Acts of legislative bodies (and administrative agencies that make rules and regulations) can have a serious impact on the profitability of companies. Some sectors are heavily regulated, and companies such as those that make drugs are constantly concerned with new and different regulations. At present, there is much talk on Wall Street concerning “marijuana stocks.” Many states have passed medical marijuana laws, and some have decriminalized recreational use. Many investors are speculating that this trend will continue and that the federal government will eventually legalize it as well. Obviously, these stocks face immense legislative risk.
Last Modified: 06/26/2018