Vancouver, British Columbia, December 7, 2012 - A new feature on the Investmentpitch.com website is the weekly video "How I See It" by Ted Ohashi. This week Ted discusses why he believes the 47% decline in the TSX Venture Exchange Composite Index, over the past two years, may be near an end
This latest segment of "How I See It" is available for viewing. If this link is not enabled, please visit www.InvestmentPitch.com and enter "How I See It" in the search box.
Firstly, Ted says that the index itself may have a downward bias because on average some 40 to 50 stocks a year move up to the more senior Toronto Stock Exchange. In other words, the Venture Composite Index loses a large number of its best performers each year.
Secondly, with all the concerns facing people today, investors are in a risk off mode. During such times, they naturally reduce their holdings of higher risk, smaller cap stocks.
Ted points out that most markets around the world are up this year led by markets such as Germany and India that are 25% higher. One of the notable markets that is lower is China.
The decline on the Venture Exchange has been fuelled by economic concerns that have depressed resource markets, with resource and resource related companies comprising the majority of issuers on the Venture Exchange.
Even gold, at the currently lofty price near $1,700 is down more than 10% from its peak in late 2011.
Finally, Ted points out that an investor`s favourite form of transportation is the bandwagon and selling has spawned more selling.
Many of you may remember that the last time the TSXV had a decline of this magnitude was in 2007 - 2009 when the index was down 80%. After that decline, the market rebounded 300% in the next two years. Could we expect the same performance over the next couple of years?
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