What a difference a few months can make. From an ‘all-time’ high of over $1200 per share in October 2015, the price of marijuana stocks has plummeted from a high of $456.33 per share in January 2016 to a low of $134.75 per share in December 2016. The slide has been fueled by four factors: 1. The DEA’s recent decision to maintain its Schedule I classification of cannabis as a dangerous and illegal substance. 2. The continued crackdown on pot-related businesses in states where recreational use is legal. 3. The DOJ’s announcement that it will continue to enforce federal marijuana laws even in states where recreational use is legal. 4. The stock market’s own recovery from the sharp

As the cannabis industry continues to grow at an unprecedented rate, it’s inevitable that some will break out and go on to capture the public imagination. Whether it’s one of the newer companies like Canopy Growth Corp. (TSX:WEED) (NYSE: CGC), Cronos Group Inc. (TSX: MJN) (TSX: CRON) or more established names like Aurora Cannabis Inc. (TSX: ACB) (NYSE: ACB), they are all looking to capitalize on the growing market. However, they still have a ways to go to catch up to the likes of Canopy and Aurora, if history is any guide.

The total value of all publicly traded U.S. companies that make money selling THC-infused products is north of $1 billion, according to data from New Frontier Data. I believe firmly that we will see at least some of that capital flow into the newly legalized recreational marijuana market, and that the total value of all U.S.-based companies will continue to grow.. Read more about top marijuanas penny stocks 2020 and let us know what you think.


Long-Term Investments in Marijuana Stocks

The market is once again in a state of flux. We’re seeing some fresh fear in the market as the COVID-19 delta variant begins to scare investors. What does this imply for marijuana stocks, though?

If we look at the history, this may spell doom for the stock market.

That’s because, just like we witnessed at the start of the pandemic, risky sectors like marijuana were among the first to experience massive investor flight.

That is, to a degree, a completely fair reaction. After all, marijuana stocks that are volatile in regular market circumstances are more likely to see significant swings and losses during times of economic uncertainty.

When the economy is doing well, investors are willing to take on greater risk in their portfolios. However, with COVID-19 entangling the entire supply chain, investors were understandably concerned. They were looking for secure assets that could withstand the storm.

This scared investors away from risky sectors, particularly the marijuana industry, which is one of the most unpredictable. During the early phases of the epidemic, this shift away from marijuana stocks caused share values to plummet.

Are marijuana stocks going to collapse again now that we’re worried about a pandemic resurgence? To put it another way, are we destined to repeat history if the epidemic causes economic slowdowns once more? It’s difficult to say.

Yes, history indicates that marijuana stocks will decline. This is, however, a completely different epoch.

People were naturally terrified in the early days of the epidemic. No one could have predicted how terrible things would become. I mean, I even blogged about how I assumed it would all blow over in a few months and we’d be back to normal. (There’s a reason I’m not writing about virology.)

Massive market overreactions resulted from this panic, particularly among marijuana companies. The stock market dropped more than it should have. Later, during the market downturn that started in late 2020, this led to a very robust rebound. People recognized that, although things were terrible, they weren’t in the end-of-the-world situation.

The price of marijuana has mostly recovered. While many have yet to recover their 2019 highs (for reasons other than COVID), some have come back stronger.


StockCharts.com provided the chart.

With the benefit of hindsight, we now know that even if markets pause for a while, they will most likely recover their pace before long.

With this information, investors may be more likely to wait out another slump, or at the very least, not be as worried and rush to haven markets as fast.

In any case, the fact that the market is once again concerned about the possibility of the pandemic worsening is not a good indication.

Now, I admit that my track record in this area isn’t great. However, given high vaccination rates in many wealthy countries, I don’t think the situation will be as severe as it was the first time (fingers crossed).

But, even if the worst-case scenario plays out, and things are just as terrible as they were in early 2020, does that imply marijuana stocks are no longer a viable investment?

Quite the contrary, in fact.

Marijuana equities will actually become better investments even under the worst-case scenario. That’s because, as has always been the case in the marijuana industry, there are typically over-corrections that drive share values lower than they should be.

These dips have always been followed by significant rallies, leaving investors with a large amount of cash on hand. As a consequence, they will be able to keep these shares for a long time until the correction ends, which will be a good time to reinvest in marijuana companies.

These purchase on the cheap may result in huge profits down the road. Most of the time, you won’t even have to wait that long. Rallies usually happen a few months after the price decreases (although sometimes these drops can last longer).

As a result, you may follow the age-old adage of buying cheap and selling high.

But this brings us to a more crucial issue. While the marijuana stock market provides day traders with a plethora of chances to profit, it is best suited for buy-and-hold investors.

That’s because the success of our best marijuana stocks from week to week and month to month is difficult to predict. The market’s trajectory, on the other hand, can only go one way: up.

More markets will emerge, legality will expand, commerce and experience will create more efficient manufacturing techniques, and illegal markets will go away. To put it another way, the odds are in favor of marijuana stocks.

So, whether you purchase at the apex or at the bottom of the market in 2021, the best marijuana stocks haven’t yet hit their high.

In reality, it’s the polar opposite.

Day traders may profit from these stocks once again, but the problem is attempting to timing the market perfectly. Trying to timing the day-to-day swings properly becomes all the more difficult when you have something like COVID-19 still hanging around.

Instead, you’d be better off investing in a still-developing sector that isn’t close to completely saturating the market, and enjoying the advantages that will almost certainly follow in the next years and decades.

Expert Opinion

While the market’s current volatility is due to COVID’s unclear position, marijuana stocks may be in for a rough ride as well.

Long-time readers may recall that market volatility has been a problem in the marijuana business previously. And each time, it has come out on the other side stronger.

Granted, a worldwide epidemic is a one-of-a-kind event, but that doesn’t alter the fact that we’re optimistic on marijuana companies. Marijuana is a worldwide popular substance that is only legal in a handful of nations. We’ll notice improvements across the board once that problem is resolved.

Following a major drop in the start of the year, marijuana stocks rallied in the first quarter of 2017. The green rush has made investors with more money than common sense willing to take big risks with their portfolios. The cannabis industry’s best bull case is that it will benefit from the growth in legal marijuana markets, but even with the recent gains, marijuana stock valuations are still extremely risky.. Read more about canopy growth and let us know what you think.

This article broadly covered the following related topics:

  • top marijuanas stocks 2019
  • canopy growth stock
  • pot stocks
  • list of marijuanas stocks canada
  • aurora stock
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