Marijuana Stocks: Avoid Getting Baked

If you are interested in learning how to invest in marijuana stocks {or if you are feeling a bit risky and want to go all in on some penny marijuana stocks}, this post will help you learn how to research whether it’s an industry to follow and pick up some shares or whether you should just say no and find better alternatives.

A Growing Industry?

Let’s face it. People are intrigued by the concept. The recent laws legalizing marijuana in some places has many people wondering if the ban on marijuana was just another prohibition gone wrong. The issue is like a circus making headline news all the time – it gets a ton of media hype. It draws our attention and of course any respectable trader can’t help but indulge in their own curiosity.

Amongst all this hoopla, traders will often decide to do some research in how to buy stock in marijuana.  Despite the hype and attention to these types of stocks, the actual research can be rather sobering when you look at the charts and numbers.

A Little Study of Marijuana Stocks Trends

To determine whether or not these stocks were worth pursuing or paying attention to, I decided to compare 4 random marijuana stocks to see if I could make sense of all the interest in this industry.

I randomly selected 4 stocks for my study. I thought it would be best to look into a few penny marijuana stocks, a high priced marijuana stock and a medical marijuana stock for good measure.

Stock #1: Growlife Inc. (PHOT)

This stock chart for Growlife Inc. was pulled on October 16th, 2015. I decided to do a one year study on the stock price. This clearly qualifies as a penny stock. Notice the price per share is literally in the pennies. The graph is showing a long steady decline that would be perfect for shorting or perhaps sled riding but not so great for going long.  I Think this is a stock pattern that speaks for itself.

Stock #2: General Cannabis Corp (CANN)

I thought perhaps this stock would be a little more promising since it was actually trading in the dollar range. I then randomly decided to do decided a 6 month study to see if things might look better in a shorter time frame. Once again, I found results that were similar to the first stock, only in this case this chart reminded me of a landslide I once witnessed when my neighbor’s house slowly slid down a hill. Needless to say this isn’t one I felt very confident about.

Stock #3: GW Pharmaceuticals (GWPH)

Next, I decided to try out a GW Pharmaceuticals (GWPH) since all the experts were predicting high times on this one a while back because it was selling for over $100 a share and it had the perks of a larger cap stock. I decided to zoom in a little closer with a 3 month study as shown in the chart above hoping this would be a bit more promising than the first two stocks I researched…Unfortunately, what I found was not very appealing. Like the others we’ve looked at so far, this might look good as a potential short sell candidate but it would be difficult to recommend this one as a potential long term investment.

Stock #4: Medical Marijuana Inc (MJNA)

Lastly, I wanted to find a random medicinal stock that would appeal to those traders looking for medical marijuana stocks to invest in. As you can see from the chart, I decided to go back to a year long study to see how it contrasted with the first stock price. Once again I saw the dreaded sled ride curve.

Don’t Get Baked

When it comes to marijuana stocks, the charts simply do not look good. The industry as a whole still has major legal challenges ahead. Even the product itself seems unappealing as an investment because in the end we are talking about essentially trading a crop – and there are many other crops with a more promising outlook than this one at its current point.

As always, it’s important to do your own research. While these charts may change in the next few weeks or months or over the course of a few years – it’s very important to always do your own independent research, trust your own instincts, and do not let others influence your decisions on whether or not to trade.

What are your thoughts on the issue? Your comments are always welcome below!