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canadian income trusts to be taxed
- Thread starter vladn
- Start date
Quote from TrendSailor:
That's not what I said. Apparently I am too subtle for you. They did it to help themselves as politicians. Constituents with no spendable income after losses do not make political contributions when the volunteers go to calling for pre-election support. It also casts a negative sentiment and focus on mundane lower tier issues that cloud the principal political platforms. Try to expand your sophistication by an order of magnitude and you might discover that you are still standing and making noise in the minor league.
TS
So it has nothing to do with the 30,000 lobbyists in Washington? I suppose none of them represent the bricks-and-mortar casino business.
Quote from TrendSailor:
But I really don't care too much to financially mingle with the junior players here unless you can demonstrate a comparable net worth.
I think that your public loss of control demonstrates your likely net worth pretty clearly.
I can guarantee you one thing. Not one of the multi-millionaires on this board has ever actually posted 'I am a multi-millionaire'. It is self-evident that no man who had the kind of resolve and mind it takes to make a fortune would consider it necessary to bellow about his net worth on an anonymous message board, especially after a loss. Furthermore, it is patently absurd that a multi-millionaire would say something like 'I'll only talk to you if you post (on this anonymous message board) that you are also a multi-millionaire'
My cut and paste shows that you are lying and contradicting yourself, and showing yourself to be a fool with your comments about your 'advisors', which don't make any sense. It was pretty simple.
As I said, all of this indicates that you are likely a teenager who lost maybe a few hundred dollars. The fact that you are interested in trading at an early age is a good thing. The fact that you are lying and whining about a loss is not a good thing. Trading is about taking responsibility for the outcomes of your trades, not blaming others, which is what you have been doing for the last 10 posts you made.
Maybe you should just re-register with a new username and try again.
Quote from traderNik:
I think that your public loss of control demonstrates your likely net worth pretty clearly.
I can guarantee you one thing. Not one of the multi-millionaires on this board has ever actually posted 'I am a multi-millionaire'. It is self-evident that no man who had the kind of resolve and mind it takes to make a fortune would consider it necessary to bellow about his net worth on an anonymous message board, especially after a loss. Furthermore, it is patently absurd that a multi-millionaire would say something like 'I'll only talk to you if you post (on this anonymous message board) that you are also a multi-millionaire'
My cut and paste shows that you are lying and contradicting yourself, and showing yourself to be a fool with your comments about your 'advisors', which don't make any sense. It was pretty simple.
As I said, all of this indicates that you are likely a teenager who lost maybe a few hundred dollars. The fact that you are interested in trading at an early age is a good thing. The fact that you are lying and whining about a loss is not a good thing. Trading is about taking responsibility for the outcomes of your trades, not blaming others, which is what you have been doing for the last 10 posts you made.
Maybe you should just re-register with a new username and try again.
If you want an opportunity to make a few thousand dollars real quick just watch the following trusts for the next 3-7 days and wait for the dead cat bounce. Maybe if I can make you some money real fast you will figure out that its mostly the principal of betraying the "trust" that I am upset with more so than money. But I really don't care what you think about me or my net worth nor what my alias is etc. This is just a diversion while I wait for the SPX index to swing so I can write another block of contracts. This is how I work out my emotion so I don't go in and trade too much until I get the emotion out of my trading system. Forgive my first time mentioning of my asset class as I came into it only this year and I am still accustomed to being open about my situation. BTW - which of those MM told you they were MM so you know they don't talk about it. LOL! Contradiction they name is vanity...
to-wit:
Trust Ticker Grade Industry Revenue (in millions) Market Capitalization (in millions) Price (as of May 10/05) Distribution Yield Earnings Yield Cash flow yield Distributions/ Cash Flow Leverage Price/Cash Flow Price/Cash Flow (5 yr range) Price/Book Change in Book Value Per Share 1 Yr Total Return 5 Yr Total Return
TRANSCANADA POWER TPL.UN A Electric Utilities $255 $1,352 $34.40 7.30% 6.40% 10.40% 70% 1.43 9.60 8.14 - 14.50 2.00 3.00% 23% 91%
ADVANTAGE ENERGY INCOME FUND AVN.UN A Oil&Gas $241 $574 $18.55 16.20% 3.50% 20.80% 77% 1.87 4.80 3.90 - 7.14 1.70 25.00% 11% 193%
NORTH WEST COMPANY FUND NWF.UN B General Merchandise $789 $482 $29.90 6.30% 7.80% 12.40% 49% 1.80 8.00 3.43 - 9.07 2.00 4.00% 37% 234%
FORT CHICAGO ENERGY PARTNERS FCE.UN B Gas Utilities $807 $1,273 $12.08 7.90% 6.70% 15.70% 45% 3.90 6.40 4.94 - 32.84 2.10 -4.00% 38% 88%
CONTRANS INCOME FUND CSS.UN B Railways $359 $332 $15.54 8.00% 5.80% 10.40% 78% 1.54 9.60 5.77 - 14.16 3.20 11.00% 77% -
CHEMTRADE LOGISTICS CHE.UN B Commodities $346 $249 $15.40 8.60% 4.40% 16.10% 53% 1.66 6.20 5.66 - 8.44 1.80 -2.00% -8% -
ENERPLUS RESOURCES ERF.UN B Oil&Gas $1,195 $4,606 $44.33 9.50% 6.10% 11.40% 83% 1.55 8.80 3.74 - 9.74 2.30 -1.00% 48% 230%
ARC ENERGY TRUST AET.UN B Oil&Gas $887 $3,430 $18.48 9.70% 7.20% 14.40% 67% 1.50 6.90 3.54 - 7.63 2.30 3.00% 39% 174%
PETROFUND ENERGY TRUST PTF.UN B Oil&Gas $517 $1,826 $18.35 10.50% 4.20% 12.60% 83% 1.45 7.90 3.14 - 8.37 1.80 3.00% 27% 69%
PEAK ENERGY SERVICES TRUST PES.UN B Oil&Gas $77 $207 $9.04 10.60% 7.90% 10.80% 87% 1.52 9.20 3.98 - 15.40 1.50 -1.00% 20% 283%
SHININGBANK ENERGY INCOME FUND SHN.UN B Oil&Gas $316 $1,161 $21.45 12.90% 4.80% 15.00% 86% 1.62 6.70 3.39 - 7.27 2.30 2.00% 31% 197%
ACCLAIM ENERGY TRUST AE.UN B Oil&Gas $514 $1,032 $15.00 13.00% 2.40% 19.70% 66% 1.79 5.10 3.74 - 18.13 1.80 15.00% 37% -
VIKING ENERGY ROYALTY TRUST VKR.UN B Oil&Gas $272 $757 $6.85 14.00% 10.10% 19.90% 71% 1.54 5.00 3.48 - 6.72 1.90 -10.00% 37% 79%
APF ENERGY TRUST AY.UN B Oil&Gas $184 $719 $12.21 15.70% 7.80% 19.70% 81% 1.84 5.10 2.62 - 5.29 1.60 10.00% 21% 167%
TS
Well I picked up a few small positions in some Canadian Trusts in anticipation of a "DEAD CAT BOUNCE". It looks like it payed off in 1 day. Most all are up about 5% today. Wee - now the dilemma. Do I take my quick profits now or hold tight and get both a capital gain growth and a huge dividend yield? It will be 4 more years till the new foreign taxes kick in 2011. At that time the Canadian government fines us "damn Yankees" a heavy 41.5% foreigner tax extortion for being so rude to inject many billions of capital into their Canadian markets. Funny how they forget that we foreigners basically funded all their infrastructure development that led to current prosperity and masive revenues from production of natural resources...
But its this Jim Flaherty who is the total snake. I can't imagine how Canadians can forgive him.Only a couple of weeks before this trust wipeout, Jim Flaherty rolled out his compliments to the trust market for bringing so much to the Canadian economy as well as helping capitalize the resource, energy, consumer, industrial, real estate and utility segments of the nation. After this speech that was well received by investors in- and outside Canada, everyone in the trust investment community became even more optimistic that the Tory-led government was going to continue to keep the trust market and work on reforming some of the ill-fated tax and accounting changes implemented by the Liberals just before their ouster in the last general election.
Bravo Flaherty - you snake!
But I really feel for the lil ol ladies and men in Canada that just had their family fortunes stolen right out of their pockets by their own government. Never mind that the income trust sector has lost about CD18 billion of its value as of 10:30 am Wednesday morning. The Toronto Stock Exchange's capped income trust sub-index is down 11.5 percent. The value of the sector yesterday was worth about CD157 billion, according to Bloomberg.
