Slaughter in the Canadian Markets
- 5 Comment
You can’t have an investing blog in Canada and not write about the blow up that occurred today in our markets as a result of the income trust policy change the federal government enacted. In essence, they have change the tax rules on trusts and the ability to reduce the amount of tax a corporation by converting to a trust. To sum up:
Income trust investors suffered more than $20-billion in paper losses on their portfolios as some of Canada’s best-known companies — from telecom giants BCE and Telus to Yellow Pages, CI Financial, Canadian Oil Sands and Aeroplan — were battered by the rush selling following Mr. Flaherty’s surprise announcement that trusts will be taxed.
I think what this tells us is how vulnerable investors are to changes in government policy. I think to other examples such as the NEP in the early 80′s when the federal government’s policy changes on oil and gas destroyed that industry. Be careful out there – diversify, diversify, diversify.
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5 Comments on this post
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Kimber said:
What made me laugh was the talking heads dramatizing on “money evaporating.”
Money moves, it doesn’t evaporate.
It moves from one person to another,
from one investment vehicle to another.Personally, I picked up a few trusts today.
Already made about 15% on the rebound
(markets always overreact in the short term).November 1st, 2006 at 9:11 pm -
D said:
I enjoy reading your articles and insights, hang in there and your picks will come through.
November 2nd, 2006 at 1:44 am -
empty spaces said:
Yeah I lost a lot of gains that I had seen in the past few month. I picked up a ton of energy trusts when natural gas prices tanked. I was up 20% in a month and now i’m back down to zero!
November 3rd, 2006 at 4:11 am
[...] The Dividend Guy argues that the latest blow up once again shows the importance of diversification. [...]
[...] Canadian Income Trusts Tax Melt-down Let’s face it, most investing decisions are made as easily as throwing a dice. I’vebeen told that I have a pretty hot temper, so I make it a point not to jump into things when it comes to investment decisions. This explains why I haven’t covered the recent Canadian Income Trusts melt-down like some of my peers have. There’s been some excellent discussions brewing. Almost a week has past, so here’s my perspective. [...]