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Welcome to The Ganja Guru, a website all about weed stocks. I began following pot stocks in 2013 after a few companies made the news. Since then, I’ve made some good money, but I’ve also lost a lot of my gains due to poor choices as I reinvested profits.
What I’ve learned, I wish to share. There is no better time to jump on this ship than now! At the time of this writing, there are only 8 states (plus Washington D.C.) where marijuana is totally legal (California, Oregon, Washington, Nevada, Colorado, Massachusetts and Main). There are 28 states where marijuana is only legal for medical uses. The restrictions on use varies considerably from state to state. What does all this say? It says, the weed business is in its infancy.
Can you imagine if you were alive during the end of alcohol prohibition and someone asked if you wanted to invest in a company called Budweiser? This is the exact point we are at today.
There are some really great opportunities to invest in weed. But where to start? OTC pot stocks are risky! There is no doubt about that. Here are just some of their pitfalls:
- OTC Markets have less stringent reporting requirements
- OTC Markets are very volatile (Not always a bad thing), you can lose your ass in a heartbeat.
- OTC Markets can be manipulated in what is known as a “Pump & Dump”
- OTC Securities may look like a company but have no assets, no products and no revenue.
Then Why Invest?
OTC stocks offer the ability to get started with very little investment funds. A few hundred or a few thousand shares of a company may be purchased for as little as $100. You can see share prices swing as much as 1000%. I’ve seen one of my $80 investments transform into $1000 overnight
But Where to Start?
There are well over 60 “Pot Stocks” listed on the OTC Market, plus two companies listed on the NASDAQ (GWPH and INSY). With all these choices, a $100 investment won’t go far at all. The first thing you can do is cut the fat.
After making tremendous gains in around March of 2014, my portfolio crashed around April 2014, finally bottoming out in 2015. 2016 came and the market started to turn around.
My biggest mistake is how I reinvested my money, Rather than cash out, I took most of my profit and put it into other companies that were not directly related to growing, selling or processing marijuana. Bad move for me.
After losing so much value in my portfolio, I saw a pattern. I shed the majority of my investments. Why? Because they did not meet one simple rule I now almost always follow… Sometimes I do make an exception.
Weed stocks that I invest in must be based in the US and must directly grow, sell and/or process cannabis.
I am more hesitant to invest in ancillary companies in the cannabis industry. Vape stocks, equipment, consulting etc. I have shifted the focus of my portfolio to mainly to companies with their hands in the pot.
I also no longer invest in foreign exchanges (sorry Canada), while I am sure that there are good companies in Canada, the hassle is not worth it to me. With my broker, foreign investments are not tied directly to the Canadian exchanges, they go through an American exchange first and thus can be difficult to manage. Like anything else, I suggest you read up on investing in foreign exchanges from within the US. In other words, invest locally.
With these simple guidelines, my portfolio is doing much better. Remember, the stock market is nothing more than legal gambling. Don’t put anything into it you are not willing to lose.
I share my picks for informational and entertainment purposes only. Always seek guidance of an investment professional.