VANCOUVER, British Columbia, Jan. 12, 2015 (GLOBE NEWSWIRE) -- By Financial Press
Historical evidence is mounting that TSX Venture Exchange has now hit bottom, and investors have a rare opportunity to create wealth by investing in good companies and catching a rising tide.
We sat down with capital market veteran Ron Loewen to discuss the potential to create wealth in the current market. Loewen specializes in funding and restructuring public resource companies.
"I'm a technical contrarian by nature," states Loewen in an exclusive interview with the Financial Press. "I seek value and I make money where it is there to made – including shorting overvalued stocks."
"The TSX Venture Exchange can be a difficult animal to understand and to predict," admits Loewen. "When times are bad, it's hard to make aggressive decisions. Part of us always feels, 'it's different this time' 'things won't get better'. But the history of the TSX.V proves – not just that they will – but they always do."
Loewen stresses that it is human nature to have a 'herd mentality' and not think rationally. "A herd appears to act as a unit," explains evolutionary biologist, W. D. Hamilton, "but its function emerges from the uncoordinated behavior of self-seeking individuals."
"It's sad, but we need bear market bottoms to purge investors, brokers and weak public companies out of our industry," explains Loewen. "Negative headlines of broker layoffs, over regulated markets, sinking commodity prices and general despair are the signal that we have reached the bottom and are about to enter a new bull market."
'Buy on Bad News - Sell on Good News.' It's easy to say, harder to do. Historical data confirms that when a stock index plummets dramatically on what seems like never ending bad news, it will rebound just as dramatically. And for more than 30 years, widespread negative newspaper headlines have been an accurate predictor of Canadian Venture Exchange market bottoms.
To illustrate his point, Loewen retrieves News Headlines from his research files on other bear market bottoms and we begin to see a trend.
Just prior to the stock market bottom of 1982: "VSE Twisting In Economic Winds", "Vancouver Stock Exchange Closes Lower For 27th Consecutive Day," "Index Passes Another Milestone On Its Downward Path."
Just prior to stock market bottom of 1984: "Economic Slump Leaves VSE Reeling," "VSE Is The Last Vegas Of North American Stock Exchanges," "VSE Slide May Be Worse Ever In Canada."
Prior to market bottom of 1989: "Scam Capital Of The World," "VSE In Free Fall," "Gold Falls To $370," "VSE Plummets To All Time Low."
From 2013/2014: "TSX Venture is Broken," "US Dealer Shutters Toronto and Calgary Offices Amid Gold Slump," "Investors Run For Cover" etc.
When pressed about the sectors he is following, Loewen mentions lithium where acquisitions and takeovers with senior lithium producers continue (i.e. Albermarle's purchase of Rockwood Holdings for $6.2 billion dollars). At the same time the mid-cap lithium sector saw Toronto Stock Exchange listed Orocobre Limited officially open their Olaroz lithium mine in December of 2014.
Pressed for an example of an interesting junior lithium company, Loewen mentions Dajin Resources (TSX.V:DJI), which holds 100% interest in lithium and boron claims in the Teels Marsh region of Mineral County, Nevada and significant land holdings of lithium targets in the Jujuy province of Argentina, near Orocobre.
"There are a lot of very good buying opportunities in the juniors markets right now," states Loewen. "I've got my investment group focusing on a number of things, but in the junior space, Dajin because their Teels Marsh is a potentially huge lithium asset in the direct vicinity of Tesla Motors' announced Gigafactory, in Nevada."
"The Tesla Gigafactory will use 25,000 metric tons of Lithium per year," states Loewen, "around a fifth of the world's capacity. What Tesla is doing has validated to the mainstream what many of us in the Lithium space have known for a long time, that there are huge advancements happening in battery and ion technology that are going to change the face of how we power everything around us. We're right on the cusp of that - Supplying the Gigafactory is predicted to raise demand for lithium in the battery industry by about 55%, and demand in the overall market by 20%."
Loewen continues, "While the Canadian Venture Exchange has gotten pounded, I've been quietly mentoring Dajin. The company has done a great job of getting themselves in the right position at the right time. Dajin is involved in two of the world's best known brine based lithium salars with the underlying metal experiencing increasing global demand."
The International Energy Agency predicts 40 million battery electric vehicle sales per year by 2050, from current annual sales of 150,000. This macro trend is spreading quickly from West to East.
According to the World Bank, air pollution costs China around $300 billion a year in health problems and loss-of-productivity. In response, the Chinese central government just announced a slate of pro-electric car policies including slashing charging station rates by 30%.
Navigant Research predicts that global lithium ion battery sales for all devices - including cellphones, laptops, commercial aviation and aerospace - will increase 400% by 2023.
"Investors should not wait for more positive headlines before allocating some of their capital to overlooked and historically cheap stocks," advises Loewen. "History does matter. The barrage of negative headlines aimed at the Venture market is the signal that we have reached the bottom. When the turn-around happens it will be dramatic and the markets will reward the early and the bold."
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CONTACT: Ron Loewen can be reached at firstname.lastname@example.org and found at ca.linkedin.com/in/ronloewen Dajin Resources Corp. can be reached at email@example.com and found at http://dajin.ca