalued, trading at valuations that have no basis in reality.  So make no mistake: When the excitement dies down, many of these cannabis stocks will start to sell off.  That’therefore I’ve been encouraging investors to concentrate less on Canada and more on another market that’s set to soar: the United States.

The cannabis market in the United States reminds me lots of the Canadian cannabis market from a few years ago: Before full-scale legalization was approved on a national level.

In the USA, a federal prohibition on cannabis stays in place.  But due to the beauty of states’ rights, individual states have been legalizing cannabis for both medicinal and recreational purposes for years.  Although only over the last few years have we seen a true momentum take hold.

It’s pretty simple, actually.  Countries that have taken the proper actions to legalize the adult use of cannabis have benefitted from a flood of new tax revenues and massive investments in local markets.  Job creation has also been a huge advantage for states that have legalized, and politicians who have supported legalization have enjoyed significant support from Republicans.  In other words, the states that have seen the very real benefits of legalization will never return to prohibition.  It just doesn’t make sense from an economic and political perspective.

The bottom line is that states like Colorado, California, and Nevada have been making so much money from the legalization of cannabis, not threats from the attorney general of the United States will send them back to the stone age of prohibition.

Now, there are 29 states (plus Washington D.C.) who have legalized cannabis in some form.  After this next election, there might be more, with the state of Michigan very likely to legalize cannabis for adult-use.

Individual states have taken the legalization issue into their own hands, and they’ve triggered a domino effect that will ultimately end in the repeal of cannabis prohibition in the United States.  My prediction is that the federal prohibition on cannabis will be lifted no later than 2021.  That means we have about three years to stake our claim today – before US bud stocks head into the exact same territory that Canadian cannabis stocks are in today:  tremendously overvalued with the big money having already been made by early investors.

US-Based Cannabis Stocks Worth Monitoring

One piece of advice I’ll give you in regard to the US cannabis market is that you should definitely keep up to date with all the latest developments in new legalization legislation.  Tom Angell of the Marijuana Moment does a great job of providing this information for investors, and I encourage you to check it out his site here.

International Cannabis Market

While the Canadian and US cannabis markets are just two of the more popular cannabis markets for investors, you must see that the legalization of cannabis is now a global movement. Outside of the U.S. and Canada, there are a number of countries that are now embracing, or on the point of embracing, legalization or decriminalization in some form.

Though some of these countries have just recently decriminalized the plant in certain cases, make no mistake that this leaves the door open for future efforts to legalize.

In these international markets in which legalization exists in some form, certainly some are more rewarding than others, and some are even allowing for the import of cannabis.  Numerous Canadian cannabis companies either already export cannabis or have the capability to export cannabis outside of Canada. 

Knowing Your Source

Investing In Marijuana Stocks? Investing In Cannabis Stocks? Here Are 3 Things You Need To Know

AlphaLab Startup Accelerator/Flickr

Recently, the number of mainstream financial books providing investment analysis on the cannabis market increased.  Unfortunately, most are relying on analysts who don’t know the first thing about the cannabis market.  They aren’t experts, but they write for some of the biggest financial books in the world.  Sadly, investors are taking their advice, and probably missing out on the best opportunities.

Cannabis Stock Pros

Truth is, there really are just a handful of quality sources out there for cannabis investors.  Here are a few that I would recommend after on Twitter to get their daily feeds…

These analysts have a solid history of providing accurate and honest analysis.  As you should always do your own due diligence, these people can serve as excellent sources of market intelligence.

You can also follow my feeds:

Marijuana Stocks Include Risks

Investing In Marijuana Stocks? Investing In Cannabis Stocks? Here Are 3 Things You Need To Know

Daniel Dionne/Flickr

While a great deal of folks have made a lot of cash in the cannabis space, there are still risks.  As an investor, you must decide for yourself which risks are worth it. Don’t invest your hard-earned money into this space without acknowledging the gamble you’re making.

One risk that has long been a part of investing in cannabis stocks is federal prohibition. At least, in the USA. At any moment, Jeff Sessions and his army of prohibitionists can launch an assault on cannabis operations. Even ones that are in full compliance with state laws.

Personally, I don’t see this as much of a risk.  We’re too far down the rabbit hole today.  No state that has legalized is going to give up this gift of wealth. It is unlikely that the United States will support a crackdown on states that have legalized cannabis.  I personally don’t see this as a risk, but you must make these types of decisions on your own.

One risk I do see is that more and more “shady” cannabis businesses going public. In actuality, many are spending millions just to market their marijuana stocks.  This type of thing isn’t exclusive to the cannabis industry. But more companies are attempting to become rich by pumping and dumping in this space.

If you’re unfamiliar, a pump and dump, as defined in Investopedia, is a scheme that tries to boost the cost of a stock through recommendations based on false, misleading or exaggerated statements. The perpetrators of the scheme already have an established position in the company’s inventory. Then, they sell their positions after the hype has led to a greater share price. This practice is illegal based on securities law and can cause heavy fines.

The risks involved with investing in bud stocks is why it’s so important to rely on the actual experts in this space to assist you. Now today’s piece is truly only an introduction to the area of cannabis investing. Moving forward, I will be providing you with updates that will help you better understand this market.

Published at Fri, 29 Jun 2018 16:48:07 +0000

Posted in: News

Comments are closed.