TD Ameritrade is cautioning financiers to avoid the growing cannabis market.

“The cannabis and marijuana market– in some cases described as the Wild West of investing– is cluttered with high-flyers, possibly over-valued business, and even frauds,” the stock brokerage company stated in a three-minute video published on its Youtube account.

Young traders have gathered to equip trading apps from business like Robinhood and TD Ameritrade to capitalize the buzz around cannabis stocks.

TD Ameritrade, nevertheless, is cautioning financiers to be careful. They compared the craze around popular cannabis stocks like Canopy Development and the NASDAQ-listed Tilray to other market bubbles, like the dot-com boom of the early 2000 s and the real estate market collapse in2008


“As cannabis relocations from the black market to the stock exchange, the possible chance is simple to see,” the young professional-looking male in the video stated. “This enjoyment combined with a hazy regulative outlook suggests severe volatility and high-risk for financiers.”

For instance, Tilray— which was the very first Canadian cannabis manufacturer to go public on the NASDAQ– saw its shares skyrocket 93% in on September 19 prior to quiting all of its gains. The Securities and Exchange Commission (SEC) stopped Tilray’s trading for volatility 5 times in a single day of trading.

The stock is up over 600% given that the going public in July

“It’s tough not to see Tilray’s chart as a book example of a market bubble– a poster kid for the worry of losing out on the next huge thing,” TD Ameritrade stated.

Tilray did not right away react to an ask for remark.

The SEC provided a caution in September too, stating financiers need to know the dangers of scams and market control in the nascent sector.

“Scammers might attempt to utilize media protection about the legalization of cannabis to promote a financial investment fraud,” the SEC stated.

It’s vital to “do your research” if you wish to buy cannabis stocks, or a minimum of know the high danger, TD Ameritrade stated.

“Think about waiting up until the market has actually grown prior to investing,” the video stated.

Not all financiers believe the craze around cannabis stocks is a bubble.

Famous short-seller Andrew Left is developing out a fund to concentrate on both long and brief plays in the cannabis sector.

“There’s an apparent fascination with financiers, however at the exact same time it’s an area that’s open for buzz,” Left informed Service Expert in a current interview “So I believe it’s extremely hard for some financiers to understand the genuine gamers.”

Watch TD Ameritrade’s video here: