As the year comes to an end, many investors are evaluating their portfolios and are planning how to reallocate funds from losing investments to other avenues where the earning potential is higher. If you plan to make money from the cannabis industry, read on and discover the three trends that you can consider as you make your 2019 investment allocations.
Think Small
Seasoned investors know that the worst time to acquire interests in an entity is when the price is at its peak, because that means that a market correction will soon happen and latecomers will lose out.
Similarly, people who are planning to invest in the marijuana industry need to move away from the large-cap companies and examine the small-cap companies. There is logic in this approach because many of the large-cap entities are most likely to have partnered with a large entity in the past year (2018), so their shares are likely to have hit an all-time high.
Instead, think of smaller companies, such as those valued at less than a billion dollars. Such companies may have better prospects going forward because you will be positioned to get a slice of any gains they make when big players come knocking to acquire a stake in those companies.
However, you also need to be cautious and avoid very small companies, such as those valued at less than $200 million because the long-term survival of those companies may not be certain as yet.
Look to Auxiliary Companies
It may also be a smart move for investors to put some money in companies that complement the companies involved with the cannabis plant directly. For example, a good place to start would be the companies that provide packaging materials to the cannabis industry. These auxiliary companies are a good investment choice because they will grow as the industry grows, and they often have a foot in other industries, so they are a smaller risk when compared to the companies which “touch the plant.”
Slot CBD In
Cannabis drinks are likely to take the world by storm, and many of them will not cause a high. That means investing in a company that has interests in CBD (from industrial hemp, for example) may line your pockets as the popularity of CBD oils and drinks reaches feverish level in the years to come. Current trends point in this direction, especially after hemp was legalized by the federal government and more states are legalizing either medical or adult-use cannabis.
As always, do your due diligence before making an investment decision. You can start by watching the journey of Choom Holdings Inc. (CSE: CHOO) (OTCQB: CHOOF) and ChineseInvestors.com, Inc. (OTCQB: CIIX) in order to get an idea of the historical trends for cannabis companies, and then branch out in the direction that you think holds most promise to you as an investor.
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