Putting all your eggs in one basket
Many first-time cannabis investors focus on just one or two prominent companies which attract favorable media coverage. This strategy is fraught with risk, particularly in the marijuana sector where many of the companies lack business experience. If you own just one stock and its price slides by 50 percent (not uncommon for pot stocks), the stock must now double in order to offset your losses. If you had multiple stocks, the loss in one stock would not have such a deep impact on your entire portfolio. First-time cannabis investors often have limited funds and they focus on a smaller number of stocks to minimize commission costs. But the right strategy would be that an investor with, say, $10,000 to invest would be to choose 10 different stocks.
