With the exception of one special case, we have been seeing pullbacks across the pot stock market in the marijuana news today.
This isn’t, however, the cannabis industry’s fault. Instead, the larger malaise of the stock market in general is hurting the volatile, nascent industry harder than most.
The U.S.-China trade war was thought to be entering a detente as the two countries seemed to be reaching an understanding. The negotiations prompted a bit of a rally in the stock market, but that rally was short-lived. (Source: “Dow plunges 799 points on trade, slowdown fears,” CNN, December 4, 2018.)
Now we have stock market damage pretty much across every industry, with marijuana stocks hardly being immune.
Far from it; due to their inherent volatility, marijuana stocks are going to be some of the hardest hit.
That doesn’t mean investors should panic.
If we are indeed in for an economic slowdown following the U.S.-China talks (as some metrics would indicate, like the U.S. Treasury yield curve inverting, which has happened before nearly every recession in the past), then the marijuana stock market is going to be in for a rough ride. (Source: “The U.S. Yield Curve Just Inverted. That’s Huge.” Bloomberg, December 3, 2018.)
But the key thing to remember is that pot stocks are long-term buy-and-hold trades. At least they are if you want to eke out maximum value.
There’s still a ton of room left for development in the legal marijuana industry. This is, after all, a young product that is only legally available in a few select regions, but with a worldwide potential of dozens of billions of dollars.
The development of the pot industry is going to take years. That means we may very well see a few recessions or mass downward