Now the government (e.g. Jim Flaherty) had the gall to insult peoples intelligence also. He calls this a tax break - hahaha! After extracting and vaporizing 15% of pensioners net worth (those in trusts) he has the gall to toss them a small bone back with minor tax breaks on income etc. A whopping increase in the Age Credit Amount by $1000 from $4,066 to $5,066 effective January 1, 2006. This will "benefit" low and middle-income seniors after he stole 15% up front...haha omg he must think everyone is utterly stupid. If I were a Canadian I'd be picketing in front of his house for the insult.
What a concept! Haha - never would have though Canadians could be so stupid to fall for that political pandering trick. But the US has done worse to its own by issuing US bonds and then inflating the dollars so interest was negative for those patriots who believed in and trust their country.
Rant over - back to making money:
I think I will collect a year of high yield at 9-20% return since the stock prices should pump up nicely just as soon as the US FED is forced to lower interest rates again around 1st or 2nd quarter 2007 to fend off recession and economic collapse.
Here is a fragment snip from my account balances showing the dramatic dead cat bounce. My thesis is its going up a lot more after maybe another round of slow moving foreign shake out then headed up 10% as US raises interest rates early in 2007. Not a bad little growth and income play...
Cheers:
TS
But its this Jim Flaherty who is the total snake. I can't imagine how Canadians can forgive him.Only a couple of weeks before this trust wipeout, Jim Flaherty rolled out his compliments to the trust market for bringing so much to the Canadian economy as well as helping capitalize the resource, energy, consumer, industrial, real estate and utility segments of the nation. After this speech that was well received by investors in- and outside Canada, everyone in the trust investment community became even more optimistic that the Tory-led government was going to continue to keep the trust market and work on reforming some of the ill-fated tax and accounting changes implemented by the Liberals just before their ouster in the last general election.
Bravo Flaherty - you snake!
But I really feel for the lil ol ladies and men in Canada that just had their family fortunes stolen right out of their pockets by their own government. Never mind that the income trust sector has lost about CD18 billion of its value as of 10:30 am Wednesday morning. The Toronto Stock Exchange's capped income trust sub-index is down 11.5 percent. The value of the sector yesterday was worth about CD157 billion, according to Bloomberg.
Now the government (e.g. Jim Flaherty) had the gall to insult peoples intelligence also. He calls this a tax break - hahaha! After extracting and vaporizing 15% of pensioners net worth (those in trusts) he has the gall to toss them a small bone back with minor tax breaks on income etc. A whopping increase in the Age Credit Amount by $1000 from $4,066 to $5,066 effective January 1, 2006. This will "benefit" low and middle-income seniors after he stole 15% up front...haha omg he must think everyone is utterly stupid. If I were a Canadian I'd be picketing in front of his house for the insult.
What a concept! Haha - never would have though Canadians could be so stupid to fall for that political pandering trick. But the US has done worse to its own by issuing US bonds and then inflating the dollars so interest was negative for those patriots who believed in and trust their country.
Rant over - back to making money:
I think I will collect a year of high yield at 9-20% return since the stock prices should pump up nicely just as soon as the US FED is forced to lower interest rates again around 1st or 2nd quarter 2007 to fend off recession and economic collapse.
Here is a fragment snip from my account balances showing the dramatic dead cat bounce. My thesis is its going up a lot more after maybe another round of slow moving foreign shake out then headed up 10% as US raises interest rates early in 2007. Not a bad little growth and income play...
Cheers:
TS
Attachments
After the carnage that just occured in the canroy's, I have slashed my exposure to that sector. I have some longs near the lows from yesterday that I will take a punt on, but for the most part, I am out of this sector for a while. Note that some of the CEF's that specialize in this area haven't really recovered too much.
There is a lot of wishful thinking on the net that this tax will not go though. I think it is a foregone conclusion, and smart money exited a few weeks ago. (should have felt warning bells when the dividend payout exceeded 10%, but thought it was due to bearishness on oil. Live and learn)
You might get a little bit more mileage out of this dead cat bounce, but any drop in oil prices and you can pretty much forget about it. Given the drop in oil last few months despite the geopolitical situation globally, while there might be still good longer term potential in oil, there is simply a reasonable amount of downside risk here with less upside.
Sorry, not for me, not now and not at these levels. Maybe lower.
