The NASDAQ of marijuana produces better returns than the S&P 500

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Returns on marijuana stocks are blowing away those of other investments

It’s been two years since marijuana stocks really started making a name for themselves, but the results lately have been phenomenal. Getting past the volatility of the nascent market, stocks are settling down and growing at a regular rate. Overall, the outlook is good and one particular vehicle in the market is showing just how strong marijuana stocks have become.

The Marijuana Index, which is essentially the NASDAQ of marijuana stocks, was sitting at $113 on October 26, 2017. By January 23 of this year, it had risen to $363.

By way of comparison, an investment in the S&P 500 in October 2017 would have yielded a return of just 9.78% by last October. An investment in the Marijuana Index resulted in a return of 158% over the same period. That means the return on a marijuana investment is 16 times higher than that of an established trading vehicle that has been around since 1957. While the Marijuana Index hasn’t seen that same level of growth, it is still outperforming the S&P 500.

The index is weighted equally among 16 companies that maintain at least 50% of their operations in the marijuana industry. Those businesses must maintain a trading score of 20 over the previous quarter, which is calculated based on a weighted average of individual scores of each company in the index. Those scores are reassessed daily and are calculated on market cap, share price and daily trading volume.