BALTIMORE, MD — Since the beginning of 2002, the major American indices have posted modest gains. The Dow Jones has tacked on a healthy 22.5% while the NASDAQ and S&P 500 have gained 22.3% and 22.2% respectively.
And while those gains aren’t bad…they’re not even in the same ballpark as Canada’s TSX Venture Exchange (TSX-V), which has laid claimed a 200%+ increase over the same period of time. Just take a look:
As you can see, the growth of TSX-V flat-out embarrasses the three major U.S. indices. Truth is, the TSX-V has outperformed the Dow, NASDAQ, and the S&P 500 by about 9 times!!
And what about other major global indices?
Forget about it.
The TSX-V spanked the pants off of all the world’s major indices. Over the past five years the Venture Exchange is up:
- 10.3 times higher than England’s FTSE 100;
- 10.1 times higher than France’s Cotation Assistée en Continu 40 (CAC 40);
- 6.7 times higher than Germany’s Deutsche Aktien Xchange 30 (DAX 30);
- 3.2 times higher than Japan’s Nihon Keizai Shimbun 225 (Nikkei 225); and
- 2.9 times higher than Hong Kong’s Hang Seng
With the index gaining 202.5% in just five years, you can just imagine the kinds of eye-popping returns some of the individual companies on the TSX-V have posted. Some of these include:
- CV Technologies Inc. – a gain of 9,301.3% in under three years;
- Seabridge Gold Inc. – a gain of 2,764.3% since April 2002;
- Energy Metals Corp. – a gain of 5,858.3% since September 2003;
- ECU Silver Mining Inc. – a gain of 5,983.3% in under three years;
- Laramide Resources Ltd. – a gain of 7,403.1% since May 2004;
- Exxel Energy Corp. – a gain of 7,217.7% in under a year; and
- Mega Uranium Ltd. – a whopping gain of 14,880.7% since June 2003
Just so you know…had you invested a modest $10,000 in each of these companies before they made their big moves, your net profit would have been over $5.27 million!
Now, before we go any further, let’s take a step back.
What is the TSX Venture Exchange?
Owned and operated by the TSX Group, the TSX Venture Exchange is a public venture capital stock market that is designed for junior issuers that are still developing their businesses.
The majority of the companies listed on this exchange are still very early-stage type deals and present ground-floor opportunities for investors. In other words, the TSX-V is essentially the nebula where tiny companies with big ideas are born to become the next market stars. What this boils down to is an attractive risk/reward to ratio that is difficult for most investor to pass by.
With high-quality standards the TSX-V provides a fair marketplace where growth companies can raise capital to develop and market their products and services. The listing and governance standards are not as rigorous as Toronto Stock Exchange’s or as the Sarbanes Oxley rules in the U.S. So our standards are lighter than TSX’s and SOX. But nor are they as unregulated as either the OTC markets in the United States or AIM in London.
While TSX Venture continues to demonstrate its strength in attracting resource companies, TSX Venture’s approximately 2,200 issuers represent a diverse mix of industry sectors, including industrial, life sciences, technology and financial services.
So, overall the TSX-V is one of the most exciting exchanges in the world today and – as we talked about earlier – one of the most profitable of the century so far.
Well, it’s simple: It’s all about energy and minerals.
Truth is, over 60% on the companies listed on the TSX Venture Exchange are involved in either the energy or minerals business.
And the continual rise in energy and metal prices over the past five year has propelled the TSX Venture Exchange more than anyone could have imaged.
So the big question now is, ‘is the party over?’
On the surface it might seem that such a run-up is destine to be followed by a sharp and sudden correction. But digging just a bit deeper, you easily see that the rally isn’t over by far. And you’ll see that this ‘party’ is just getting started.
You see, the massive momentum behind the energy and metals story is kindled by global demand. And the demand for these commodities – as we all know – is going through the roof. And the companies involved in the energy and mineral industry are coiled for a perfect storm of profits.
Now, in general the supply/demand story alone virtually ensures that quality energy and metal companies have nowhere to go but up.
But that’s just the beginning…
On top of the supply/demand factor, the fact that the Canadian dollar continues to rally – coupled with the impending decline in the U.S. dollar – will only push the TSX Venture and the companies that are listed on it higher in the coming years.
The strength of TSX Group is reflected in the broader strength of the Canadian economy. For eight consecutive years, Canada has been the only G7 country with a federal government in budget surplus. Furthermore for the past five years, employment in Canada has been growing while inflation rises more slowly.
Canada’s economy is broadly diversified with key strengths in manufacturing, financial services and life sciences. Add this to Canada’s diverse resource base and you can begin to understand Canada’s immense advantages in the global competition for investment and economic activity. And this is essentially why the Economist Intelligence Unit has named Canada the best country in the world to do business in through 2008.
For investors the TSX Venture Exchange offers massive leverage and should be a major part of any portfolio as the commodity bull market is still in full swing.
Until next time,