Marijuana Stocks vs. Bitcoin: Which Asset Class Suits Your Investing Style?

Investing in high-risk assets tells a lot about your style. Is buying marijuana stocks, such as Canopy Growth Corp. (TSX:WEED), better for you, or should you bet on Bitcoin?

| More on:
The Motley Fool

If you are a risk taker, you might be wondering if you should bet on Bitcoin or marijuana stocks.

Investors in both asset classes have made a killing this year. The world’s biggest and best-known cryptocurrency, Bitcoin, hit a record high of $17,270 on December 12, registering a 20-fold jump in its price for 2017, as millions of new investors were lured by the value of this “digital gold.”

Gains in marijuana stocks are no match to the ones investors made in Bitcoin, but top weed stocks, such as Canopy Growth Corp. (TSX:WEED) and Aphria Inc. (TSX:APH) produced triple-digit returns, which are by no means normal.

Bitcoin and marijuana are two very different asset classes, but both attract investors who want to make a quick buck in highly speculative trading. Let’s find out which one matches your investing style


Market participants are divided over the digital currency’s utility, value, and safety. Some of the top minds in the financial sector are calling cryptocurrencies a fraud and a bubble which is bound to burst.

The world’s most respected stock picker, Warren Buffett, says Bitcoin might be a bubble in the making, as “you can’t value Bitcoin because it’s not a value-producing asset.”

JPMorgan CEO Jamie Dimon called cryptocurrency “a fraud” at a conference presented by CNBC and Institutional Investor. “It’s just not a real thing; eventually it will be closed.”

The self-made millionaire and best-selling author of Money: Master the Game says investing Bitcoin is just like going to Vegas, where you are prepared to lose your bet.

If you believe in the financial wisdom of these top minds, then it makes sense to stay away from this asset class. But if you’re willing to take the chance, then only bet the money you can afford to lose.

Marijuana stocks

When compared to cryptocurrencies, the marijuana industry is in a different speculative territory. There are two big drivers for very rich valuations, which some cannabis stocks enjoy.

One is about the potential legalization of weed in Canada by July 1, and the second is the size of the recreational market. There is no doubt that these companies will benefit once the legalization for the recreational use is in place, but there is still a lot of guesswork on the depth of recreational demand. The estimates of that market vary from $5 to $10 billion.

Having said that, the cannabis market is not that complicated when compared to cryptocurrencies. You are taking a big risk by buying marijuana stocks, but it is possible to make huge gains when the market is ready, and companies have the product to sell.

The biggest vindication for investors in this market came from the recent deal activity, which includes acquisitions, supply deals, and stake sales. Canopy was able to attract $245 million investment from Constellation Brands in October, when it sold its 10% equity stake to the company.

The bottom line

Investing in risky ventures is not forbidden. All you have to decide is how much are willing to lose if things don’t work out in your favour. Marijuana and Bitcoin are both in a bubble territory, but the one in the Bitcoin is of astronomical proportion.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Haris Anwar has no position in the companies mentioned.

More on Investing

Nuclear power station cooling tower
Energy Stocks

Why Shares of Cameco Are Powering Higher

Cameco (TSX:CCO) shares have surged more than 400% in the last five years alone, with more growth on the way.

Read more »

A bull outlined against a field
Stocks for Beginners

Bull Market Buys: 2 TSX Stocks to Own for the Long Run

Are you looking for stocks that could see a bull run for decades ahead? Here are two top TSX stocks…

Read more »

financial freedom sign
Dividend Stocks

Million-Dollar TFSA: 1 Way to Achieve to 7-Figure Wealth

Achieving seven-figure TFSA wealth is doable with two large-cap, high-yield dividend stocks.

Read more »

analyze data
Dividend Stocks

How Much Will Manulife Financial Pay in Dividends This Year?

Manulife stock's dividend should be safe and the stock appears to be fairly valued.

Read more »

food restaurants
Dividend Stocks

Better Stock to Buy Now: Tim Hortons or Starbucks?

Starbucks and Restaurant Brands International are two blue-chip dividend stocks that trade at a discount to consensus price targets.

Read more »

Diggers and trucks in a coal mine
Metals and Mining Stocks

1 Canadian Mining Stock Worth a Long-Term Investment

Cameco (TSX:CCO) stock could be a great long-term investment for Canadian growth seekers.

Read more »

Pot stocks are a riskier investment

Could Investing $10,000 in Aurora Cannabis Stock Make You a Millionaire?

Let's dive into whether Aurora Cannabis (TSX:ACB) could be a potential millionaire-maker stock, or a dud, over the long term.

Read more »

stock analysis
Energy Stocks

Is Enbridge Stock a Good Buy in May 2024?

Boasting high-yielding dividends and a stable underlying business, Enbridge (TSX:ENB) might be a great buy for your self-directed investment portfolio…

Read more »