A reader and friend of mine since high school wrote to me the other day asking for my opinion on Marijuana Stocks and if she should buy some or not. I appreciated the question and was happy to give her my opinion and advise. Marijuana stocks have come to light with investors due to the recent legalization of marijuana for recreational use in Colorado. So I thought this would be a good topic to address with my readers and site members as well.
Marijuana stocks have been on the market since the legalization in many states that have approved it for medical use. Things such as glaucoma, arthritis, ADHD, pain issues not well controlled by conventional methods and those not eligible for surgery for treatment. It was not until a few weeks ago that it was legalized for recreational use in one state, Colorado. Do remember that Federal Law still prohibits the use of marijuana and the clash between State Government and Federal Government has yet to take place to see how long these State Laws will be allowed to remain.
In the thoughts of purchasing Marijuana Stocks for your portfolio there are many other issues to consider too. Questions like, will these stocks benefit my portfolio? Are you willing and able to loose your investment if things turn bad for this very small sector in the market? Have you done your homework and evaluated your risk? Are you savvy in the market and have a good knowledge and portfolio that includes various other individual stocks? If your answer is "NO" to any of these questions you should not buy marijuana stocks. All you would be doing is buying them for a novelty to tell your friends you own stock in a marijuana company. Novelties do not make you money in your portfolio.
Other things we have to consider. We currently only have one state, Colorado that has approved recreational marijuana for use. It is tightly restricted with amounts you can purchase. Not every city or county in the state is allowed to sell it. And it is illegal to cross state lines with it and bring it home with you if you live in a state outside of Colorado. Who in the future will jump on the band wagon and join Colorado in approving it for recreational use in their state and how long will this take? You know our political and legal system and things do not tend to move quickly. How many states might get on the wagon with Colorado and how many won't during your life time? Probably not many. Remember we have LOTS of conservative Red Republican states and lots of states with the good ole Bible Thumpers. Many states still won't embrace the Supreme Court Ruling regarding gay rights. They are rewriting their state constitution and doing everything they can to fight the ruling. Such states like Utah and Indiana. So don't bet money that recreational use of marijuana is going to go over well with too many states. What states might sooner or later jump on the wagon in follow in Colorado's footsteps? Perhaps Massachusetts, Washington DC, Minnesota, Florida, California. I think it could be possible in the far future for Arizona, Rhode Island, and perhaps Iowa or Hawaii. But that is only a guess and your guess would be no better than mine.
If you are hell bent on adding a marijuana stock to your portfolio now would be the time. After other states follow in Colorado's footsteps (if they do) the timing would be too late. If you are one that feels you are willing to take the risk my suggestions would be marijuana stocks such as CANV, CBIS, and HEMP.
Will you find any such marijuana stocks in my portfolio? The answer is simply "NO"! First of all these types of stocks are all OTC or Pink Slip stocks, which I refuse to deal in due to their risk factors. Look at it sensibly. If they were worthy stocks they would be on the NASDX or NYSE. Of course there are a couple of OTC stocks that do not fit the normal rule such as Rolls Royce (RYCEY). With the uncertainty of the future for marijuana stocks I am not sliding them into my portfolio. I think there are a lot better things I could steer you to in the Healthcare Industry than something like marijuana stocks. Such as Rite Aide Pharmacy (RAD) which is up 77.5% since August 2013 (In my portfolio). Forest Labs (FRX) up 59% since August 2013, Bristol-Myers Squibb up 26.5% since August 2013 or how about Gilead Sciences (GILD) up over 48% in 2013. For you mutual fund investors the best healthcare mutual fund hands down is T. Row Price Health Sciences (PRHSX) which is up 51.40% for 2013. I just feel there is a lot more opportunity to make money in 2014 than a marijuana stock and I am sticking with those stocks on the NASDX and NYSE that have proven track histories over the years and in the long haul. I think you will find this to your advantage as well for your portfolio.
I also welcome any of your questions or comments to my blog entry. Always feel welcome to do so.
Gus S.
Disclaimer:
Make sure to review any information found on this blog site with your personal financial advisor before making any decisions. I am providing general information and not financial advise. I am not a licensed stockbroker or financial advisor.
Friday, January 17, 2014
Monday, January 6, 2014
Where is the Stock Market Going in 2014?
First of all I do not have a Crystal Ball. I can only share with you my personal beliefs, personal research and the research, articles and comments by the so called "experts". With that said I tend to agree with the so called "experts" for the upcoming year.
We are set for an upward trend in the market for 2014. But don't hold your breath waiting for another year like 2013 in 2014 or several years down the road. I see Individual Stocks doing much better than Mutual Funds. But not so much better that they warrant inexperienced investors to leap into the individual markets. Both individual stocks and mutual funds will both rise over 2014, but nothing like in 2014. The uphill climb will continue, but at a much slower pace. Those that have starting investing in individual stocks I warn to stay away from "most" pharmaceutical companies. If you want a good pharmaceutical diversification in your portfolio I suggest a good mutual fund like PRHSX. I am staying away from Pfizer (PFE). But if you want a better choice and what some Pfizer in your portfolio I am going to suggest Zoetix (ZTS). This is Pfizer's Pet Medication company which is growing, but you need to be in this one for the long haul and it has had it's ups and downs. I just don't feel most pharmaceutical companies are the place to be in 2014 due to most all of them have no new or exciting drug releases on the burner and without that, one big lawsuit on one of their existing drugs will kill you with the that stock holding. If you are looking for Individual Stocks, there are going to be some good buys to make, but you are going to really have to hunt and research to find them. If you are looking at Individual Stocks in the list of the DOW 30 my suggestions are 3M who has been killing it and I think will continue to climb about 20% more in 2014. I would also be looking at Boeing and Caterpillar to do about the same. Another good consideration is Walt Disney and Intel. There are a couple of others that have some good potential, but I am for sure staying away from Pfizer, Wal-Mart, Johnson and Johnson, and Proctor and Gamble.
