I’ve warned investors that making money in marijuana stocks is not as simple as loading up when the news is good. That’s because bad news is sure to follow.A lucrative industry does not mean that every company is a good investment. And even when a company is good, it does not mean that the stock is appropriately priced. In addition, marijuana stocks in particular are vulnerable to unsustainable valuations, sentiment shifts, high volatility, short squeezes, and “pump and dump” schemes.
• The chart shows that, on average, a typical investor appears to have lost about 75% of her investment. • Recently, in a surprise announcement, MedMen Enterprises MMNFF, -13.26% abandoned its buyout of PharmaCann, whose price was originally set at $600 million. It was the biggest marijuana deal in the U.S. at that time. MedMen’s CFO was ousted. Those developments created a negative environment prior to Hexo’s announcement.
Additional warning It is worth repeating Tilray stock’s 75% decline. Many, if not most, marijuana investors have losses in their portfolios. The year-end is approaching. At The Arora Report, we expect significant tax-loss selling in marijuana stocks between now and Dec. 31 unless there is good news that buoys the industry.
TheAroraReport Smoke em if you got em