There is a lot of wishful thinking on the net that this tax will not go though. I think it is a foregone conclusion, and smart money exited a few weeks ago. (should have felt warning bells when the dividend payout exceeded 10%, but thought it was due to bearishness on oil. Live and learn)
You might get a little bit more mileage out of this dead cat bounce, but any drop in oil prices and you can pretty much forget about it. Given the drop in oil last few months despite the geopolitical situation globally, while there might be still good longer term potential in oil, there is simply a reasonable amount of downside risk here with less upside.
Sorry, not for me, not now and not at these levels. Maybe lower.
Quote from TrendSailor:
Well I picked up a few small positions in some Canadian Trusts in anticipation of a "DEAD CAT BOUNCE". It looks like it payed off in 1 day. Most all are up about 5% today. Wee - now the dilemma. Do I take my quick profits now or hold tight and get both a capital gain growth and a huge dividend yield? It will be 4 more years till the new foreign taxes kick in 2011. At that time the Canadian government fines us "damn Yankees" a heavy 41.5% foreigner tax extortion for being so rude to inject many billions of capital into their Canadian markets. Funny how they forget that we foreigners basically funded all their infrastructure development that led to current prosperity and masive revenues from production of natural resources...
But its this Jim Flaherty who is the total snake. I can't imagine how Canadians can forgive him.Only a couple of weeks before this trust wipeout, Jim Flaherty rolled out his compliments to the trust market for bringing so much to the Canadian economy as well as helping capitalize the resource, energy, consumer, industrial, real estate and utility segments of the nation. After this speech that was well received by investors in- and outside Canada, everyone in the trust investment community became even more optimistic that the Tory-led government was going to continue to keep the trust market and work on reforming some of the ill-fated tax and accounting changes implemented by the Liberals just before their ouster in the last general election.
Bravo Flaherty - you snake!
But I really feel for the lil ol ladies and men in Canada that just had their family fortunes stolen right out of their pockets by their own government. Never mind that the income trust sector has lost about CD18 billion of its value as of 10:30 am Wednesday morning. The Toronto Stock Exchange's capped income trust sub-index is down 11.5 percent. The value of the sector yesterday was worth about CD157 billion, according to Bloomberg.
Now the government (e.g. Jim Flaherty) had the gall to insult peoples intelligence also. He calls this a tax break - hahaha! After extracting and vaporizing 15% of pensioners net worth (those in trusts) he has the gall to toss them a small bone back with minor tax breaks on income etc. A whopping increase in the Age Credit Amount by $1000 from $4,066 to $5,066 effective January 1, 2006. This will "benefit" low and middle-income seniors after he stole 15% up front...haha omg he must think everyone is utterly stupid. If I were a Canadian I'd be picketing in front of his house for the insult.
What a concept! Haha - never would have though Canadians could be so stupid to fall for that political pandering trick. But the US has done worse to its own by issuing US bonds and then inflating the dollars so interest was negative for those patriots who believed in and trust their country.
Rant over - back to making money:
I think I will collect a year of high yield at 9-20% return since the stock prices should pump up nicely just as soon as the US FED is forced to lower interest rates again around 1st or 2nd quarter 2007 to fend off recession and economic collapse.
Here is a fragment snip from my account balances showing the dramatic dead cat bounce. My thesis is its going up a lot more after maybe another round of slow moving foreign shake out then headed up 10% as US raises interest rates early in 2007. Not a bad little growth and income play...
Cheers:
TS
Good old Tobin Smith. Pissed because he led some more sheep to slaughter. That guy has a horrible track record and yet he is on fox every saturday morning talking like he is the guru from God.
Quote from drsteph:
You might get a little bit more mileage out of this dead cat bounce, but any drop in oil prices and you can pretty much forget about it. Given the drop in oil last few months despite the geopolitical situation globally, while there might be still good longer term potential in oil, there is simply a reasonable amount of downside risk here with less upside.
Sorry, not for me, not now and not at these levels. Maybe lower.
Hey drsteph - thanks for adding your insights. I was not following this market in any detail prior to this tax policy event and had just bought blindly on some advisory info I get. My objective was to get some nice monthly cash flow by selecting trusts with different dividend distributions quarters and chain them all together like a money machine. I normally research everything very thoroughly but since I had a reputable advisor I figured these were ultra safe and well vetted. It is just SO ironic that I changed asset reallocated on a portion of my portfolio to cut back on exposure to the more "volatile" small caps and high growths. I shifted a portion into these trusts literally 1 week before the world changed. It was suppose to make my portfolio MORE stable - can you imagine waking up to see a portion in the red 15% overnight? haha.
