Investing in marijuana stocks seems like a great idea. The only problem comes when we get to the details. Understanding the particularities of national markets and international regulations is the first part of the necessary analysis process. Act with caution. In this article we will try explore great reasons for investing in marijuana stocks?
“Every Day, more and more people realize that marijuana will be legal in more places and that it will be the next great American industry.” “Those who know are placing their bets”
The marijuana business is in full swing, but to bet on, it is necessary to know how to differentiate companies with potential from those that do not have it so much. I knew it’s not easy for you.
While it is a controversial business, so is the fact that the opportunity to make large profits by investing in marijuana stocks is huge.
However, it is important to know how to differentiate the winners from the losers in the sector, since not all companies will benefit equally.
How to invest in Marijuana Stocks to win big?
Even though marijuana in the United States remains illegal in federal terms, many companies are already accumulating profits from production and marketing for medicinal uses.
At the same time, companies are already prepared for legalization linked to recreational consumption.
Thus being a product that most people demand, it should be taken into account that the added value that the industry offers to investors lies in shaping itself as a move that directly attacks the lifestyle and habits of people.
As the industry grows, investors interested in the business can opt to position themselves in well-established companies and after recreational legalization, who betting on those smaller players will clearly be favored.
The marijuana industry is on fire, especially after several American states decided to approve both recreational and medicinal use. Experts believe that this business and all the helpers will tend to grow almost exponentially from now on. Several states, including Alaska, California and Washington has approved the use of cannabis. They do so even though at the state level their use is still prohibited, but the territories have the possibility to approve this substance and they have done so.
At present, there are areas where its use is only allowed for medicinal purposes. However, American society, so old-fashioned, has radically changed its vision. The latest polls a year ago suggested that about 60% of Americans agreed with legalization.
Some studies point out that legal-marijuana is one of the industries with the highest growth rate in the United States and sales are even expected to reach $ 22 billion by 2020. Although investor interest has increased over time, the marijuana industry is still in its nascent stages. and is still treated as penny stocks.
No doubt there is an enthusiasm and desire to be a part of this new medical industry. Here are few things you should know before Investing in Marijuana Stocks :
1. Read Company’s stock filings
New investors can easily find a company’s stock filings on the Securities Exchange Commission site or any exchange sites. Basic information can also be found on both Yahoo and Google finance pages.
2. Pump and Dump. (P&D)
Some traders buy stocks and then publicize something positive written about the company in order to drive up the stock price. Unsuspecting investors are unaware that these traders will sell their shares and reap the profits. Clark warned investors to do their homework on the stocks that interest them. “Before you jump in and buy, check sites like stockpromoters.com and see if it shows up there as a highly promoted stock,” he said. Clark also cautioned investors about a Facebook page called Fabulous Penny Stocks. “They are actively involved in promoting stocks”
Clark said if an investor really wants to check on a company, he or she should pick up the phone and calling them. “If you only get voicemail or the mailbox is full or no one ever answers your call or gets back to you, then that is a bad sign,” he explained. Check financial websites like Yahoo Finance to see if management is selling any of their shares. If they believe in the company they won’t be selling their shares.
4. Check the exchange.
There are companies associated with the marijuana industry on the larger exchanges like Nasdaq and the New York Stock Exchange. Marijuana industry insiders generally consider GW Pharmaceuticals, Insys Therapeutics and Zynerba as biotech companies and not “true” marijuana stocks. Most of the true marijuana stocks trade in the over-the-counter market, which has varying levels of transparency. Clark advises sticking with companies in the OTC QX and QB level. He suggests avoiding the pink sheets stocks altogether.
5. Rainbows and Unicorns.
If a company puts out multiple press releases, say daily or weekly, be wary. Legitimate companies will only issue a press release when there is real news and this isn’t on a daily basis. Newsletters and marijuana news websites that only speak glowingly of companies may be getting paid to do so.
If a new investor finds a marijuana stock to invest in, Clark said to choose a stock trading site that doesn’t charge a lot of money per trade. Shop around for trade prices. He also suggested that the new investor buys in stages. “Only use 25% of your investment money for the first trade and see what happens before committing your entire amount,” he said.
So when you are investing in marijuana stocks?