Investing in medical marijuana companies

Investing in medical marijuana companies

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Hi Ish,

Welcome to the world of investing. Let me start by saying we can only offer general advice so please take your personal situation into account before acting on our recommendations. Having said that, short-term gains are next to impossible to predict, and I would recommend you steer clear of any advice-giver promising short-term returns. However, over the long term, it’s possible to value companies and wait for opportunities where the stocks trade at a discount to their underlying value, thus providing a margin of safety. It’s also important to realise, somewhat counterintuitively, that great companies or those industries that have a lot of growth ahead, such as medical cannabis, won’t always provide the best investments. If everyone recognises that an industry has a lot of growth potential, the stocks can be overpriced. We did a detailed review of the medical cannabis industry recently and you can read our conclusions here. You can also find our current Buy recommendations here. These are the stocks where we see the best opportunity to earn good long-term returns in industries as diverse as healthcare and retailing.

As for minimum costs and risk, you can buy shares with as little as $500, though fees tend to bite into your returns quite a bit at this amount. A few thousand is a good place to start. And as for the ‘risk of the market’, that’s a big question. At Intelligent Investor, we find that making broad market predictions about risk or valuation next to impossible, so we approach each stock on a case-by-case basis. We come to each company thinking as a business owner, and value it from there. Over the long term, we find that share prices tend to gravitate towards the company’s ‘intrinsic value’, so we try to focus on getting that figure correct and not worry about the market bouncing around in the short term.

Let me know if you have any other questions; we’re here to help as you get started in investing. The education section of our blog has many articles teaching the basics of investing, so it might be worth a look.