There are incredible opportunities in all emerging markets. This includes green energy, African economies, and tech. However, that does not mean all investments will bear fruit – most won’t, in fact. For those seeking to make a fortune with marijuana, there are specific approaches to take when choosing stocks for your portfolio, and they are not different from how to choose any other company.
The keys are to:
- Understand what you are buying
- Know the risks
- Only risk what you can leave out there, and lose
What Are You Buying?
My portfolio holds 6 different pot stocks. Some of the companies actually grow marijuana; others deal in related hardware, like farming equipment and vaporizers.
If you take the money you want to invest and don’t at least know what the company does, then you are increasing your risk unnecessarily. It would be no different than simply putting your money “in the stock market” without having any clue what stock you purchased.
Knowing what you own is a big part of understanding the risk you are taking.
Money Invested Is Money Risked
Marijuana as an industry will emerge very strongly over the next decade, and the stigma will mostly surround smoking in general and perhaps the volatility of certain edibles if they don’t have some sort of uniformity, or labeling, for strength.
But that does not mean that any of the current companies will emerge victorious. What may come out as the biggest player in the industry has likely not yet even been started, such as a dispensary franchise – the McDonald’s of pot shops – or a leaf-based fiber to be used for stitches after surgery.
What you need to remember is that whether you’re putting in $200 or $2MM, it can all be gone tomorrow, which is why you must know what you buying into – both the product as well as its leadership – and that what you invest can be left to grow or be lost.
You Must Be Willing to Wait
Any money you invest should be put into the market with the idea that it will be tied up for years. The reason this is so important to remember is because most companies that are huge today took a decade or more to truly pay off.
This includes The Gap, which in the 1980’s was a penny stock. Had someone bought just $100 worth or Gap shares (over 3,000 shares) in March of 1980 they would have over $100,000 as I type this. Had they consistently invested $100/month through the 1980’s, they’d be living off their dividends alone.
The same can be said for Netflix stock, which in 2002 was as little as $0.46 and in 2008 could have been purchased for $2.70. It took nearly 10 years for Netflix to pay off nicely, and another five for people to start getting rich.
If you’re going to buy pot stocks, investing funds you need is a waste of time and money, plus it will cause unnecessary stress because if those 5-cent shares turn down to 4 cents you’ll panic about losing it all, and if they go up to 10 cents you’ll worry it could go back down.
You must put the money out there, set goals that match your risk level, and leave it.
Wrapping this up, just keep it simple. If you don’t have money to invest, then you likely need a new job or a second one. Investing will have to come later. If you’re too afraid to lose your money, then don’t speculate in stocks at all.
For those who can invest and are not afraid of the possibility of losing the money, then you need to find out what the company does. Do they own land? Are they running retail establishments? If you don’t know, then that’s a problem.
Lastly, what you invest, you need to forget. Just let it go, so it can grow.