Since the early 2014, the marijuana industry has been constantly advancing as legalization embargo eases up in 23 states across the USA. Not only does it serve the medical purposes but also the recreational use, which is bringing new jobs to the economy due to the business expansion. A new lucrative opportunity for inveterate investors from all over the globe comes into sight as cannabis penny stocks set new stage of investment arousal called a ‘Green Gold’ rush.
If you refer back to my list of top 5 penny stocks of 2018 you’ll definitely notice a couple of cannabis microcaps among them. I am sure this market will be dominating in the upcoming years, therefore I am planning to add more weed related stocks in the near future. The boom is closer than you think. Colorado and California is just a drop in the ocean. Back in a day when those states legalized marijuana recreational use (for adults only) the stocks soared amid the announcement and brought additional hundreds of millions into a market cap. Both legal and medical use markets to reach $50bn sales in the next 7-8 years. Imagine you just cut off a small piece of that cake.
Believe me, there are plenty of retail and institutional investors who are currently watching over the weed market to eventually make a bid and wait until it shoots up. I’ve said that a few times before but I am never tired to repeat that again: regular traders (like you and I) are not able to shake up the market so beware of risk while trading penny stocks. Do not put all your funds at stake!
So, what is a weed penny stock?
The ‘Green Gold’ rush has turned into a separate profitable niche of legalized cannabis market. As stated multiple times at previous stages, the industry is relatively new, therefore a good dozen of companies don’t show up in the news headlines yet. It’s quite an advantage for those you plan on purchasing them cheap before the mainstream knocks the door. However, some of these newly born ventures were set up only with one purpose – pump and dump scheme. That said, many traders are now looking to get a detail info about the companies financials to make sure they will jump in on time before the next upward move starts.
Marijuana stock market is mostly build on fundamentals. This is very unusual thing as various political and social factors might have an instantaneous effect on the industry. These stocks are linked up between each other and every price drop may lead to a following series of price drops across the entire sector. Daily swings of different magnitudes can either help you make a fortune or go bankrupt so never fall in love with just one microcap. In fact, there is no particular stock you should really stick to. Don’t forget they are all penny stocks so our target lies in a $1 to $5 range (more info in previous article) or even less than $1.
New investors will definitely try to find the most prominent top movers of 2018. Just to add, have a look at these two guys, too: CANN and CBIS. As I said earlier, they are in my top 5 list and I have a reason for that. I’ve never thought that marijuana penny stocks could be in such demand as a financial instrument. I also think people did not believe in gold back in the early 20th century as well as oil and IT boom back in the 70-80s. This is how the trend has arisen. I expect an unprecedented growth in this sector where cannabis can become a new hedge or benchmark for the broader market (along with cryptocurrency). By the way, there’s a high probability of using crypto-currency by the cannabis business in 2018.
However, every time we make decisions we encounter so many risk-related problems. I will tell you what: due diligence is a lifesaver here. Read and analyse as much as you can prior to any investing.
Here’s a few points I’d like to share. Hope they will be of some help:
- Hit the SEC filings. Behind the noise of ‘Green Gold’ rush, some of the companies had absolutely nothing to do with the real cannabis business, except for a few words in their headings. Just Google the name of a stock quote and find as many financial/revenue info as you possibly can.
- If you feel uncomfortable while trading penny stocks just make a break and look for legit trading communities/rooms. Believe me or not, but professional assistance is something you ought to get here. Who knows how unsuspecting traders can deal with a pump and dump scheme.
- If you really want to check on a company do not hesitate and participate in forum discussions. I know there are plenty of scammers and swindlers out there but you may find someone who trades in the OTC and knows how to avoid unwanted microcaps all together.
May the force be with your traders!