Marijuana stocks in 2018 have been touted as the next big investment opportunity. But looking at the index today (and since October), it's hard to keep the faith that these shares will deliver the profits many expected.
Marijuana Stocks in Red
Checking out the marijuana index today, some of our biggest names are in the red (again). Canopy Growth (TSX:WEED) (NYSE:CGC) is down 9%, Tilray (NASDAQ:TLRY) is down 5%, Cronos Group (TSX:CRON) (NASDAQ:CRON) is down 3.5%, and GW Pharmaceuticals (NASDAQ:GWPH) is down 5%.
Aurora Cannabis (TSX:ACB) (NYSE:ACB) is actually up 5.6% but wait before celebrating that. Only yesterday, Aurora Cannabis lost over 10% in one day!
So technically, any gains of today for marijuana stocks are really just some of yesterday's losses recouped. That's not exactly thrilling market behavior, is it? This kind of activity won't deliver serious profits to long-term stockholders. Perhaps short-term traders might make a quick buck, but the market is so volatile that knowing when to buy and when to sell is really just guesswork.
Basing your decision on company performance alone is becoming increasingly harder to do.
In fact, that's where a lot of confusion comes from. In the case of those listed above, nothing negative has been reported to warrant such price decreases. Rather it seems that marijuana stocks appear to be "falling victim to a host of macroeconomic and geopolitical concerns that are weighing on stocks in general today."
Okay. So when can an investor make a genuine play purely off the back of a company's operational movements?
>> Weed Stock to Watch: Cresco Labs Inc. Emerges on the CSE
Marijuana stocks are showing us that they are not infallible. These stocks, too, will succumb to the pressures of economic issues. Over the summer of 2018, marijuana stocks seemed almost impervious to such realities.
Has the Moment Passed for Marijuana Stocks?
Some will argue that this industry's day in the sun is over. What we have now is a simple dog-eat-dog industry full with as many mismanaged companies as there are true winners. The ability to tell between the good and the bad is getting increasingly harder as the field becomes more convoluted.
Plus, when we look at marijuana stocks across the board, the increasing volatility is evident. It feels like the days of massive gains and continued upward spikes are over.
So while the industry is indeed ticking along one acquisition after another, one legalized jurisdiction after another, it seems investors are unsure where to put their money. There is so much choice, so much news, and sometimes, not enough clarity.
What are you going to do?
Featured Image: Depositphotos/© Wavebreakmedia
