True Story: How I Lost Money Investing In Cannabis Stocks

I talk with a lot of investors on a day to day basis. Sometimes it’s just one or two messages, and sometimes long dialogues that can span days, weeks or months. This particular investor who shall remain nameless agreed to share their experience with cannabis stocks to potentially help someone else engaging in the same kind of behaviour. We also agreed to keep specific company names out of this.

The moral of the story: do your due diligence and don’t chase the market

Anonymous:

I sat there for hours just refreshing the screen, almost thinking that through willpower I could make the price go up. I knew logically that was impossible, but I kept doing it. Even worse, every few minutes I would check the other stocks that I almost bought, if they were red I felt good, if they were green I felt like I missed out. I did this over and over again. Time and time again and each time I would be left with buyers remorse. I would also check stocks after I sold them to see if I would have money if I had decided to hold, often times it would have been wise to hold.

If I bought 1 company there were really 3 or 4 I was looking at, and if I bought 3 there were really 5 or maybe 10, so each time I made the mistake of comparing my moves right from the start. It’s like when you buy clothes and instantly regret it, it felt like that every-time, and if I bought all the stocks I researched I would be spread too thin.

I recently saw the Warren Buffet documentary on HBO, the one where he buys McDonalds meals based on how well the market is doing that day, kind of hilarious. From there I found some of his other interviews and YouTube and realized I was doing everything wrong. I thought that because I liked a certain company that it meant others probably did too.

If I found something positive I assumed everyone else would find it too, sometimes thinking I was ahead of the curve. This was a big mistake. What I learnt from watching Buffett interviews was that I was chasing trends, even within cannabis. Then I was reacting to the news instead of really making a plan, and almost every-time I followed the trend I got in too late and ended up taking a loss several times.

I also fell victim to the gamblers fallacy, which means I correlated past events with future events, I was wrong about that, but, my luck is sure to turn at some point and this particular company is on a great run, so I may as well get in now as it’s going up. I kept doing this over and over again thinking my luck would change as if this stuff is based on chance. I saw other people in forums bragging about how they picked the right stocks at the right time and I thought I could be one of those people, but, in the end it rarely worked out. Once in a while I would pick a good one, and I would remember that and try and forget the ones that didn’t work. But the times it didn’t work outweighed the times it did when I look back on it. Selective memory I guess.

I didn’t lose a ton of money thankfully, and I think the market will recover by summer once legalization comes. What I plan on doing during this colder period is to do more research and try to not base my buying decisions on chasing something, rather I want to build a long term plan that I can stick to and not buy/sell based on emotion.

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