The psychedelics industry is projected to grow at a compound annual growth rate of 14.5% in the short term, hitting $6.3 billion by 2026. Psychedelics present an attractive investment opportunity for any investors seeking to diversify their portfolio. However, like most major decisions in life, investing hard-earned money should be done with a lot of forethought and caution, especially when dealing with products that have a lot of room for growth, such as psychedelics.
To help stake a profitable position in the burgeoning psychedelics space, potential investors will need to understand that experts’ expectations of psychedelics blowing up in the near future is mostly speculation, even with the substances’ supposed medical abilities.
Companies that can prove their psychedelic formulations work through clinical trials and can be profitable for investors are the ones that will survive to see success. Even then, investors shouldn’t go all-in on one psychedelics company, even if they the utmost trust in the product or company. Furthermore, investors should limit their investment in psychedelics to a small portion of their portfolios.
Secondly, potential investors should also consider spreading risk among several companies. This is because even if the industry does see significant growth and manages to disrupt the pharmaceutical industry, not every company will be a winner. Therefore, instead of injecting all funds into one company, such as Delic Holdings Corp (CSE: DELC) (OTCQB: DELCF), a potential investor can create a psychedelic stocks portfolio or invest in premade investments such as Exchange Traded Funds.
In addition to this, investors will need to study a firm’s balance sheets carefully before deciding to make an investment. Those investors need to be able to answer questions such as how much money does a company have on hand, or how quickly is a company burning through its working capital. A company with enough capital to last a few years and a reasonable capital burn rate would be a much better bet because it is better equipped to weather financial storms.
Finally, investors shouldn’t be quick to sell because psychedelics are a rather long-term investment (five to ten years). Assuming that psychedelics will indeed disrupt the pharmaceutical sector, investors should hold even when there are falls in stock prices as a result of market downturns. Of course this will depend on whether they actually believe psychedelics will be disruptive and whether the companies they invest in have enough capital to survive a downturn. Either way, those in the market should think carefully before selling their psychedelic stocks during a market downturn.
If potential investors understand the speculative nature of psychedelic stocks and can hold their position over the long term even through market downturns, they may well be ready to invest in psychedelics.
NOTE TO INVESTORS: The latest news and updates relating to Delic Holdings Corp. (CSE: DELC) (OTCQB: DELCF) are available in the company’s newsroom at https://ibn.fm/DELCF
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