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Long a buy and hold investor, I now believe that buy and hold has to be re-evaluated in a world of ever increasing, instant information and huge gyrations in markets all over the world. A value investor at heart, I anchor my portfolio with conservative funds and blue chip dividend stocks, but... More
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  • New Global X ETF Tracks Micro Caps In Resources And Energy Via The Canadian Venture Exchange. 0 comments
    May 2, 2012 4:30 PM | about stocks: JUNR, PPP, SGRCF, TLTHF, RDNAF, WLCDF

    A new ETF promises to track the returns of the Venture Exchange in the coming years. The Global X S@P/TSX Canada ETF is currently trading under $10 currently. Like the companies on the exchange, this ETF is speculative, however at the current price point for both the ETF and the exchange, the upside can be huge. The entire exchange has been literally hammered over the past year. The Venture exchange, populated with small mining, energy and resource companies, has a history of up and down volatility and if that history is any indication, it is poised for monumental returns over the next year.

    The exchange is down almost 45% over the past year.

    However, history teaches us that, when dealing with the Venture Exchange, what goes down, always goes up. In this case, extreme volatility can be your very good friend. You don't buy the venture at the top. You buy it at the bottom, or as close to the bottom as you can. I believe this exchange is at a bottom and is poised for huge gains. If you don't like to spend the time picking individual stocks, especially ones with this kind of volatility, then (TSXV) is probably the vehicle for you.

    A recent article at Pinnicle Digest, details 7 significant drops in the Venture Exchange since it's inception 11 years ago, and the subsequent recovery points. From trough to peak, here are the numbers:

    Average loss (in percentage terms) during a correction (peak-to-trough): -36.25%

    Average duration of a bear market in the TSX Venture: 5.78 months

    Average gain after a correction (trough-to-peak): 98.08%

    Average duration of a bull market in TSX Venture: 11.83 months

    The current drop of the exchange began in March of 2011 and has lasted for almost 14 months.

    tracks the top 30 most liquid stocks on the Canadian Venture Exchange and began trading in March this year. It consists of two sectors, Materials (53.9%) and Energy (46.1%) Although most of the companies listed in the Venture Exchange have their headquarters in Canada, their operations span the entire globe, wherever precious metals, resources and energy are found. The Venture is the largest "pure" resources exchange anywhere today.

    I believe the is a great way to track the junior resource industry. I am also a speculator of a number of small and even penny stocks on the exchange that I have been following for some time. They represent approximately 10% of my portfolio at any given time. (volatility is not for the faint of heart, nor for more than 10% of your money).

    Having said that, I have made some spectacular gains on the Venture Exchange.. I believe that the exchange is now poised for some of those gains again this year. In the mining sector, we are at the start of drilling and excavation season. The spring is when hope springs eternal for many small mining stocks and this year will be no different. Some will fall short and some will find new reserves that could change there share price in spectacular fashion.

    As I have pointed out in previous articles, I have bought stakes in Brigus Gold (BRD), San Gold (SGRCF.PK), Alberta Oil Sands (TSXv-AOS) Talison Lithium (TLTHF.PK) Rodinia Lithium (RDNAF.PK) and Western Lithium (WLC) My most recent purchase is:

    International Lithium Corp

    TSXv-ILC

    ILC is a small company (a penny stock trading today at .085c) with huge resources in both lithium and potash reserves. in Argentina, Canada USA and Ireland. The venture exchange has dropped significantly over the past year and companies like ILC have had their share prices slashed to lows never seen before. A number of Lithium juniors have partnered strategically with battery companies. ILC's strategic partner is Jiangxi Ganfeng Lithium Co. Ltd of China.

    About Jiangxi Ganfeng Lithium Co. Ltd.

    Ganfeng Lithium based in Xinyu, Jiangxi Province, China, is a professional producer of lithium products which has developed a comprehensive product chain, including lithium metal and alloys, inorganic and organic lithium chemicals, supplies a wide range of lithium products for primary and secondary lithium battery market, pharmaceutical and new material industries. Ganfeng's principal market is in China with international exports to Europe, Japan, USA and India. "Ganfeng Lithium, as a leading lithium downstream products producer in Asia, has recently announced in the company's 2011 annual report USD75 million in sales revenue representing a 34% increase over the previous year. Currently Ganfeng consumes a significant volume of lithium raw material but taking into account projected business growth, sourcing a future supply of lithium becomes more and more important to support Ganfeng Lithium's core business. The company was founded in 2000, it was listed on the Shenzhen Stock Exchange in August 2010, notably as the first publicly listed lithium company in China and has experienced rapid continuous growth over the last 10 years.

    "Increasing our share in ILC is part of our raw materials strategy." Wang Xiaoshen, Executive VP of Ganfeng Lithium Co., Ltd.

    It takes a lot of time and research to invest in individual companies, especially juniors on a volatile exchange, so if you don't have that time, then maybe you should consider The Global X S@P/TSX Canada ETF for that "speculative" portion of your portfolio.

    Related articles

    Disclosure: I am long BRD, SGRCF.PK, TLTHF.PK, RDNAF.PK, WLCDF.PK.

    Additional disclosure: long International Lithium Corp.

    Themes: TSXv - ILC Stocks: JUNR, PPP, SGRCF, TLTHF, RDNAF, WLCDF
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