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Thursday, April 26, 2018

High Street Journal - by Tony Salter

Marijuana Penny Stocks – Your Chance to Strike It Rich!

 As the Green Rush sweeps across our nation it would seem that the medical and recreational cannabis industries are the hottest things going right now. Nine states have already legalized recreational marijuana, and 29 permit medical use. Additionally, 13 other states have decriminalized. The Arc-View Group, a cannabis market research firm, estimates a 33% increase in revenues this year, totaling over 10 billion in potential retail sales. And just like the gold rush of 1849, this will be the only time and therefore the only chance you have to perhaps strike it rich! Medical marijuana is quickly becoming a widely accepted treatment alternative for many diseases and ailments. Others use cannabis simply to promote overall good health. As a result, it’srapidly creating a multi-billion dollar industry. And, as more states legalize recreational use, there will be countless opportunities to potentially make, or lose a lot of money. Most of us don’t have the financial resources needed to open our own cannabis facility, hire the needed attorneys and consultants, and then actually get the doors open.Many states currently require proof of substantial financial resources to qualify for many of the various licenses available. Add that to the start-up costs for a dispensary storefront, lab facility or even a transporter to get the cannabis where it needs to go, and the dollars add up quickly. Unfortunately, those costs can put many of us out of the game as they say. Ultimately, for many of us, it’s only a dream. Now however, Marijuana Penny stocks make it possible for the average individual to get involved and perhaps make a lot of money. Marijuana penny stocks have had some of the highest growth rates of any stock in recent history.In recent years some have netted earningsin excess of 10 and even 20 times over their original investment. But, as is the case with almost any potential high return investment, high risk usually comes with it. In other words, compared to other investments, you also have a higher possibility of losing your money.

First of all, what are Marijuana penny stocks? Penny stocks are low-priced shares of small companies that usually sell for as little as a fraction of a centup to $4.99 per share, and are typically used to finance expansion plans. This means that a small investment of as little $100 - $200 can sometimes get you 5,000 to 10,000 shares of a company’s stock instead of the 1 or 2 shares you might get if you were buying stock from a larger company like IBM, Coca-Cola or Google. There are a few larger marijuana based companies trading on the major stock exchanges, but typically penny stocks are what is referred to as OTC, or over the counter. Consequently, there is very little oversight compared to those soldonthe major stock exchanges, like NASDAQ or the NYSE.And with OTC stock trading, (the buying and selling) can be accomplished pretty easily as well. Mobile apps such as TD Ameritrade and Robinhood can be downloaded to your phone that allow you to quickly set up your own brokerage account and in a very short time, buy and sell stock, (no broker required). These apps allow you to research a potential stock or company prior to your purchase, if the information is available for that particular company. However, be warned. Just like any other opportunity to make some substantial financial gains, there are those out there that would like to scam us out of our hard earned cash and others that simply aren’t a good choice. Regulated exchanges require companies to meet compliance and financial reporting standards. OTC’s do not. Sometime this information is available for OTC stocks, sometimes not. Again, this is where your research is very important. Another consideration when considering a stock is current value. Has it already reached its earnings peak or is the value low so that you’ll realize earnings on it when it does reach its peak.

If this is your first foray into what seems to many a very complicated financial world, you should learn some basics about the stock market before jumping into penny stocks.There is some great online training available for free at that will give you a clear understanding of the basics. Among some of the essentials, learn how to read and understand the charts and financials of a company or stock you’re considering for purchase. Once you feel like you’ve got a good understanding of the basics, you can then do what’s known as due diligence on the companies you like. Remember that just because overall support for medical and recreational marijuana is at an all-time high and will undoubtedly go even higher, not every marijuana stock will perform well. Each company is different. You should find out as much about the company as you can before buying their stock. Again, there are a number of resources available online that will not only allow you to learn the nitty gritty about a company but you’ll also start to learn the red flags to watch out for and alert you to a bad selection. Also, if your goal is to invest in a cannabis company, make sure the company you like is actually in the cannabis business. Some companies that have simply changed their name to include some marijuana or cannabis related term in the hope of inflating their stock value. Some excellent research resources for cannabis related business can be found on the North American Marijuana Index ,MarijuanaStocks.Com and theDailyMarijuanaObserver.Com. Again, one of the keys to success in all this is your research. After learning how to read the charts and financials of a company. Make sure you know how to determine a stocks Market Cap and what the Authorized shares are, as well as the Outstanding and Remaining shares indicate. Some other indicators that something is off can be excessive press releases or stock issues. See if stock prices suddenly go up after the company issues several press releases. This could indicate that the stock value is being falsely inflated so it can be dumped later for a profit while at the higher price. Determine how often stock is being issued and is it covering existing debt of being used for expansion. And, it never hurts to practice your skills first. There are trading sites that offer practice accounts and simulators that allow you to practice and become confident with yourskills before taking a risk with real hard-earned cash.

Bottom line, it’s a volatile market. Rapid and significant price moves are not uncommon. Sometimes in your favor, sometimes not. That’s why it’s important to know the performance of a stock you’ve bought almost daily. We recently saw substantial gains after Senator Cory Gardner announced the support of President Trump for the federalized effort to correct the marijuana problem. Prior to that we saw significant drops when Attorney General Jeff Sessions said he was rescinding the Cole memo.Another consideration to certainly consider is where a company is located and are they actually in the business of producing cannabis. At this point in time, Canada seems to be the home for many of the larger, more established companies such as Canopy Growth (TWMJF) and Aurora Cannabis (ACBFF). With the entire country expected to fully legalize recreational marijuana by July 2018, Canadian based companies are certainly worth keeping an eye on for potential investment.
Ultimately remember this when investing in marijuana stocks, the marijuana isn’t what’s important. When you are buying any stock, whether the company makes or sells cannabis-based products or potato chips, you're actually buying part of that business. And they just happen to be in the marijuana business. Hopefully you’ll find one that practices proper policies, ethics and genuinely cares about its customers and investors.

Finally, have an exit strategy. Many experts say that Marijuana penny stocks are for trading and not long term investment. Set some goals and parameters that will determine how long you’ll hold a particular stock before selling, hopefully at a nice profit. But you should also know when to sell off a loser, before all its value is gone. Bottom line, do your research and invest no more than what you can afford to lose, like Blackjack! And who knows? Maybe you’ll be the next Marijuana Millionaire!


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