Dan Caplinger, The Motley Fool
Investing booms often lead to busts, and for recent investors in marijuana stocks, October felt like a rude awakening. Even though investors had looked forward to the legalization of recreational cannabis in Canada, a big plunge in the broader market brought about a downturn that sent key marijuana stocks plunging.
Yet in the course of evaluating a stock portfolio, it’s important not to let short-term results have too much influence over your long-term vision. One way to avoid letting your emotions get the better of you is to realize that even after a big pullback, those who’ve been committed to a particular investment often still end up ahead. That’s been true for key players in the cannabis industry, and it’s far more important to look at the fundamental performance of companies than at share-price fluctuations in deciding whether to hang on to a particular stock or move on to greener pastures.
An ugly October for cannabis stocks
October was definitely not a good time for stocks in the marijuana industry. Excitement about the imminent opening of the Canadian cannabis market helped to sustain momentum for major players like Canopy Growth (NYSE: CGC) and Cronos Group (NASDAQ: CRON), and the recent IPO of Tilray (NASDAQ: TLRY) continued to draw attention because of the stock’s extreme volatility. Many investors looked to the mid-month listing of Aurora Cannabis (NYSE: ACB) on the New York Stock Exchange as a potentially momentous occasion that would drive further gains for marijuana stocks.
But the combination of a broader market correction and a “sell the news” mentality after cannabis became legal in Canada led to dramatic declines. All four stocks ended the month down by roughly a quarter to a third…