This is what the end of a secular bull looks like. From a high around 3300 in July 2007, the resource-centric Canadian Venture Index (CDNX) has today broken below 500. As shown below, it is now some 26% below the great recession low reached in December 2008.
With commodity prices still falling, global demand still slowing and defaults in the high yield debt space just getting starting, further industry consolidation is likely. In other words, the once widely adored Venture Exchange may have even further downside yet to come. And all of this offers a warning shot to broader financial markets.
Why should we care about excessive credit and speculation driving asset prices beyond reason? Because the most reckless participants and advisers attract followers to their ‘genius’ during the topping phase. In the end, only the few insiders who cashed out early leave enriched. The vast majority of participants are left with devastating losses in the process–savings and precious time that they could not afford to lose.