Can Marijuana Traders Handle A Stock Meltdown?


Spencer Schredder

April 9th, 2014

Uncategorized


Even factoring in a rough conclusion, cannabis stocks had a phenomenal first quarter.

Being bullish on this sector could lead to huge gains if correctly positioned, but it also could mean detrimental losses if the sector is misplayed.

A lot of traders are ‘all in’ on cannabis stocks. There is no reason not to be bullish on marijuana stocks, but traders must  recognize the potential risks.

The valuations of companies are challenging to understand for every stock in the sector.  This isn’t surprising, because canna-businesses are still in the very early stages of transforming from back-room operations to a publicly traded, big-money industry.

There is a ton of money flowing into the market, and much of it comes from novice investors that want to cash in on the ‘Green Rush.’

Investing in marijuana stocks is risky. Not only are valuations high (with off-the-charts positive sentiment), but with almost all of the stocks trading OTC (many “Pink”), disclosure is lacking.

Consequently, traders have to worry not only about the companies will be winners, but how realistic the valuations are. But these risks are inherent to all penny-stock investing.

Advanced Cannabis Solutions (OTC: CANN), and other MJ companies that have been halted, (such as Aventura Equities, Inc. (OTC: AVNE), PetroTech (OTC: PTOG) and Citadel ETF (OTC: CDFT)), has been a demonstration of the risk affiliated with trading marijuana stocks, serving as a great example of why traders must practice risk-management.

As with any new sector, cannabis stocks are likely to be very volatile. Traders must be prepared for this volatility. If not, it will be easy to buy high, panic and sell low. This is a sure-fire way to lose money. Traders that go all-in on the sector run the risk of seeing a pullback, and having no ability to buy low because they are already fully invested.

And pullbacks are inevitable.

Traders that hold an individual security in large size take an even bigger risk. No one has a crystal ball, so diversified holdings are key.

No matter how confident in the market, always be prepared for a downswing. Don’t put everything into the sector, and make sure that you holdings are diversified.

Understand valuations, use charts, and focus on quality (or at least understand where a company lacks it).  Many of the dotcom winners are still below their crazy levels.

Remember that a good company and a good stock aren’t the same thing, and don’t be afraid to take some profits along the way.

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Spencer Schredder

Mr. Shredder has over a decade of experience in the financial markets as both a private investor and financial journalist.


Network Partners

Follow Us on Social Media

About CFN Media Group

CFN Enterprises Inc. (OTCQB: CNFN) owns and operates CFN Media Group, the premier agency and financial media network reaching executives, entrepreneurs and consumers worldwide. Through its proprietary content creation, video library, and distribution via www.CannabisFN.com, CFN has built an extensive database of cannabis interest, assisting many of the world’s largest cannabis firms and CBD brands to build awareness and thrive. For more information, please visit www.cfnenterprisesinc.com.

Disclaimer: Matters discussed on this website contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. CFN Media Group, which owns CannabisFN, is not registered with any financial or securities regulatory authority and does not provide nor claims to provide investment advice or recommendations to readers of this release. CFN Media Group, which owns CannabisFN, may from time-to-time have a position in the securities mentioned herein and will increase or decrease such positions without notice. The Information contains forward-looking statements, i.e. statements or discussions that constitute predictions, expectations, beliefs, plans, estimates, or projections as indicated by such words as "expects", "will", "anticipates", and "estimates"; therefore, you should proceed with extreme caution in relying upon such statements and conduct a full investigation of the Information and the Profiled Issuer as well as any such forward-looking statements. Any forward looking statements we make in the Information are limited to the time period in which they are made, and we do not undertake to update forward looking statements that may change at any time; The Information is presented only as a brief "snapshot" of the Profiled Issuer and should only be used, at most, and if at all, as a starting point for you to conduct a thorough investigation of the Profiled Issuer and its securities and to consult your financial, legal or other adviser(s) and avail yourself of the filings and information that may be accessed at www.sec.gov, www.pinksheets.com, www.otcmarkets.com or other electronic sources, including: (a) reviewing SEC periodic reports (Forms 10-Q and 10-K), reports of material events (Form 8-K), insider reports (Forms 3, 4, 5 and Schedule 13D); (b) reviewing Information and Disclosure Statements and unaudited financial reports filed with the Pink Sheets or www.otcmarkets.com; (c) obtaining and reviewing publicly available information contained in commonlyknown search engines such as Google; and (d) consulting investment guides at www.sec.gov and www.finra.com. You should always be cognizant that the Profiled Issuers may not be current in their reporting obligations with the SEC and OTCMarkets and/or have negative signs at www.otcmarkets.com (See section below titled "Risks Related to the Profiled Issuers, which provides additional information pertaining thereto). For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. CFN Media Group, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity-based compensation in the companies it writes about, or a combination of the two. For full disclosure, please visit: https://www.cannabisfn.com/legal-disclaimer/. A short time after we acquire the securities of the foregoing company, we may publish the (favorable) information about the issuer referenced above advising others, including you, to purchase; and while doing so, we may sell the securities we acquired. In addition, a third-party shareholder compensating us may sell his or her shares of the issuer while we are publishing favorable information about the issuer. Except for the historical information presented herein, matters discussed in this article contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. CFN Media Group, which owns CannabisFN, is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. CFN Media Group, which owns CannabisFN, may from time to time have a position in the securities mentioned herein and will increase or decrease such positions without notice. For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. CFN Media Group, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity- based compensation in the companies it writes about, or a combination of the two. For full disclosure please visit: https://www.cannabisfn.com/legal-disclaimer/.

Copyright © Accelerize Inc. · All Rights Reserved · Privacy Policy · Legal Disclaimer

loading