Stock market traders invest funds into a company, with the anticipation of receiving monetary returns from dividends as well as selling shares. Successful companies pay out dividends over long periods of time. There are several ways an investor can invest their monetary resources with the intent to build a future of financial stability. When investing in the stock market, it is best to create a diverse financial portfolio that consists of asset classes such as stocks, bonds, short-term, as well as long term blue chip investments international investments.
Investing in stock allows an investor to become a shareholder by purchasing shares from a corporation, which creates a regulated small percentage of ownership with specific rights from the invested company with the intent to receive cash flows from dividends. Becoming a shareholder in a company presents some advantages and disadvantages to becoming a shareholder in a company. A stockholder in a company has voting rights to elect the board of directors and then company’s board of directors decides the scheduling payment of dividends to the shareholders. In theory, it is assumed that when a company is generating substantial profits, the stockholder will receive dividend payments. Stockholders should be aware that this is not always the case however, since a company that is generating high profits may be reinvesting the profits in order to make the company grow. If that is the case the company’s board of directors can choose not pay shareholders. The stockholders in the company have no legal recourse if dividends are not received from the company (other than selling their stock). Corporate stocks have been created and utilized for company financing.
The new trend in investing has been coined the “Green Rush,” referring to cannabis related companies going public and the surging cannabis cash-cow market. The Marijuana market is growing financially due to hydroponic companies, distributors and vaporizer manufacturers generating increased revenue due to increased sales. A CNBC report stated that a Denver hydroponics wholesaler said his sales grew “tenfold in the last year.”
“There’s definitely a bubble,” he says, estimating that 90 percent of the growth is due to medical marijuana. The Marijuana business is reported to be booming. The Medical Marijuana Business Daily has estimated project sales within the Marijuana market to increase from $3 billion in 2014 to $6 billion in 2016. The use of marijuana has created an opportunity to boost cannabis related company sales. MSN Money reports that there are a few cannabis companies stocks to watch for 2014. Some profitable related marijuana companies range from vending machine companies, equipment suppliers, and marijuana consulting companies as well a marijuana research companies. Many of these small marijuana related companies are offering stock trade from Pink Sheets or Penny Stocks OTC, (over-the-counter market).
When it comes to stock trading with OTC markets, some markets are considered non-formal exchange markets. Pink Sheets and Penny stock trading are not allowed on the main stream trading exchange market due to company size or inability to file correct documentation with the SEC (Securities Exchange Commission). Pink Sheet trading is considered as a non-mainstream means of trading (they don’t need to meet minimum requirements to file with the SEC) and Penny stocks are traded stocks for less than $5 per share and include increased risk to investors. Business Week also mentions that Pink Sheet OTC markets, merit some caution, due to their home of investment scams and stock in companies that are bankrupted.
Marijuana related companies with significant growth have thinly-traded shares and exchange on Penny Stock and Pink Sheet OTC exchange market. In recent news, there has been an investor warning alert for investors about Marijuana Stock Scams. Fraudulent marijuana related companies have been targeting investors about trading activities with the company. The Financial Industry Regulatory Authority, states the scams works by an investor investing in shares of stock and when the share prices and volumes reaches a certain peak, the dealer behind the scam sells off their share for a profit, resulting in investors having worthless stock.
Forbes highlighted a pot stock from a well-known marijuana based company CannaVest, which is the world’s leading hemp-based investing company that is valued at $1.8 billion, how it has thinly-traded shares trading on Pink Sheet exchange market. In addition Forbes has highlighted that the SEC plans continue the temporarily halted on trading of a pot stock for Denver-based FusionPharm, and GrowLife Advanced (PHOT) because the company’s shares because of “potentially manipulative transactions in PHOT’s common stock.” On the SEC website they listed other marijuana-related companies Irvine, Calif.-based Cannabusiness Group Inc., Woodland Hills, Calif.-based GrowLife Inc., Colorado Springs-based Advanced Cannabis Solutions Inc. that recently had their stock trading suspended until certain reporting requirements are met by these companies. The SEC’s primary goal is to have companies disclose accurate financial information to the public about the company with an attempt to provide a fair and maintained system as well as prevents fraud for investors. When companies enclosed accurate information about their financial well being, it allows investors to make informed decision whether to buy, sell or hold on to the stock.
Anyone considering investing should understand the market they are investing in, gather information to perform thorough research on the company’s financial history, as well as give an accurate projection of the company’s future longevity. It is known that stock investing in any market is very volatile and comes with increased risk. When attempting to invest in marijuana related company stock, research and investigate the company get sound information as it relates to the company and its profitable growth. Understand that marijuana stocks are fairly new and have just recently began. Inexperienced investors should be aware of misleading and false “come-ups” suited for the naive investor, who is trying to strike it rich quick. A true investor understands that with any market an investor has to willing to take the risk and be willing to accept the lost. Extensive investigative research of about the company of interest should be considered. When investing in a company, consider researching the company’s background, financial history, and current financial transparency as well as what is the company’s longevity and opportunity for continual growth.
It’s important to note that currently on the stock market, there are only hemp-based companies or ancillary related companies being traded. As marijuana is still a Federal Schedule 1 Drug, any company directly related to the sale of marijuana or a THC infused company cannot go public at this moment in time.
BY PRINCESS JORDEN