BUZ INVESTORS Marijuana ETF It’s been a wild ride in the marijuana industry over the past few months. Stocks have been crushed, only to rally a few days later, only to find themselves on the losing end again by the next week. It’s a roller-coaster ride, one that is not for the faint of heart, but it is also to be expected in an industry with so much hype surrounding it and so much money flowing in and out. All this makes the performance of the first ever marijuana ETF an even more complicated investment opportunity, or at least one that warrants a good deal of research.
The fact is that nearly everyone believes that there is money to be made in marijuana stocks. After all, this is a widely used substance that has a built-in market and is slowly but surely making its way towards legality in most major countries. Many of the companies on the stock market today that trade in marijuana products are already successful in the medical marijuana fields. As legalization for recreational use comes, they’ll almost certainly be able to expand those profits.
HMMJ had a brief flirtation with success upon its release, but has been on a steady downward spiral since mid-April. The ETF, like any other industry, tracks marijuana stocks overall and, as such, fell in relation to the decline in share prices that many major marijuana companies experienced.
As seen in the chart below, the ETF predictably fell as marijuana stocks in general fell. This makes sense and is not a cause for alarm, should you be interested in taking advantage of the marijuana ETF.
But this ultimately leads us to the question of whether the marijuana ETF will be worth it in the long run. While of course the investment will come with a fair bit of risk, that risk is inherent to the marijuana industry as a whole. But are you better served putting your money in an ETF versus an individual stock in the marijuana stock market?
Conversely, if you want to be able to reap the rewards of massive gains at the expense of having your investment be more vulnerable, then playing with individual tickers is the way to go.
At the moment, there are a lot of companies trying to make money off the marijuana hype, and we’re going to see a lot of pretenders crop up looking to make a quick buck. While some are certain to be profitable investments, others could be absolute duds. So invest with caution when it comes to marijuana companies.
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