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How to Invest in Marijuana Stocks

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What is a stock?

When you hear investors talking about stocks they usually mean “common stocks”. A share of common stock represents a share of a company that issues it, that means that even if you buy one share of a company’s stock, you are a part owner.

For example, if you own one share of Aurora Cannabis, and Aurora has 100,000,000 shares that are “issued and outstanding” then you own .000001% of the company. If Aurora was to be sold to another company then you would receive $50 that you can use to buy potatoes.

That simply means that, if you become a stock owner today, you are a business owner. But here is the thing, when business is good and companies are making lots of cash. The prices of stocks will rise, on the other hand, if business is bad, stocks will decline and you may lose cash. It’s kind of like gambling on a soccer match i.e. if Ronaldo screws up, you lose money and if he scores, you make money.

As an investor, you can make money with marijuana stocks in two ways:

  • Through dividends that companies give to shareholders.
  • Through the rise in price of a stock.

Foreign Marijuana Stocks and Foreign Currency

Canada and a number of different countries have legalized marijuana, as a consequence of that. Marijuana companies are now entering the stock market. Investing in foreign stocks is very similar to investing in local marijuana stocks, the only difference is. A new level of risk is introduced. The thing is. If you buy foreign stock, you make two bets at the same time, for example, if you choose to invest in a Canadian company, you must first convert your currency into that used by foreign exchange and then use Canadian currency to buy stock. At this point, you now have all the risk and possibilities of stock ownership but remember you are also investing in foreign currency.

In simple terms, shit can get complicated. Therefore, take investment classes before you put your money down. I know, going to class is boring but if you get the right knowledge, you will know exactly what to do with your money. Think about it, what do you intend to do with that $1,000 that’s sitting in your account or under your mattress? Are you going to use it to buy weed, alcohol, and hookers or are you going to use it to make more money? You decide.

 

How to Open a Brokerage Account

If you want to invest in marijuana stocks, you have two options. One you can hire someone to do the heavy lifting for you or two, you can do all the work yourself. If you go with the second option, the first thing you must do is open a brokerage account.

What is a brokerage account?

This is simply an investment account that you can use to buy stocks, bonds, and mutual funds. You can open one at an online broker of your choice or at your bank. Talk to an independent financial adviser near you.

When choosing a brokerage account you should consider:

  • Account fees.
  • How often you intend to trade.
  • Commissions
  • How much support the broker offers.
  • Types of investments offered.

Brokers fall into two categories: discount brokers and full-service brokers. The later will call you frequently with suggestions, ideas, and corporate research but the catch is. They will charge hefty commissions. Discount brokers as the name suggests requires little investment.

Why long-term Investing is better than short-term Investing

The truth is. Investing in marijuana stocks will not allow you to “get rich quick”. Instead, you may get rich slowly. The reason why you should consider long-term investing is. Investments held for long periods normally exhibit lower volatility than those held for shorter periods. That means that the longer you invest the more likely you will be to weather low market periods. Also, long-term investing might save you expenses such as transaction fees and active trading fees.

What I’m telling you is timing is very important, also the amount of time you leave your monies invested will determine your success.

If you are serious about this, you should take time to learn:

  • How the stock market works.
  • Market cycles.
  • How to react to highs and lows.

How to Make your First Trade

All individual stocks in the market are assigned a unique ticker symbol, when researching stocks, getting quotes and placing orders, you have to know the ticker symbol, why?

Let’s say you want to buy Coca-Cola company stock whose ticker symbol is KO if you don’t know that you may end up buying COKE stocks which represents the Coca-Cola bottling company. These are two different companies and such mistakes can lose you money. Therefore, check the ticker symbol before you buy.

After getting the right ticker symbol, the next step is to place your first order. To do that you will have to go to the trade menu and choose trade stocks. To place a trade, you can use three different types of orders:

  • Market orders
  • Limit orders
  • Stop orders

Your next task is to understand what all these orders do. So take some time to read and understand exactly what you intend to do with your money.

The real question: should you invest in marijuana stocks?

Marijuana is making a lot of people lots of money especially in Canada and Germany, why? Both countries have legalized it.  In the US, you have to worry about federal regulations and the constraints put on the industry by banks and other financial institutions. But here is the thing, the industry is still in its infancy and new companies are popping up almost daily.

What I’m saying is, the future of marijuana is bright, meaning if you invest in the right company today, you will be singing this song somewhere in the future.

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