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Marijuana Stocks: How to Start Investing in Pot’s Explosive Growth

Matt McCall

YOLO.

marijuana leaf

Source: Shutterstock

That acronym for “you only live once” is now an official word in the English language. Texters and social media posters used it so much that it was added to the Oxford English Dictionary three years ago.

I must say, I got a chuckle out of the definition. According to the dictionary, YOLO expresses “the view that one should make the most of the present moment without worrying about the future, and [is] often used as a rationale for impulsive or reckless behavior.”

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Leave it to the dictionary to take all the fun out of it.

Believe me, I’m all for making the most of the present, but I don’t believe we should have a carefree attitude about the future. Especially when it comes to retirement. We need to prepare for it. And when it comes to your financial future, you definitely do not want impulsive or reckless behavior.

That’s especially true when investing in marijuana stocks, which are unquestionably one of the best investment opportunities of our lifetimes. You can get really burned if you’re impulsive or reckless.

I bring this up because YOLO is actually a ticker symbol for a recent marijuana-related exchange-traded fund (ETF) called the AdvisorShares Pure Cannabis ETF, which debuted in April.

As legalization spreads and the industry grows, cannabis ETFs are in the midst of their own marijuana craze. In just the last couple of weeks, three new funds have started trading or announced that they are about to: The Cannabis ETF (THCX), Amplify Seymour Cannabis ETF (CNBS), and Cambria Marijuana ETF (TOKE).

I must say, YOLO and TOKE win the best symbols award … at least for now.

These new funds have a long way to go to catch up with the leaders. ETFMG Alternative Harvest ETF (MJ) has $1.15 billion in net assets, while Horizons Marijuana Life Sciences Index ETF (HMMJ) is next with $788 million.

I get asked all of the time about marijuana ETFs, especially from people who are new to investing. Marijuana’s huge potential has attracted folks with less investing experience, so I created a special five-part video series “masterclass” on marijuana investing to show them how to get started and answer a lot of these kinds of questions.

So are ETFs good for marijuana investing?

Yes.

And no.

I know that doesn’t sound very helpful, so let me explain what I mean.

Get the Best of Both Worlds

Investing in a marijuana ETF is better than not investing in marijuana at all. If that’s what makes you comfortable, you should do it. I’d rather see you get at least some exposure to this incredible opportunity. At the moment, I like both the established Alternative Harvest ETF and YOLO, but the others are worth watching.

On the other hand, there is a better way to get all of the benefits of an ETF but make more money. You basically build your own smart ETF, a strategy we use often in my investing services.

Most ETFs hold dozens or even hundreds of different companies. They can give you diversified exposure to a sector or country, and they can be very useful investment vehicles.

However, because ETFs hold so many stocks, a buyer is virtually guaranteed to end up owning a lot of average companies — and even some crappy ones. You have to take the bad with the good. You can’t separate them.

But you can with your own ETF. By purchasing a handful of the best companies, you avoid owning the weak players. This gives you big upside potential while still providing you with diversification.

It’s a smart way to invest in big themes like marijuana. You get an excellent balance of risk and reward.

It’s not always possible to buy a basket in a sector. Sometimes, there aren’t many good individual companies trading at good prices in a sector at the same time.

That’s not the case with marijuana. The exploding industry is perfect for creating your own ETF.

There are bigger companies and smaller companies. Companies that grow marijuana. Companies that extract oils. Companies that own retail shops. Companies that recently went public. Companies jumping from small stock exchanges to big stock exchanges. Medical marijuana companies. Even marijuana software companies.

There are so many good cannabis opportunities that you should own enough stocks to build your own ETF anyway.

I find this approach helps investors who are leery of investing in marijuana or new to investing. Do me a favor and think about it.

Legal marijuana is slated to skyrocket from less than $10 billion today, into a $100 BILLION juggernaut. That makes it easily the biggest investment opportunity over the next few years. If you learn nothing else from me, I hope you will at least look into this once-in-a-generation opportunity. And if you need help getting started, just let me know.

Matthew McCall is the founder and president of Penn Financial Group, an investment advisory firm, as well as the editor of Investment Opportunities and Early Stage Investor. He has dedicated his career to getting investors into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA), +1,044% in Tesla (TSLA), +611% in Liquefied Natural Gas Limited (LNGLY), +324% in Bitcoin Services (BTSC), just to name a few. If you’re interested in making triple-digit gains from the world’s biggest investment trends BEFORE anyone else, click here to learn more about Matt McCall and his investments strategy today.

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