canadian income trusts to be taxed

Discussion in 'Wall St. News' started by vladn, Nov 1, 2006.

  1. la1paz


    Bought PGH @19 a week ago and sold @ 19.51 on holloween x 1000 shares. Price action seemed weak. It was wedging up on thin volume. Made me nervous. I also think the timing of it all was very lucky. Sold one day before the fallout.:)
    #31     Nov 2, 2006
  2. Any of you Canadians can tell me what happened to Fording Canadian Coal (FDG)? I am down over $10K (34%) since May and yesterday it was down 14% more after showing some slow signs of recovery. Holding Canadian Trusts have devastated my net worth in 6 months. Now with principal all shot to hell I am forced to stay long (5 years minimum) just to get my principal back from dividend flow. That time line is assuming the Robbin Hood Canadians don't outright confiscate US held securities to pay off their immigrants and social programs "on our nickle".

    The company is a coking coal producer for steel industry. I have read horror stories that they had plenty of customers (China and other foreigners) but due to incompetent management they are not even able to find tires (supply shortage) on their mining equipment to get the coal to fill orders. In the interim customers have been getting by with cheaper lower temperature coal and ignoring quality of steel production and dumping inferior steel on 3rd world. I also heard that incompetent managers/directors at Trusts all over Canada can't manage their cash payouts. On one hand they blindly pay the large quarterly dividends to owners then realize too late that they drew down too much operations cash with the dividend payouts and then have to turn around and borrow cash (at high interest rates) to fund operations.

    It sounds like you have a bunch of idiots managing your trusts and companies up there. While cash is being siphoned out the stock prices tank when investors see disaster looming on the books. Its like the classic "owners having their cake and eating it too" scenario with share price dropping each time they pay out the "Fat" yields and everyone thinking they are getting ahead and not thinking to the day they want to cash out and can only get 45 cents on the dollar to escape financial hell.

    God I SO regret EVER putting a dime into Canada and trusting foreigners with my hard earned money...

    #32     Nov 2, 2006
  3. Wetton


    Fording Coal - falling coal prices, end of story. Cyclical market.

    Why did you buy these income trusts knowing that "a bunch of idiots managing your trusts and companies up there"?

    Did you do your homework? Did you think that a 15% yield was normal? Or maybe the high yield indicated something was wrong?

    When a company pays out more than its cash flow, I would say that is a problem. For lots of income trusts, this was the case.

    I empathize with your anger over losing money, but Cdns lost more money than U.S. investors. So you can stop whining about Cdns "stealing" foreign money. What did the U.S. do to online gaming stocks about 4 weeks ago?

    Does this mean you won't be coming here on your big ski trip?
    #33     Nov 2, 2006
  4. mskl


    LOL - toooo funnnny
    #34     Nov 2, 2006
  5. lescor


    According to what rule? Did you sign a contract saying you can't sell? The question every trader/investor should ask themselves is, where's the best place for my money NOW. Holding on just to avoid taking a loss is a losing trader's mentality.

    You lost money, get over it. If it's that devastating to you, I at least hope you learned a lesson about portfolio diversification.
    #35     Nov 2, 2006
  6. mskl


    Leave it up to an American to blame a Country for his lousy investment.

    BTW - if you did your homework you would have known something was coming. Large Canadian corportations (BCE/Telus) had already said they were going to become a trust because of the favorable tax treatment. The banks were also threatenting to do the same- so it was soooo obvious that either the Government was going to lower corporate taxes/personal divdends to equate the taxes paid on trusts or they were going to increase taxes on trusts. Given the amount of $$ that would have been lost with the former - the latter became the obvious decision. It was simply a matter of time......

    All countries change their tax policies - that affect investments - yes even the good old USA (see recent tax changes of Dividends).
    #36     Nov 2, 2006
  7. mskl


    One last comment for those who don't really understand what happened here:

    Trust companies have grown in Canada simply because Canadian Corporations found a loophole in the tax system. It was never the intention of the Tax Act that Coal/Oil/phone/utility companies be allowed to be setup as a trust and receive favorable tax treatment (it was meant for passive investment like real estate). If the law wasn't changed - corporations would have virtually ceased to exist over time - as virtually every corporation would become a trust.

    So - it was truly the companies that became trusts - that were taking advantage of a loophole in the Canadian Tax Act and any investor who took advantage of this should be greatful that it lasted so long. The reality is that these investors schemed their way through a loophole - stealing billions of dollars from the Canadian Tax Base. Now - the party is over - and I'm suppose to feel sorry for those affected - TOO FUNNY

    True justice would have been to make it retroactive - now quit your crying
    #37     Nov 2, 2006
  8. Good I shook out a patriot to scream at.

    I blindly trusted an advisory service and actually paid good money for a recommendation to get into these trusts. When I started to see principal erode I started doing my own research. By the then they were all way down. Having thus discovered from examining the financial reports that most of the trusts were a scam and managed by "idiots" I made hasty plans to exit at the next US rate hike. My thinking was correct and we started getting a slight up trend to get out. I just did not get out fast enough. I was making headway on my exit plan and slowly selling off positions when the Canadians drop this foreign tax bomb shell. Instantly 15% loss overnight across the board.

    The gambling thing in the US was extremely predictable given the abuse in the gaming industry and the generally conservative nature of the US and negative attitudes about gambling. Politicians don't want their constituents going into the poor house from gambling or having to go on welfare/social programs. Anyone who "bet" on a gambling business deserved everything that they lost - double 00 on the roulette wheel just came in earlier than most thought it would. That was not however a selective tax on "foreigners" like what the Canadians have done.

    I am writing my senator about an idea to get even. The US should impose a $250 tax on every Canadian that comes across the boarder to avail themselves of our much superior quality health care that they can not get in timely fashion in socialist Canadian programs.

    Yes, I am still coming to Canada for ski vacation since I have already paid for it. If nothing else I want the pleasure of drinking a Canadian beer, paying my tax on it, then returning it as yellow snow before I return home... :D

    #38     Nov 2, 2006
  9. mskl



    Here is a link confirming your point of view: (Only go - if you truly believe that TS has a valid point)
    #39     Nov 2, 2006
  10. According to the rule that I think Canadians who just lost their ass as well as Americans who will put political pressure on Canada will FORCED to back peddle this idea. If I realize my losses too soon it would still take me 5 years to recover this much principal loss for an average expectation of return rate. The better bet is to not follow the sell off panic down and wait for rational thinking to prevail and pull up the fire side sell prices. I might just increase holdings when I think we get a panic induced bottom and then let it trend up over the next 6 months before I bail out and take less losses.

    Listen I probably lost more money this week than you make in two or three years. So I don't need the advise about "getting over it". This was only 5% of my total portfolio and I am well diversified. Frankly I have a huge cash position waiting for major global market sell offs such as this so I can come in and cherry pick the best of breed anywhere on the globe. That does not mean I like losing principal since by managing my risk I have built up a fortune frankly and really don't even bother working anymore. I was trying to get cash flow with high dividend stocks and bonds which is a new investment game to me. Normally I am a high growth investor. It's ironic that just as soon as I get into "lower risk" higher yield investments everything goes to hell in that world. My high risk side of my portfolio uses massive leverage with options. When I see markets stabilize I will just go in and write a huge options position to earn premium and get it all back in 1 month. It's just the principal of being screwed by foreign politicians that gets me angry.

    #40     Nov 2, 2006