I regularly get questions from new investors about the trend that’s hot at the moment.
Two years ago it was cryptocurrencies. Lately, the number one question has been about marijuana stocks.
Let me preface my comments by acknowledging that at the present time, I personally have no investments in weed stocks. I follow the sector, but not very closely.
That said, here’s what I can tell you.
There is no doubt that the United States will eventually legalize marijuana for recreational use in the future. When this happens, the US will probably become the biggest market in the world for recreational weed.
At this point in time, there are a ton of companies in the mix trying to stake their claim.
If someone put a gun to my head today and said “Invest in weed or die!” here’s what I would do: I’d identify the present leaders and buy the leader.
Let’s go back to 2002 for a moment. At that time, if someone said “Buy an Internet stock or die!”, what would I have done?
At that time, in 2002, you could have flipped a coin between Amazon, eBay, or Google.
If you’d picked eBay or Google, you would certainly have done well. If you’d picked Amazon, you’d have made the right choice – it would have been life-altering.
So, back to my earlier point on pot stocks: buying the leader.
The marijuana industry is still in its very early stages. There’s a good chance that the leading company will continue to lead.
If you’re looking to make this your very first stock purchase, I would advise you to reconsider.
But then again…someone once said the same thing about buying Amazon in 2002. How did that work out?
Do your research on the companies you’re considering investing in. Make informed decisions. That is the way that will most likely lead to choosing a winner – in any industry.
My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.
Click the image of the book at left to be taken to its Amazon page. (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)