At any rate - with the price drop these yields are super high (even higher than the old "super" high lol) . Though I am certain that most trusts will now cut way back on their dividends since there is no longer a tax advantage for returning principal to owners. My hope though is that trusts will still try to maintain the essential character/reputation as being high cash throw off securities relative to alternatives and only scale the divs back a little.
If I was a trust manager I would immediately look to buy up a portfolio of land and REIT type trusts since these are STILL apparently exempt from the tax on distributions. Then they could push oil/electric/drilling/mining cash flow through the wholly owned subsidiaries in the form of low interest or zero interest loans and have the land trusts pay out the dividends for the tax play and it looks all the same to investors (and the gov).
At any rate, no matter what, I still expect oil to trend much much higher in 6 months and certainly longer term. BRIC countries are not going to just stop their new industrial revolutions in midstream and suddenly not need to increase natural resource spending due to the US/West becoming insensitive/complacent with the world turmoil/fear. Oil just squeezed out the fear component but I am confident that that will come back as soon as one hiccup of production happens somewhere and inventory falls. Nope, I expect that the trend up in oil price will mean more and more production for Canada for at least 20 years.
I think the risk in dividend reduction will be made up in capital appreciation in all the thrown off cash from operations that MUST be invested somewhere. If that means better and more efficient production equipment etc. then that helps book value too. The massive undistributed cash flow generated is itself going to reduce PE ratios and attract a lot of investors looking for traditional growth or value. The underlying value of these trusts is in the resources - that is not going away and demand will accelerate after the current short term anomaly. The one thing that is a certified and now a validated risk is the Canadian Government. If it continues to get even more socialistic it might just start nationalizing company's or resources and penalizing every investor/owner and subsidize voting constituents. But I think that most Canadian leaders are a lot smarter and more responsible than that. I guess I am betting on the common sense and that may be a counter trend to what we just saw. I never thought of myself a contrarian investor before lol...
Just my two cents,
TS
Quote from TrendSailor:
Hey drsteph - thanks for adding your insights. I was not following this market in any detail prior to this tax policy event and had just bought blindly on some advisory info I get. My objective was to get some nice monthly cash flow by selecting trusts with different dividend distributions quarters and chain them all together like a money machine. I normally research everything very thoroughly but since I had a reputable advisor I figured these were ultra safe and well vetted. It is just SO ironic that I changed asset reallocated on a portion of my portfolio to cut back on exposure to the more "volatile" small caps and high growths. I shifted a portion into these trusts literally 1 week before the world changed. It was suppose to make my portfolio MORE stable - can you imagine waking up to see a portion in the red 15% overnight? haha.
At any rate - with the price drop these yields are super high (even higher than the old "super" high lol) . Though I am certain that most trusts will now cut way back on their dividends since there is no longer a tax advantage for returning principal to owners. My hope though is that trusts will still try to maintain the essential character/reputation as being high cash throw off securities relative to alternatives and only scale the divs back a little.
If I was a trust manager I would immediately look to buy up a portfolio of land and REIT type trusts since these are STILL apparently exempt from the tax on distributions. Then they could push oil/electric/drilling/mining cash flow through the wholly owned subsidiaries in the form of low interest or zero interest loans and have the land trusts pay out the dividends for the tax play and it looks all the same to investors (and the gov).
At any rate, no matter what, I still expect oil to trend much much higher in 6 months and certainly longer term. BRIC countries are not going to just stop their new industrial revolutions in midstream and suddenly not need to increase natural resource spending due to the US/West becoming insensitive/complacent with the world turmoil/fear. Oil just squeezed out the fear component but I am confident that that will come back as soon as one hiccup of production happens somewhere and inventory falls. Nope, I expect that the trend up in oil price will mean more and more production for Canada for at least 20 years.
I think the risk in dividend reduction will be made up in capital appreciation in all the thrown off cash from operations that MUST be invested somewhere. If that means better and more efficient production equipment etc. then that helps book value too. The massive undistributed cash flow generated is itself going to reduce PE ratios and attract a lot of investors looking for traditional growth or value. The underlying value of these trusts is in the resources - that is not going away and demand will accelerate after the current short term anomaly. The one thing that is a certified and now a validated risk is the Canadian Government. If it continues to get even more socialistic it might just start nationalizing company's or resources and penalizing every investor/owner and subsidize voting constituents. But I think that most Canadian leaders are a lot smarter and more responsible than that. I guess I am betting on the common sense and that may be a counter trend to what we just saw. I never thought of myself a contrarian investor before lol...
