I was inspired to write this article when I heard a Marijuana company selling stocks on the radio! It made me angry because I feel that this industry is taking advantage of people who have illusions about the profitability in this sector and that bothered me.. so here we are.
There are a couple of businesses that are surrounded by a money making myth and the pot business is one. Think "Gold Rush" or better yet FOMO (the fear of missing out).
Some people believe that profits in this sector are a no brainer and they can't loose. But guess what? A ton of money IS being lost. Don't make it yours.
My advice? Hold off on purchasing stock in Marijuana companies but if you are determined to venture into this very risky market focus on big brand pharmaceuticals who will be poised to buy up the little companies at some point and distribute to hospitals and drug stores directly. Have you noticed there are a lot of pharmacies cropping up all of a sudden?
And don't hold your breath not only will you be looking at hundred dollar share trades, the Federal Government is still negotiating their cut before legalization. Think prohibition.
One of the biggest red flags with these businesses right now is that they are offering their IPO's way too soon.(That's when a company decides to start selling shares on the stock exchange). It's a fatal mistake for an investor because many of these businesses are simply cash hungry and are looking to get themselves out of debt rather than investing in the future of their company.
This is the place where the penny stocks live, dancing with big time gamblers scammers and con artists. Think the Wolf of Wall Street.
However there ARE some jewels in the bunch if you can find them and that's why the risk is so high. Usually these companies tank and end up being worth nothing and bankrupt.
The stock market is like going to a casino that the big boys own and they run the market. That's why whenever Trump says something about Trade Talks the stock goes up and down depending on the status of the deal.....which is totally predictable (Many people feel that Trump is insider trading right in front of our faces. But that's for another article)
Most Marijuana IPO'S are NOT even in the zone to go public.
Exhibit A. Last week the message got out that Coca-Cola was exploring combining CBC a legal marajuana derivative that doesn't get you high, God forbid! (That's like taking alcohol out of beer) into their products and order to do so needed to purchase young Marijuana based companies with fairly cheap stock. And by the way, Coca-Cola does have a history of using drugs in their soda and added Cocaine in their early days, so the idea was not that far fetched.
(Teens.Drugabuse.gov)
https://teens.drugabuse.gov/blog/post/coca-colas-scandalous-past
I thought that this was great but held off buying, others were not so lucky and they got seduced by the FOMO factor and the Gold Rush began and small Marijuana entities sold stock like crazy. But low and behold, Coca-Cola changed their mind because of Federal Regulations and the smaller companies' stock dropped like a stone. Ironically, on the flip side Coca-Cola's stock rose slightly because they did not have to invest huge amounts money and investors financial fears were quelled.
And so I have concluded that after all my research it is impossible at this point to determine which Marijuana stock will stay standing. I think that those on the market today are extremely volitile.
Finally what you should know about all stocks on young start ups is that many sell what is called Restricted Stocks. That means you can't sell for a period of time maybe a year or more so when the stock plummets so does your investment.
I stand by my advice. Do not buy stocks in this sector. If anything changes I will let you know because I know there's a way to make some good money from stock in this market I just don't see it at the price range (a penny to ten bucks max), that I play in.
And if you have read this article all the way to the end you deserve a tip. Take ALL of your money OUT of the market. The time draws near. There will be a major collapse. That's because our President is a "debt fuctioner" and the market is currently being propped up by billions of dollars of debt. The bill is coming due and it won't be pretty.
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