E The TSX Venture Exchange Got Crushed, Opportunities Are Endless

TM editors' note: This article discusses a penny stock and/or microcap. Such stocks are easily manipulated; do your own careful due diligence.

What's Ahead:

As 2016 is on our doorstep, we should be looking at what opportunities lie ahead of us. This short essay elaborates on the horrible performance of the Toronto Venture Exchange (TSXV) and why this actually brings about great buying opportunities. Take a look at the next chart, showing the TSX Venture exhchage at all time lows.

(Click on image to enlarge)

Whereas the US indices rose sharply in the past couple of years, the Canadian counterpart got hammered by almost 80%. Of course, the Venture Exchange is laden with mining stocks, which explains most of the selling. The index even reached a point now that its total market cap is substantially lower than at the height of the financial crisis in 2008! It has to be the most beat up developed country index.

But even during a collapse, it is possible to make money by very carefully pick your plays. SecretCaps has seen two of our TSXV picks double, while our other two long-term plays have stood their ground despite the TSXV's sell off, demonstrating their very solid foundations, backed by strong theses.

Why The TSXV Now:

Why exploring this index now? A rule of thumb is that when an index drops 80%, a bottom will more or less be hit. I've seen indices double or triple soon after such a bottom. The solar index (TAN) crashed 80%, and then tripled. Akin for the Russian country index. Or the NASDAQ in 2003. A huge index crash actually reduces downside risk, because the market risk already materialised big time. Be a contrarian investor here. Even the good companies are dragged down during a multi-year bear market. At some point, the sellers are simply done selling. At some point, stocks trade at cash level, making a further slide completely illogical. It's about timing….and about conducting some thorough due diligence.

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Disclosure: 

Due Diligence Is Key:  Conducting due diligence takes a lot of effort. A vital element ...

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