According to an in-depth analysis conducted by Stansberry Research, it’s time to consider legal marijuana as an investment strategy. Given the popularity of legalized marijuana, the sales are now a potential boom or bust for investors. But not so fast; before you invest all your available resources; first you need to consider the marijuana market as a valid cash producing sector. Like all other profitable stock, “supply and demand,” determines the price of stock. Supply and demand responds to cycles. Meaning that the stock could rise dramatically one cycle and fall the next. Unlike other commodities, marijuana as a profit generating stock can correct any price imbalances that occurs. Why? Because prices are dictated by supply and judging from the number of dispensaries opening up everyday, there will never be a shortage.
Typically, supply and demand is more complicated than Economics 101. Stock prices rise or fall based on the demand for more supply. With other single commodities it takes a lot to correct the imbalances. Because first you have to figure out why the demand decreased. Then take a look at the capital markets to calculate how much supply will be needed to meet future demands. This is based on traditional stocks and individual commodities the fall when things don’t correlate. Lack of correlation is just another way of saying, stock price devaluation. The result is a commodity that’s been overproduced without demand and the price drops really low.
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