Resource World Magazine

24 www.resourceworld.com J U N E / J U L Y 2 0 1 8 At the Market by Rodney Blake R ecently I read about two young men who became instant billionaires when they sold their new smartphone app for a very large sum of money. This instant success story made me wonder if this news was a sign of a tech market top as I heard similar stories just before the Dot.Com bubble burst in 2000. In that era, it was two high school students becoming instantly wealthy when their software program sold for millions of dollars. Time will tell if this indicator was right once again. Market tops are not usually announced but are predicated by the actions and attitudes of the players in that particular sector. Other than the example above, more indicators of market tops could be: Stock-only acquisitions: companies using their inflated share prices as a piggy bank and issuing shares to make a major acqui - sition. This may look good at the time but if the market ever corrects the acquisition could be seen as very overpriced. Think of the recent take-over activity in the marijuana sector. Growth at any price: companies using their inflated treasuries to acquire competitors or add to their production base at seemingly exorbitant prices. Think of the overly aggressive growth in the gold industry around 2011 with companies trying to produce more gold or add to their reserves even though their costs kept rising. This time it's different: sector pundits announcing that for what - ever reason this new business model somehow throws out tried and true aspects of corporate governance and that bottom line numbers are no longer important. Think of companies that get more than their share of media attention and trade at earnings multiples much higher than their peers. No one knows what it's not worth: new ideas that capture the markets' and media's attention with dramatic price increases without ever suffering a prolonged price correction. Think of the recent action around crypto currencies and blockchain mining. Company CEOs can do no wrong: market watchers tend to give CEOs of high flying companies the benefit of the doubt as they are thought to be visionaries, even though they sometimes take on unexpected or potentially hazardous avenues of new business. Think of the world's best known electric car company getting into the solar panel business, or the world's largest online shop - ping company getting into the retail foods business. Everybody's making money and telling their friends all about it: this could be the most dangerous indicator of a market top of all as it suggests that many are fully invested and if the market ever turns there are few buyers left to support the decline. Think of the current housing market. Market tops seldom come with definitive sell signals but they do have indicators. Watch for them and act accordingly. You may not catch the very top of the market, but you will certainly avoid selling at the bottom. n Rodney Blake is an Investment Advisors with Canaccord Genuity Wealth Management, a division of Canaccord Genuity Corp, Member- Canadian Investor Protection Fund. The information contained in this article is drawn from sources believed to be reliable, but the accuracy and completeness of the information is not guaranteed, nor in providing it does Rodney Blake, Canaccord Genuity Corp, or its subsidiaries, or affiliated companies, assume any liability. This information is current as of the date appearing in this article, we do not assume any obligation to update the information or advise on further developments relating to these securities. This article should not be considered personal invest - ment advice or a solicitation to buy or sell securities. Canaccord Genuity and holdings of its respective directors, officers and employees and their associations, from time to time may buy or sell any securities mentioned herein. The views expressed are those of the author and not necessarily those of Canaccord Genuity Corp. He can be reached at 604-643-7567 or rod.blake@canaccord.com Market top indicators

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