Just my two cents,
TS
"I think the risk in dividend reduction will be made up in capital appreciation in all the thrown off cash from operations that MUST be invested somewhere. If that means better and more efficient production equipment etc. then that helps book value too. The massive undistributed cash flow generated is itself going to reduce PE ratios and attract a lot of investors looking for traditional growth or value. The underlying value of these trusts is in the resources - that is not going away and demand will accelerate after the current short term anomaly. The one thing that is a certified and now a validated risk is the Canadian Government. If it continues to get even more socialistic it might just start nationalizing company's or resources and penalizing every investor/owner and subsidize voting constituents. But I think that most Canadian leaders are a lot smarter and more responsible than that. I guess I am betting on the common sense and that may be a counter trend to what we just saw. I never thought of myself a contrarian investor before lol..."
Do you understand the structure of the trusts? It doesn't seem so.
The resource trusts hold DEPLETING assets, ie, oil and gas. By their very nature, these companies must continue to ACQUIRE other assets to offset their depletion. Since the trust structure itself has not changed, these companies must continue to pay out 90% of their cash flow or they LOSE their tax advantaged status. The TAX is being levied on the distributions, not on the trusts themselves. These companies are left with a depleting asset base and no cash flow or retained earnings to acquire new assets. In four years, you will see significantly lower distributions. Get it?
The only way these companies were able to grow in the past was through their ability to issue new units. Up until this point, this is how they grew. NOW, who in the right mind will purchase more units in these trusts???????? End of story, the resource based trusts will basically be forced to revert to a corporate structure or sell out. Desperate sellers don't command premium prices.
You should ask your advisory service if they truly understand what they're talking about. Or are they simply recommending these trusts based on their yield????
Even though you seem like an arrogant prick, I hope you'll give this some thought. You're on a sinking ship, and the bounce is simply what you stated before, a dead cat bounce.
Do your homework, research these companies. They will NOT have the producing assets to maintain their distributions. Throw in the tax on the distributions, and you have a dead business structure.
Quote from Wetton:
"
Do you understand the structure of the trusts? It doesn't seem so.
Funny how some people go out of their way to personally attack others on a question that was not even directed to them. If you have a personal problem with me send me private email or lets exchange contact info and meet in person for a personal round of "education" and lesson givings. Who the hell do you think you are talking to me that way?Your a hypocritical, opinionated and judgemental bigot. I didn't attack you personally and don't even know you.
So let's get beyond the personal bs - and try to get to investing and learning a few things.
I know the basics of trust structures but they are complex mechanisms and not many in the investment community even have a clue about them. My advisors have made 20-45% (annualized) on top of 10-20% dividends over the last 2 years in these instruments so I'd say they know their stuff.
The US and AUS got away from trusts many years ago since they were considered an inferior product. However, the low and declining interest rate environment in the US have resurrected the interesting notion of income and trust instruments as "growth" instruments. This trends well with an emerging baby-boomer retirement demographic in the US who are looking for high incomes. In fact high yielding securities have been some of the most profound and unsung growth stories known anywhere these past few years. They have beat the S&P500 performance to death. Wake up and smell the coffee - many people made 30-60% on these instruments on the growth on TOP of the dividend as yield hungry investors bought up shares with heavy demand. I am personally playing right now for dead cat bounce but MAY transition longer term and play both growth and income. If I can net 10-20% in Div cash flow a year PLUS 3-5% growth for a few years that is fine for me. Even if I get a decline in growth of 1-2% the high yield makes up for it. But I am anticipating increased costs (tax) and I don't mind the implication of a reduced dividend if its a LOT better than I can do elsewhere for the same level of risk.
As for declining assets - the ENTIRE planet is a declining resource bubba. Guess what happens when resources decline? I'll give you a hint - prices of resources go up. That's econ 101. What "smart" miners and resource producers do do when prices decline is they take the easy minerals near the surface or the commodity from the easy to reach/low-hanging fruit that have the lowest production marginal expense. Miners get ore near the surface for example. When prices increase they go deeper to the harder or more expensive materials to produce since margins are higher but profit and risk both increase. But this technique is a natural hedge and has been done for decades all over the world; most notably in S. Africa. Acquisitions of juniors in 3rd world countries is also a good way to increase capacity but there can be political and labor risks. There are also future hedging and repurchasing production from strategic trading partners etc. So there are many profitable ways to deal with the problem of declining assets. The most direct is to pass off the costs to buyers of product at multiples of true cost. This is an old game that utilities have done for decades to get extra premium for "average" costs of increased production from naive people buying at retail. Trust me its very easy to adjust strategies or cook the books in legal ways that can make enormous profits in any kind of environment.
