The cannabis market has been extremely lucrative for those who have gotten in thus far, but given that the market has had some time to mature, there are some things to look out for before investing in the industry. With new federal laws hopefully going into place in the near future, and statewide markets growing at an unprecedented level, it does look as though marijuana is the market of the future.
Cannabis stocks have been down for this year so far but with good reason. Much of the reason that the stocks have been down thus far is due to uncertainty regarding several legislative measures throughout the market. Many investors have found a level of comfort in recent times, given the amount of positive news in the way of cannabis in the past month or so, but this is not denying that the beginning of this year was off to a rough start.
The Global Cannabis Stock Index is however up as much as 71% over the past six months, which shows the continuous growth of the market overall. With new growth occurring throughout the industry, many analysts have stated that this number will only continue to go up in the near future. According to one report, one of the largest pieces of news to hit the market comes from “California legalizing at the beginning of the year and the media coverage it inspired brought a lot of new investors into the sector, many of them new to investing.” This news helped to show how successful a recreational cannabis market could be in such a large place, which demonstrates more faith in the market overall.
There are several mistakes that investors make when inviting in the cannabis market. One of the first mistakes that come with such a new market is the failure to diversify a portfolio. Many stocks in the cannabis market are quite volatile given that the market is still very much in its infant stages. This is not to say that there are less volatile stocks in the industry, but the majority are still quite young. The best method for this is to choose a balance between the larger stocks in the market that seem to have a strong grasp on the future of cannabis, and smaller companies that have great ideas and business models. The future of legislation in the cannabis market will help to determine how the industry will look in the future. One of the most promising events in the future could be the addition of large mutual funds for the cannabis space. These mutual funds would be able to offer a high level of diversity, while also having a solid amount of exposure to the market.
Another mistake that many investors beginning in the market maker is relying on news to fuel their investments. Sure, there is a lot of speculation that is driving the prices of stocks in the market, but the underlying driver will continue to be more traditional items like financials and how future-proof a business is. Speculative trading can be a good tool to use for short-term day-trading in the industry, but this is extremely risky and often not a great idea.
The cannabis market is still very much in its infant stages which means that there is no definitive way to invest in it. The hopes are high that the future and the next coming years of the marijuana market will begin to see the calming down of prices and fluctuations throughout the whole of the industry.
MAPH Enterprises, LLC | (305) 414-0128 | 1501 Venera Ave, Coral Gables, FL 33146 | new@marijuanastocks.com
