VANCOUVER -- Time heals all wounds.

The cliche holds particular relevance in the stock market, where investors are often willing to put aside old grudges in order to get a good return on their dollar.

It's also part of the reason the

Canadian Venture Exchange

, or CDNX, has been a smashing success since its inception Nov. 29. While the exchange has a long way to go before it earns the moniker "

Nasdaq

of the North," as the local press has taken to calling it, the CDNX has broken one record after another since the beginning of the new year. Earlier this week, the exchange reached new highs for trading volume and trading value. The CDNX Index, meanwhile, continues its amazing ascent, having doubled since its creation in the fall, and up more than 75% this year.

All of this excitement is starting to garner significant attention stateside. American investors, who've been too enamored of their own stock market to give a hoot about the goings on north of the border, now appear to be jumping on the Canuck bandwagon. They're putting aside their preconceptions of disrepute in the Canadian markets to capitalize on the country's hot bull market.

According to the Canadian federal government's

Statistics Canada

agency, Americans invested a record C$17 billion ($11.69 billion) in the Canadian stock market last year, helping to explain the good fortunes for the country's senior market, the

Toronto Stock Exchange

, as well as the Canadian Venture Exchange. The benchmark TSE 300 enjoyed a whopping 30% gain during 1999.

The CDNX saw a trading average of 50 million shares valued at C$48 million per day for its one month of existence in 1999. While that figure pales in comparison to the average 1.08 billion shares that changed hands daily on the Nasdaq, Canada's junior exchange shows no signs of slowing down. The average daily value of shares traded in February, for example, was a record C$163 million.

Born of Canada's stock market reorganization ambitions, the CDNX is an amalgamation of the now-defunct

Vancouver Stock Exchange

and

Alberta Stock Exchange

. The two western Canada-based exchanges, traditionally oriented toward natural resources, had suffered during the past few years, thanks to the downturn in the mining sector and credibility questions surrounding Canadian junior issues.

The Alberta Stock Exchange, after all, was the birthplace of

Bre-X

, a mining swindle that captured headlines around the world. The Vancouver Stock Exchange, rife with shady stock promoters during its mining heyday, got saddled, courtesy of

Forbes

magazine, with a reputation of its own: "Scam capital of the world."

By the late 1990s, both exchanges were forced to watch from the sidelines as investors -- particularly from the U.S. -- shunned the junior markets in favor of large-cap issues and the Nasdaq's red-hot technology listings.

That's in marked contrast to the euphoria surrounding the CDNX today. The exchange's new name (which discards the provincialism of its predecessors) and a newfound focus on high-technology junior companies have marked the return of mainstream investors to the Canadian small-cap fold.

With about 2,300 company listings, the CDNX is Canada's funding source for fledgling companies trying to attract attention -- and ultimately, a larger financing to put them into the Nasdaq or TSE big leagues. So while the market's insatiable appetite for all-things-tech feeds the buying frenzy on Canada's hottest exchange, investors should be well informed of the risks associated with these young companies.

For example, since January, at least 15 mining companies reportedly have applied to switch their main listed businesses, no surprise, to e-commerce. The CDNX beefed up scrutiny of such companies last week.

"It's 'buyer-beware,' " says Jeff Rath, technology analyst with Vancouver-based brokerage

Canaccord Capital

. "With the junior exchange comes more lax reporting requirements, and whenever you have a frothy market, people will want to take advantage of that, and you're susceptible to a lot of things -- like stock promotion."

But Rath, who attributes much of the high volume on the CDNX to daytraders, believes the exchange's listings are no more speculative than tech offerings on the Nasdaq. "Valuations are out of line, but I think it's the same thing in the large-cap markets as well," he says. "I would argue that you're not any more protected buying a large-cap story than a small-cap story."

So while daytraders, growth investors and penny stock aficionados lick their lips at the prospects of impressive capital gains, the CDNX finds itself basking in the glory of its recent successes. "We anticipated a great deal of interest in CDNX, but its momentum and results to date continue to exceed our expectations," CDNX Chairman Dennis Burdett said last month.

For American investors with a stomach for small-cap volatility and an eye for the next big thing, making a run for the border may not be such a bad idea.

Derek Moscato is a freelance financial journalist in Vancouver. At the time of publication he had no positions in any of the securities mentioned, although holdings can change at any time.