Also, believe me the Canadian Gov is setting itself up for a belligerent back lash with this tax on trust. The gov will be forced to subsidize trusts if the expenses get too high (due to tax) and in the middle of a cold winter miners and workers etc. who get their salary increases scalped call a strike or walk off and stop all production and hold your gov hostage. With no tax revenue and no gas/oil or coal the pressure is high. This happens all the time and the easy way to give relief is for gov to remove the taxes and everyone gets more money (except the greedy government). So there are many opportunities for a significant change in favorable sentiment in trusts and that can pump prices up from a fireside sale level.
Frankly, I think what is going on with the change in tax status of trusts is really contrived and a clever way to screw the initial trust investors. These newer Trust managers never really intended to pay out high dividends "forever". This recent tax change was basically gov giving CEOs an excuse and a motivation to convert to traditional corps at the costs of the investors; many of them nonvoting foreigners. Pure Machiavellian tactics. Guess what? If the trust structure is not a viable mechanism because of the recent more favorable tax breaks to corps (reexamine the new tax breaks to corps) then trusts WILL have an economic incentive to convert. Its the old "Brier rabbit" game and this is exactly what the trust CEO's wanted to save face with investors since trust structures limit their management flexibility.
Now Trusts can blame government as the contrived bad guy. But wait - guess what happens when trusts convert to traditional corps? Initially there is a fire side sale as the speculative players get shook out of trust. But this is also contrived and when prices decline this is the time to buy. Reason? Trust owners get new shares in a normal for profit corporate structure (with the new improved tax rates). But the big thing is the new stock/corp gets an elevated PE multiple in the new stock that is more traditional for corps and DIVIDENDS ARE CUT WAY BACK since they are taxed higher. That means price of shares GOES UP (not down) since capital is held on the books rather than distributed. Then CEOs can give themselves options and the theft of prior trust assets reverts from gov to internal officers but it takes a long time for this theft to show up on the books. Smart investors get out after the corp is formed.
Those trusts that do not convert will obviously also find a way to reduce dividends by increasing costs (higher salaries, more office equip etc). There is NO pragmatic way for gov to force managers to be efficient with how they run these trusts. In fact I expect those wanting to remain as trusts to invoke a belligerent push back against gov to rebel against this change of tax status. Trust me - less tax will be paid than what the gov expected to gain. Think about it - there is no longer an economic advantage to distribute the same high level of dividends - so income will be "hidden" on the books or spent to the benefit of workers before it gets to gov. Increased expenses mean that profits are lower and dividends MUST be reduced. That's a simple p&l reality since trusts can't distribute what they don't have nor can gov tax what is not tangible. Bottom line gov is completely powerless and those trust holders that shake out at the bottom subsidize the change in control of trust and revenue sharing relationship change between trusts and gov. Its the old Robin Hood game and the best way for an investor to profit is to keep their wits and to become one of the merry men...
Now come back and look at the current situation. If trust price drops (like it just did) then yield increases for a given dividend rate. That's a pretty basic high school level math concept that you should be able to understand. If price is severely/overly discounted in such a way as to make up for the anticipated dividend reduction from unfavorable tax then its very possible for an investor coming on now to get an immediate net gain. I just did that and am already up a few thousand dollars. Got it? Now consider what happens if US treasury rates decrease in a few months (a high probability given economic slowdown). That means rate changes ripple throughout the global community and foreigners come looking for better yields. Guess what? People find this neurotic;y Anglo-french socialist country called Canada that has an old track record of high yield performance in trusts that looks pretty good on paper - and they are discounted from their highs. Guess what now? There are only so many trust shares available for purchase (again econ 101 supply and demand) and a lot of investors looking for high yield for a period of time before the foreign tax kicks in (less than a 4 year horizon). Guess what - yup - trust prices go up. Got it now?
If you can't make money in this then you have no business giving investment critiques or advise or lessons. My advise - go pick a fight with someone closer to your peer level - high school kids maybe?
TS