What about the Mutual Funds? I am sticking with Large Cap and Small Cap funds for 2014. The growth will be slow but I think these are your best choices over most other mutual fund sectors. Can you look at mutual funds with bond holdings in them? I am going to say yes for 2014 with caution and moderation. I would not go with a mutual fund that has more than 20 to 25 percent in bond holdings and the stocks in the mutual would have to be real winners.
What about Bond Funds? Well, I pretty much answered that question all ready. A mutual fund made up entirely of bonds I am going to stay far away from for 2014. Although interest will continue to climb, I still think there are better places to invest your money. I don't foresee Bonds playing a significant roll in 2014.
What about CD's and Annuities? Not even a viable option in 2014 for any investor at any level. Interest rates will not go up significantly enough to help them. Also CD's and Annuities interest rates are slow to be raised by banks and insurance companies. I cannot recommend them for 2014. A better option for those who are very conservative investors is a good balanced mutual fund or conservative managed account through your financial advisor. J P Morgan Chase has some excellent Managed Account options.
What about Precious Metals? I think we are going to see much the same with Silver, Gold, other precious metals and the companies out there that mine them. I don't think that they are going to do a whole lot for your portfolio in 2014, but the prices are low right now and interest rates are starting to go up and that is the prediction for the future. Buying Gold and Silver in small amounts in your portfolio may be viable as interest rates climb again, but you are going to be waiting a few years to cash in. So I see it as a long term investment that you are going to have to hold for several years in your portfolio to see a good profit.
I hope this information is helpful to you for 2014. Hope we see better come year end than what I am seeing now. Only time will tell.
Gus S.
Disclaimer: Make sure to review any information found on this blog site with your personal financial advisor before making any decisions. I am providing general information and not financial advise. I am not a licensed stockbroker or financial advisor.
We are set for an upward trend in the market for 2014. But don't hold your breath waiting for another year like 2013 in 2014 or several years down the road. I see Individual Stocks doing much better than Mutual Funds. But not so much better that they warrant inexperienced investors to leap into the individual markets. Both individual stocks and mutual funds will both rise over 2014, but nothing like in 2014. The uphill climb will continue, but at a much slower pace. Those that have starting investing in individual stocks I warn to stay away from "most" pharmaceutical companies. If you want a good pharmaceutical diversification in your portfolio I suggest a good mutual fund like PRHSX. I am staying away from Pfizer (PFE). But if you want a better choice and what some Pfizer in your portfolio I am going to suggest Zoetix (ZTS). This is Pfizer's Pet Medication company which is growing, but you need to be in this one for the long haul and it has had it's ups and downs. I just don't feel most pharmaceutical companies are the place to be in 2014 due to most all of them have no new or exciting drug releases on the burner and without that, one big lawsuit on one of their existing drugs will kill you with the that stock holding. If you are looking for Individual Stocks, there are going to be some good buys to make, but you are going to really have to hunt and research to find them. If you are looking at Individual Stocks in the list of the DOW 30 my suggestions are 3M who has been killing it and I think will continue to climb about 20% more in 2014. I would also be looking at Boeing and Caterpillar to do about the same. Another good consideration is Walt Disney and Intel. There are a couple of others that have some good potential, but I am for sure staying away from Pfizer, Wal-Mart, Johnson and Johnson, and Proctor and Gamble.
What about the Mutual Funds? I am sticking with Large Cap and Small Cap funds for 2014. The growth will be slow but I think these are your best choices over most other mutual fund sectors. Can you look at mutual funds with bond holdings in them? I am going to say yes for 2014 with caution and moderation. I would not go with a mutual fund that has more than 20 to 25 percent in bond holdings and the stocks in the mutual would have to be real winners.
What about Bond Funds? Well, I pretty much answered that question all ready. A mutual fund made up entirely of bonds I am going to stay far away from for 2014. Although interest will continue to climb, I still think there are better places to invest your money. I don't foresee Bonds playing a significant roll in 2014.
What about CD's and Annuities? Not even a viable option in 2014 for any investor at any level. Interest rates will not go up significantly enough to help them. Also CD's and Annuities interest rates are slow to be raised by banks and insurance companies. I cannot recommend them for 2014. A better option for those who are very conservative investors is a good balanced mutual fund or conservative managed account through your financial advisor. J P Morgan Chase has some excellent Managed Account options.
What about Precious Metals? I think we are going to see much the same with Silver, Gold, other precious metals and the companies out there that mine them. I don't think that they are going to do a whole lot for your portfolio in 2014, but the prices are low right now and interest rates are starting to go up and that is the prediction for the future. Buying Gold and Silver in small amounts in your portfolio may be viable as interest rates climb again, but you are going to be waiting a few years to cash in. So I see it as a long term investment that you are going to have to hold for several years in your portfolio to see a good profit.
I hope this information is helpful to you for 2014. Hope we see better come year end than what I am seeing now. Only time will tell.
Gus S.
Disclaimer: Make sure to review any information found on this blog site with your personal financial advisor before making any decisions. I am providing general information and not financial advise. I am not a licensed stockbroker or financial advisor.
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