It’s been just over one year since the legalization of marijuana in Canada and I’m not sure how many times during the past year I’ve been asked by a client if they should buy pot stocks.
In many ways it reminds me of the Bitcoin frenzy two years ago. The price of bitcoin skyrocketed to $19,475(1) on December 17, 2017. The media was filled with ongoing headlines about the massive price increase and how much money was being made. I remember seeing numerous full-page ads from an online financial company that markets to millennials promoting how easy it is to “invest” in bitcoin using their app.
Almost exactly one year later, on December 16, 2018, the price had dropped to $3,236(1). That is a drop of in excess of 80% in one year.
Naturally, there are always a few people who get lucky and manage to make money during these speculative bubbles, but the great majority lose, and many (most?) lose big.
Not too unsurprisingly, marijuana stocks have suffered much the same fate during the past year with many of the largest marijuana ETFs losing more than half of their value.
What lessons can we learn from bitcoin, marijuana and other investment fads? The investment greats teach us their proven ways to avoid messing up with your portfolio and how be a better investor:
- Avoid the media,
- Don’t look at your investment statements too often,
- Build a wealth management plan based on your goals and stick with it
Simple advice, right? Simple, but not always easy.