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Are Marijuana Stocks Right For Me?

For years, the phrases “marijuana stocks” and “penny stocks” have been synonymous with high risk and higher reward. Traditionally, an industry like legalized cannabis has been taboo with only a few states taking a liking to the market.  But in 2018 that changed when Canada made it nationally legal. Many cannabis stocks have moved up much higher than where they were just a few short years ago. However, the vast majority are still considered penny stocks.

The same risks are involved with trading marijuana stocks as they are with buying penny stocks.  Furthermore, the risks could be greater with US marijuana stocks because the substance is still not federally legal.  Investors that want to learn how to buy penny stocks may be attracted to the hype behind the cannaboo.  

The unique situation that has been created by this new legalization initiative could equate to even greater potential ahead.  It is very important to know how to buy penny stocks. This is because there are still a limited number of marijuana stocks trading on an exchange like the Nasdaq or NYSE. Before you buy marijuana stocks, make sure you have a broker that will allow you to invest in penny stocks. Once you find this out, the real fun begins because not many brokers will be able to recommend an investment into a penny stock due to restrictions of a particular license.

Can You Trade Marijuana Penny Stocks On Your Own?

This may have investors taking a do it yourself approach to cannabis stocks.  Because the drug is still federally illegal, banks and brokers are reluctant to advise on the topic. Just because these specific types of penny stocks are available, it doesn’t mean someone is required to buy marijuana stocks.  It’s also important to remain diverse.

Just as with investing only in gold stocks or only in technology stocks, someone investing only in cannabis stocks may want to think of a more diverse approach.  It is inevitable markets will go down and up but when certain markets like gold decline, a diverse portfolio will be leveraged to weather the decline with other stocks on the rise.  In this case, a financial planner may be a good person to bounce ideas off of.

Many marijuana stocks currently available to U.S. investors are traded over-the-counter. This means they’re not listed on major exchanges like the New York Stock Exchange or Nasdaq. While you can buy these stocks through most online brokers, there may be additional fees or account minimums to do so. It is important to make a mental note of this when buying these particular penny stocks. Knowing costs associated will help you understand the amount of profit you will need to make in order to not only make up for fees but to also put some money in the bank.

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