3 Things You Need to Know Before Getting into Weed Stock

Before we start this off, here’s the mandatory disclaimer – this is NOT FINANCIAL ADVICE!

With that out of the way, the stock and cryptocurrency markets are all the rage right now. With the majority of the world bored at home waiting for things to reopen, our minds can’t help but wander what the best way to stack up on dough to prep for our next vacation would be. For the hobbyists in the cannabis space, a lot of us have wondered whether our knowledge in weed will help us get an advantage over others by buying into medical cannabis stock. If this also applies to you, then great, we’ll keep moving along.

While there are many things to monitor for in the world of trading, not all of us have the time nor interest to get to the very specifics. Most of us just want to buy the stocks we like and pray that it will go up.

Unlike other genres of investment, weed stock effectively operates with very unique rules, that might play a part in how your investments perform. Below are 3 things you should know before getting into weed stock.

1. Regulations Change Everything

Because marijuana, hemp, and CBD are still in their early inception in terms of regulation and permits, new rules passed on these products can have a lot of changes on the outcome of your investment. And since they’re ‘new to market’ in the eyes of the government, as an investor, you should expect things to change over the next 3-5 years. Unlike traditional markets like energy or banks, a single change in how companies need to operate, such as adding online sales for marijuana products, can make big impacts to your portfolio, so be sure to stay up to date with the latest news to avoid getting left in the red.

2. Weed Stocks are Highly Volatile

Maybe as not as before, but weed stocks still have the potential to surge and fall as new laws are passed and government initiatives take place. Before the legalization of weed in late 2019, we’ve seen popular public companies trade from less than a dollar per stock to highs of $16 overnight, then falling steadily back to $10 and sideways from there. For this reason, the amount of capital you invest into weed stocks can fluctuate a ton within a moments notice. Kind of like cryptocurrencies, where the implementation of a new regulation holds as much power as a tweet from Elon Musk. 🐶

3. Diversification is Key

Diversification means a lot of different things to different people. On the top-level, to diversify your investments means buying different things that can appreciate your portfolio over time; stocks, cryptocurrencies, your savings account, your vehicle, your property, etc. Then there’s diversifying stocks, whether across multiple industries to hedge against catastrophes in a specific sector, diversifying across companies from multiple countries, or diversifying between companies in the same sector, ie. cannabis. Whatever your pick, make sure to spread your investments out to a level you’re comfortable with, and play within your limits.