The exchange I speak of is the TSX Venture - ugly step-brother to Canada’s main exchange. And for the sake of its sanity, it is lucky not many are talking about it.

Born in late 1999, out of the combination of the Vancouver Stock Exchange, the Alberta Stock Exchange, the Canadian Dealer Network, and the Montreal Stock Exchange, the TSX Venture recently celebrated its 15thbirthday, by hitting a new all time low.

The exchange is supposed to be a place where exciting growing businesses from a diverse set of industries meet with growth oriented investors to fund their promising new ventures. Instead the exchange has become an embarrassment with its composite index breaking new “all time” lows recently. Yes, not year or multi-year lows, but all time lows. Again this is against a backdrop which has seen almost all North American indices hit all time highs over the past 12-months.

TSX-Venture 5 –Year Chart

TSX-Venture All-Time Chart

The Venture exchange focuses heavily on highly speculative and very cyclical resource stocks. Yes, Canada is rich in natural resources and, in theory, the Venture exchange should be an excellent place for smart entrepreneurs to access smart capital and responsibly develop our countries vast resources. But, the good theory has diverged so widely from this that the smart resources based entrepreneurs are drowned out by the comically poor run exploration shells that do nothing but fatten the pockets of a few snake oil salesmen. The proof, as they say, is in the results. With the TSX-V continuing to facilitate the deployment of capital in highly speculative resources exploration ventures the exchange continues to destroy capital and sink further to new lows.

2014 was another terrible year for the mining sector and resources in general. Even in a dire year for this segment 36% or well over one third of more than $5 billion in capital raised on the TSX-Venture was strictly related to the mining sector and largely to junior exploration companies – most of which never produce an ounce of economic profit. Add in the cyclical oil and gas segment and 67% or two-thirds of the capital raised on TSX-Venture was solely resource related.

The culture of risk capital investing in Canada needs a good smack upside the head. To the boutique brokers and the big banks who continue to churn out these money making (for them) and money destroying (for you) exploration shells, we say, shame on them. Can they not become slightly more innovative and look at funding ABC Technology Corp or XYZ Manufacturing Co. rather than trotting the same or CRAP Shell Mining Corp.

But the blame also lies squarely in the laps of the individual Canadian investors who keep funding these pieces of garbage. Since my late teens (early 90s) when I learned a quick and painful lesson with a couple classic Canadian Explore Co.’s I have not put a dime of my hard earned investment dollars towards this segment and that has served me very well.

The solution is very simple - just stay away. But it has to be en masse. If you stop funding these capital destroying shells they will die and the questionable TSX Venture players running them will disappear. Brokers and bankers will finally get the message and hopefully look to fund a more diverse set of ventures – perhaps actual businesses which create cash rather than destroy it. Ironically, this is the same advice I would give to fans of Toronto’s other laughing stock – the Leafs. The only way you can get the message to Rogers is to just stay away. Quit going to the games with bags on your heads, what do they care, you are still funding the monster. Give-up your seasons tickets, leave some empty seats in Air Canada Center for a season – the change you seek will come quickly.

Change will come to the TSX Venture, when Canadians stop funding exploration shells and demand more from their risk capital – diverse businesses with strong growing fundamentals.

Ironically, with blood in the streets on the Venture exchange now should be a time to pick-up some long-term bargains in the mining sector with strong fundamentals, but they are so far an few in between that it is almost impossible for the average investor to sort the wheat from the chaff . Over the long-term, we endeavour to stay less exposed to resources in general than the average Canadian investor, due to the significantly cyclical nature of the businesses.

Let’s start funding some actual businesses through our Venture Exchange. The key is to fund a diverse set of industries including knowledge based sectors such as technology and biotechnology - or some basic manufacturing businesses that make real products and employ real employees, not just resources. Look, Canada will never become Silicon North, but we have some great entrepreneurs in this country and a little diversification outside of our commodity sector would do a world of good long-term.

This would also help diversify our economy, bit by bit and give Canadian investors far more choice in their investment decisions on the home front.

So, the next time your broker tries to sell you on the latest exploration play with a moose pasture in Saskatoon or a huge potential gold mine in Botswana, do as Leaf fans should and stay away.