Pot Stocks Soar: Are You Ready to Light Up Your Portfolio?

Pot stocks are hotter than Snoop Dogg's mixtape! Join the green rush, but remember: this market's wilder than a Cheech & Chong movie, so buckle up!

The stock market has been on a tear in 2024, with the S&P 500 reaching new highs. While tech stocks have been a big part of the rally, investors shouldn't overlook another hot area: cannabis.

Pot stocks have been surging in value this year, as investors have warmed up to growth stocks in general. This is due to hopes that interest rates will come down, making it cheaper for companies to borrow money and grow their businesses.

The AdvisorShares Pure US Cannabis ETF (MSOS), which invests in multistate marijuana companies, has soared nearly 40% since the start of 2024. So, is this a sign that it's time to jump into pot stocks?

Are Pot Stocks Still Too Cheap?

While pot stocks have become more attractive due to their low valuations, they haven't exactly been great investments in recent years. Over the past three years, many pot stocks have seen their valuations decline by more than 60%.

However, there's still the expectation that the global pot market will experience significant growth. Researchers predict that the global cannabis industry will grow at a compound annual growth rate of more than 34% until 2030.

This long-term potential could entice investors to take a chance on some of these stocks, especially as other growth stocks may be overvalued.

Why Are Cannabis Investors Feeling Bullish?

There are a few reasons why cannabis investors are feeling more optimistic these days. First, there's speculation that marijuana reform could be on the horizon. The Drug Enforcement Administration (DEA) is considering rescheduling cannabis, which could make it easier for businesses to operate in the legal marijuana industry.

Additionally, Florida may have the opportunity to vote on legalizing marijuana for recreational use in November. This could be a big boost for Trulieve, a cannabis company with a large presence in Florida.

However, it's important to remember that neither of these developments is guaranteed to happen. The DEA may not reschedule cannabis, and Florida may not legalize recreational marijuana.

Should You Invest in Cannabis Stocks?

Pot stocks haven't been great investments in recent years, but there is undoubtedly a lot of growth potential in the industry. If you're willing to take on the risk and uncertainty, there could be an opportunity to generate some promising gains from pot stocks.

Investing in a fund like the AdvisorShares Pure US Cannabis ETF can be a good way to gain exposure to the U.S. cannabis market. However, investors should be careful not to assume that the current rally will last or that significant reform at the federal level will take place in the near future.

Ultimately, the decision of whether or not to invest in pot stocks is up to you. Consider your risk tolerance and investment goals before making any decisions.

Key Takeaways:

• Pot stocks are on fire! They've surged in 2024, fueled by hopes of lower interest rates and potential reform (rescheduling by DEA, Florida legalization).
  
  
• They're still cheap, but that doesn't mean they're risk-free. Their valuations have been declining and past reforms haven't always panned out.
  
  
• Long-term growth potential is promising, with estimates suggesting a 34%+ annual growth rate for the global market.
  
  
• Consider ETFs (like MSOS) for diversified exposure, but don't bank on immediate federal legalization or guaranteed gains.
  
  
• Think carefully before investing. It's a volatile market with high highs and low lows.
  
  
• Don't invest more than you can afford to lose.

Bonus takeaway: Buckle up for a wild ride! This market is like a Cheech & Chong movie – fun, unpredictable, and potentially rewarding for the bold.

 

Disclaimer:

I am not a financial advisor and this is not financial advice. Please do your own research before investing in any stocks.

 

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Sources:

https://misfithustle.com/why-i-am-involved-in-cryptocurrency/

https://www.fool.com/investing/2024/02/17/this-cannabis-etf-is-already-up-nearly-50-in-2024/