Mistakes to Avoid When Investing in Marijuana Stocks

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The cannabis space can often be quite confusing for investors as it is such a new market. With the industry hitting new highs as of recent, it seems that now is a better time to get in than any time before. New legislation throughout the industry is showing how the future of the market could grow in cannabis’ future. The global cannabis stock index has risen by as much as 71% over the past six months, displaying the amount of yearly growth that we can hope to expect in the coming years. While stocks may be down for the beginning of the year considering the amount of legislative issues surrounding the world of cannabis, it seems that the future will be more positive.

One of the largest pieces of news to enter the year has been the event of California legalizing cannabis for recreational use to those who are over 21. This has been instrumental in changing the paradigm shift in cannabis’ favor around the U.S. Another interesting number is the fact that there are currently over 600 cannabis stocks listed. These stocks are listed throughout the OTC market as well as the NYSE but in less numbers.

The biggest mistake that one can make when entering the cannabis space is not reading the data from the companies. The fillings for cannabis companies or any publicly traded entity are usually online and available for the public. This means that there is a world of information on the companies that one would potentially be investing in right at their fingertips. Well, most of this data is not extremely helpful to discerning whether to invest or not, a lot of the information can be extremely useful in making a decision.

Many companies in the cannabis industry are under some slight amount of confusion due to the legal standing of the substance. Because of this, it can often be difficult to not only find the data, but for the companies to give it to the public. This is, however, changing very quickly, and it seems that the availability of this information is becoming more accessible for all. As this data becomes more available, it will become easier to make decisions based on a companies financials in the cannabis space. The moral here is to make sure one knows about the ins and outs of a company before putting any money in.

Another mistake that many make in the cannabis industry is investing off of speculation. The news market in the cannabis industry is extremely valuable, and given that cannabis is still very much in its infant stages, many of the companies within the market are subject to high levels of volatility. This volatility is often something that is enticing to investors, but to some who don’t know the space, it can be quite scary. The best option here is to make sure that one is trading based off of the hard data and not just news that they see.

As mentioned prior, the market on cannabis is still very new in terms of other more established industries. This means that many stocks fluctuate with the above patterns of volatility. The market will hopefully be able to stabilize to some extent in the near future which will hopefully entice more investors to get into the space. The hopes are high that the market on cannabis will be able to stabilize in the near future, allowing more investors the chance to get into such an exciting new space for investment. Only time will tell how well these industries fair against other more established markets in the space.

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