6 Things You Need To Watch Out For When Investing In Marijuana Stocks
Medical Marijuana is a pretty hot stock to get into right now, but sometimes where there is smoke, there is also fire. (so many pot puns) but in all seriousness, you do need to be careful with where you put your money, and it’s important to do the research.
As any new and exciting new field that comes onto the market and with as much potential as medical marijuana there will always be a few charlatans out to make a buck from the guys who are definitely legit. This is where you have to be savvy and get into the nitty gritty of the research.
Here are some of the things you need to look further into before investing in a Medical Marijuana company.
BEWARE THE MARIJUANA STOCK MANIPULATORS
I know with all the potential to invest in the pot stocks is huge there are many people out there who are charlatans and manipulating the stock market. Many stocks are being offered in what they call “Over-the-counter stocks” this means the companies don’t meet the strict financial and reporting guidelines of the stock exchange to be listed.
2. CONSIDER THE SOURCE:
Did the source come to you or did you find them? Is the company well known? Have they changed names in the last four years? These are things you need to look into before you buy. Businesses can paint a rosier picture than what is truly happening always dig deeper.
3. ASK “WHY ME?”
If you hear about a pot-stock without doing anything, then you need to question why me? You could be the target of a paid promoter who stands to profit more than you do.
4. EMBRACE AUDITORS
Before buying any Marijuana stocks, it’s a good idea to check the SEC to see it the company has been financially audited. Please note this only works only if the company is independently audited. (This is also a good tip for any other company you might be researching.)
5. AVOID NAME CHANGES
Companies that change their names are an enormous RED FLAG. If they keep changing their names you need to ask why? Why are they changing their name? What do they have to hide? This is a sign to dig deeper
6. FOCUS ON QUALITY
Just like pot! You need to focus on quality investments. Even if a company is listed on the Over The Counter Market does not mean they are all bad. But you want to make sure the stock is quality and a cheap knock off. Do your research and make sure that investing within your money rules.
So you can see that it’s really important to do your Due Diligence on ANY investment before you go ahead and sink a considerable sum of money into it. Just because it’s a hot stock does not mean its any good and could go cold very quickly.