13 Mistakes Cannabis Investors Should Avoid

Avoid these mistakes when investing in marijuana stocks.

It’s been a good year for marijuana investors, with many of the largest U.S.-listed marijuana stocks up 30% or more year-to-date. When the market is hot, making money can seem easy to investors. A rising tide and positive momentum can make it seem like cannabis investors can do no wrong. In reality, strength in the cannabis stock group may actually be helping to mask some common mistakes cannabis investors are making. Big returns in the marijuana space won’t always be so easy. Here are 13 investing mistakes for cannabis investors to avoid.

Not enough diversification.

With cannabis stocks like GW Pharmaceuticals (ticker: GWPH) and Canopy Growth Corp. (CGC) showing big returns, it’s tempting to increase portfolio allocation to cannabis stocks. However, the more concentrated a portfolio becomes, the more risk is created. If anything, cannabis investors should consider rebalancing their portfolios by selling some of their stocks that have performed best this year. Given the extreme volatility among cannabis stocks and the high risk associated with such early-stage growth companies, it’s wise to diversify into a basket of cannabis stocks or a cannabis ETF rather than focusing on one or two companies.