Posted: Wednesday Jan 23 9:55:31AM 2013
Another factor is the relative underperformance of resource sector as a whole. The venture is mostly resource stocks, either energy or mining. Both these sectors have suffered during 2012.
Energy faces headwinds because oil has stalled out and stopped climbing in 2012 and natural gas was a disaster for North American producers and especially Canadian producers, who are seeing their main export market, the US, go away.
There have been calls for lower oil prices due to the climbing North American production. Some are saying we could see a similar fall in oil like we did in natural gas. There is a difference. Oil can be shipped fairly easily if the differentials get too big. ngas is another matter, with multi billion dollar export LNG plants necessary for export and some Asian buyers lowering their buy prices due to the glut.
Miners should be in hog heaven, with silver and gold both well above historical averages. But investors are shying away from risk and mining is risky.
When will the risk aversion end? We are seeing a little return to risk now. Whether the trends continue is the question.
In 2013, I think the key is cash. If you are an oil producer or a miner, you need to have sustainable cashflow. Loans are going to be hard to get and explorers without cash are going bankrupt or be acquired. Find out sustainable cashflow or cash on hand first when you investigate a stock.
Stock issuance by juniors has been shrinking due to no appetite from investors. The old strategy of selling the stock and holding the warrants doesn't work well if the stock price is falling.
So I think it's back to basics. Doren built his reputation on microcap profitable companies. Find companies that have a niche and have already made it to profitability. Buy them with low p/e's so you have some downside protection. I have migrated up the size scale a little due to the need for cash and the ability to raise funds. But there are still microcaps out there that should do fine and can finance their growth internally.
I still think gold, silver and other commodities will continue to do well over time. I have a lower weighting than normal for me in silver and gold stocks. If there is a debt crisis, we'll have to see how gold and silver stocks hold up. I am definitely going bigger in mining stocks. I want production and I want profits.
I think the US economy will recover in 2013. Housing appears on the way back and low ngas prices will encourage certain industries to return to North America. I expect strong car sales and improving consumer confidence.
Good luck all! Bobwins
Posted: Tuesday Jan 22 1:21:14PM 2013
The TSX Venture Exchange wrapped up a disappointing 2012 with another very disappointing
month. Volume on the TSX Venture Exchange fell 7% in December 2012 from November 2012 and was down 25% compared to the same month a year earlier. For the entire year in 2012, volume on the TSX Venture fell 32.8% compared to 2011. In terms of share values, the index was flat in December compared to November but was down 17.7% on the year. Overall, trading in small-cap stocks continues to be hampered on a year-over-year basis which was amplified by tax-loss selling in December. It’s also important to point out that value of transactions fell 45% during 2012 and the number of transactions fell by 35%.
What do investors expect for 2013?