By Charles Roques
“Revolutionary,” “history-making” and a “unique opportunity” were among the many catchphrases and adjectives repeated by the attendees of the Marijuana Investor Summit in Denver, April 20-22, 2015. However, “dog years” was the most appropriate term used to describe the cannabis sector years, considering how fast it is evolving. The metaphor of dog years could present an interesting yet positive paradox for small investors, especially those interested in long-term investments.
Long-term strategies generally instill a certain patience about the share price, knowing that it is tied into the general quality of the company, and not just to the marketplace. When small investors realize that the entire industry is currently affected by the pressures of the legal issue, this can give a certain peace of mind knowing that in some cases, the lack of earnings is not necessarily a reflection of their investment choices or the shortcomings of cannabis companies.
Of course, this murky area of penny stocks can appear to be a crapshoot, but at this level one can’t really judge the company solely by its chart ﬂuctuations or lack thereof. This, along with the very low share prices, can give the small investor the time to learn about the companies and the industry as it grows without the anxiety of frequent trading to stay alive in this volatile arena.
Many of the cannabis penny stocks are currently inexpensive, but there has not been room for the necessary growth. This represents the unique opportunity that exists now. For long-term investment growth, you need patience and foresight, but more importantly, knowledge of the company that you plan on staying with. This can be daunting for an amateur investor but this suppressed growth period could be an ideal time for the small investor to realize the importance of due diligence and research.
Take advantage of this time to do a little homework while you still have the time. If the company has integrity, a good product, a good business plan and transparency, among other commendable traits, one doesn’t have to stay awake worrying about the little spikes and dips of the stock value. The numbers and earnings reports are still very important, but company integrity, viable innovation and a strong sense of purpose are just as important in the arena of cannabis penny stocks.
Once you acquire shares in a company, follow it and keep your own personal history of it. There is nothing like taking the time to really learn about and understand a person or a company.
But more importantly, and the upside to all this, it is very likely that once legalization issues are dealt with, companies could become scalable and expansion could grow exponentially. Even long term holdings might not be so long. There is no way to eliminate uncertainty or predict the outcome of legalization, but having this time could be a valuable learning period without a great deal of ﬁnancial risk. Patience and vigilance could easily be rewarded with a not-so-long wait for return on your long-term investment.