Marc Smith, Financial Advisor
I use individual stocks for clients, so I'm open and supportive to investing in individual stocks. I put together a diversified portfolio of ~20-25 stocks because I don't like the highly concentrated risk of just a few companies or one specific industry. That said, Warren Buffett made himself a billionaire by using a highly concentrated theory. I highly recommend reading a few of Buffett's annual letters if you want to start investing in individual stocks. You can find them all here (https://www.berkshirehathaway.com/letters/letters.html) That all said, I wouldn't recommend you put more than 10% of your portfolio into a single company and definitely not one that is in a highly speculative industry.
When looking at whatever company you're considering, I think you need to have a view on where medical marijuana is going from a legalization standpoint nationwide. Then you have to have a view on whether the company you're considering buying is going to thrive in that market? Who else could come in and do a better job? If marijuana was legal in all 50 states, would Altria start producing? I dont know, but some large, well-financed companies could quickly get production going and crush a little company. Or maybe a large competitor would buy out the competition, potentially making it a good investment. How strong is management? Are they people with experience, learning in the fly, visionaries, etc. Management can often be the difference between a big success or big failure. A industry can thrive even though certin individual companies operating in that industry will fail. I would recommend doing a good bit of research and analysis before investing in a highly speculative sector. Best of luck to you.
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