Last week, our friends at Palisade Capital, a merchant bank, sent us over a chart breaking up the S&P/TSX Venture Index into its booms and busts since the beginning of 2002. The index, which broadly represents the thousands of companies listed on the TSX Venture exchange, has reached a new ominous milestone.
“The most recent bear market for the TSX Venture began on April 11, 2011 and has now passed 1,000 trading days in length,” said Sean Zubick, Co-founder and COO of Palisade Capital, “That’s more than all bear markets combined since the beginning of 2002.”
The most recent re-wiring of the index was in the aftermath of the Dotcom bubble. This makes it even accurate to say that the current bear market is longer than all other downturns combined in the entire history of the index as we know it.
All previous downturns have occurred over the course of 802 trading days. The current bear market? Now over 1,000 trading days.
The majority of the companies on the index are listed as being in the business of materials (38%) and energy (30%), and these sectors have been in unprecedented slumps. As we previously noted, there is a “miner problem” in that there is a swath of zombie companies that have $2.15 billion of negative working capital on their books.
This type of systematic trouble is not something that gets rectified overnight, and that’s part of the reason the market is in such a mess.
- Visual Capitalist