Story Highlights

  • 2020 Stock Forecast: Here’s what you can expect from junior mining and cannabis stocks heading into 2020.
  • Two buys to grab double-digit profits and start the new year right.

My bold prediction for 2020 is that junior mining and cannabis stocks will climb double digits from today.

That’s based on the Toronto Stock Exchange (TSX) Venture Index, which is like the Dow Jones Industrial Average for those junior mining and cannabis stocks.

Think of the TSX Venture as a Canadian stock exchange that acts as an incubator for tiny stocks.

Most of its members — nearly 60% — are mining companies.

Technology stocks make up about 10%. Around 7% are energy stocks.

Cannabis juniors makes up a small fraction, too.

These companies are typically less than CA$500 million in market value.

OK, my 2020 stock forecast isn’t exactly bold. The TSX Venture Index has bottomed in December four of the last five years. And it has climbed double digits from that bottom every single year for the past five years.

Pay close attention to the arrows in the chart of the index since 2015 below. As you can see, buying it in December paid off by at least 10% and as much as 70%.

TSX Venture Index Rises in JanuaryTSX Venture Index rises in January

Canadian Investors Dump Stocks in December

That early-year rise is due to what’s known as “tax-loss selling.”

In Canada, investors can sell stocks for a loss to offset gains. It’s an interesting system that leads to a whole lot of dumping in December. Then we see steady buying into the early part of the year.

This table shows what it looks like:

TSX ventures gains from 2015 - 2019

Most of these gains happen quickly, in just 55 days on average.

And it looks to me like the TSX Venture bottomed again in December this year.

If you’re looking for some quick speculation, there are a couple of ways to play it:

  1. Since the bulk of the stocks are mining companies, you can buy the BMO Junior Gold Index Fund (TSX: ZJG). This fund holds Canadian gold miners including B2Gold Corp. and Yamana Gold Inc.
  2. Another way to play the mining angle is with the VanEck Vectors Trust Junior Gold Miners Fund (NYSE: GDXJ). This fund holds many of the same companies as ZJG.

Both track the Venture Index closely.

Just remember: The rally rarely lasts past January. This is a quick trade to put on now and watch into the new year.

That’s our 2020 stock forecast. Let us know what you are buying in the comments below!

Good investing,

Matt Badiali

Editor, Real Wealth Strategist