The upcoming decade could see cannabis come into its own as a leading segment for investors. Still relatively new to institutional and large-scale investing organizations, the cannabis industry is growing rapidly. Individual speculators are often confused, however, because of the dizzying number of opportunities, the massive flood of startups and the different kinds of companies seeking investors. What’s the solution for people who want to park some of their discretionary funds in one of these stocks? The answer is three-fold. It involves patience, self-education and technical knowledge.
It’s important to know that one of the most popular ways to obtain a medical marijuana card is to apply online. Many companies offer this service to consumers who don’t want to stand in line applying in person or who simply don’t have any free time to apply any other way. For example, when it comes to medical marijuana in Missouri, applying for a card online is the way to go. Organizations that offer personalized services like this are more apt to be consumer-focused and a better bet for investors. Here’s the brief on what you need to know to get started in cannabis investing.
Use Limit Orders
Technical details first, in which when you place an order with a broker, you generally have two choices. Placing a market order means the broker will buy at whatever the current price is. A limit order gives you more control because you set the specific level of execution. When buying volatile shares like cannabis-related stock, you can use limit orders to protect yourself from strange, rapid movements.
Diversify Your Portfolio
Even if you decide to put x amount of money into the marijuana niche, be sure to diversity within the segment in order to build up the highest possible level of protection. That means choosing among growers, distributor, marketers, and even companies that sell nothing but growing equipment. The sector is pretty large and includes lots of factors doing many different tasks. Don’t invest all of your money in one place within the sector.
Don’t Watch Short-Term Price Action
If you can’t tolerate short-term price volatility, then perhaps you should consider putting your cash somewhere else. The cannabis-based stocks are inherently volatile right now, and likely will be for several more years. The economy is still sizing these companies up and the institutional firms haven’t decided what to do about them. That all adds up to price swings. Don’t worry. If you put your funds into market leaders with solid financials, you don’t have to sweat the swings. View all these opportunities as long-term holds and you’ll be able to sleep much better.
Study the Sector
There are so many players in this new economic sector that it’s sometimes hard to keep up. Many of the best opportunities are with firms that do medical research for breakthrough drugs. But there are many companies that excel at production of top-grade product and distributors with vast, global networks. Study the market, identify the leaders in each niche and make decisions based on your knowledge.
