Some of the most high-flying marijuana stocks have gone up in smoke since topping out around this time last year. Indeed, marijuana stocks that once put up gains of more than 3,000% have given up as much as 98% from their year-ago all-time highs.
Don’t say we didn’t warn you.
Marijuana stocks always were high-risk, not to mention dodgy. After all, they trade on the over-the-counter market (OTC).
Sure, there are some legitimate companies trading OTC — notably American depositary receipts of large foreign concerns like Nestle SA (OTCMKTS:NSRGY) or Samsung Electronics Co. Ltd. (OTCMKTS:SSNLF), to name just a couple.
There are legitimate reasons to trade OTC. If these companies listed on a major exchange, they would have to prepare two sets of financials — one according to U.S. accounting standards, and one for international standards. It also helps keep out activist investors — ADRs don’t have voting rights — or any other U.S. entity looking to build a big stake in their firms. [Read more at Investor Place]