You have to be a dope to buy marijuana stocks
February 13, 2014, 1:36 PM
By Cody Willard
In the last few months, the marijuana stock hype has really kicked in and there’s a lot of money from mostly retail investors that’s betting big on this sector.
I’m sorry to pop their bubble, but I’m pretty sure there’s going to be a lot of that money lost after this pot stock bubble pops and these dreams of big legal profits from publicly-traded stocks with pun-like and pot-reference symbols.
I see the many headlines here on Marketwatch and you hear about “legalized pot” trends in the nightly news all the time. A handful of these stocks have recently crept into the top Scutify trending stocks board and yesterday I was asked about three or four times about various pot stocks in my weekly TradingWithCody.com chat. So here’s my take on the “pot stocks” like $HEMP HEMP , GrowLife $PHOT PHOT $CBIS $MJNA and so on.
Legal marijuana distribution and growing is way too new and full of scams out there. Criminals that are still being rooted out. You literally have to be very into that industry to get any idea of what’s trustworthy and what’s not in the stocks that are “in the weed industry.”
I think that most of the publicly-traded marijuana stuff, including the aforementioned names and companies with symbols like Cannabis Science $CBIS and Medical Marijuana $MJNA, is hype and that the only way to separate the potential good buys in the space from the bad buys is to do a bunch of on the ground research and meet the companies and tour their facilities and what not. I have no interest in doing any of that.
I mean meeting management and seeing if they actually have the marijuana assets and products they say they have and going through their financials and all kinds of extra stuff we don’t have to do for example on our Apple or Sandisk SNDK positions per se.
All industries and all stocks are potential frauds and its hard enough doing what I do and getting the edges I’ve got. Pot’s gonna be a growth industry in this country and there will be lots of profits to be made as it becomes more legal in more places. But I’m not going to risk my capital on marijuana stocks at this stage.
We have our edge in other areas, as turtle108, a follower of mine on Scutify noted, this morning:
@CodyWillard agree with you completely. I spent some time trying to do DD on the mj stks and there is not a lot out there. Some “cos.” are just websites with no products, no nothing. I.e., $HEMP.com. There is a future in the MJ biz, but who knows where. Thanks for sticking to tech!
And another trader I follow on Scutify.com made a very pun-like way of explaining pot stocks:
And as always, my DO NOT EVER TRADE PENNY STOCKS rule applies, certainly including the #potpennystocks. $CBIS $MJNA
And be sure to check out the Revolution Investing newsletter published here on Marketwatch or to learn more about my whole approach, you can get a free digital copy of my #1 Amazon best-seller “Everything You Need to Know About Investing” by simply joining Scutify.com and posting a “Scuttle” request to me.
Cody Willard writes Revolution Investing for MarketWatch, posts the trades from his personal account at TradingWithCody.com, which is not affiliated with MarketWatch, and is the largest shareholder in Scutify‘s parent company, Wall Street All-Stars. At time of publication, Cody was net long Apple, Google and Facebook. Follow Cody on Twitter at twitter.com/codywillard.
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