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Gold/Mining/Energy : Canadian REITS, Trusts & Dividend Stocks

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To: Goldberry who wrote (1761)	11/4/2001 2:35:04 PM
From: bill	Read Replies (2) of 11633

Graham has done it now. He's got me thinking about ratios of distribution and stock price. I looked at the chart for AVN and saw that since it became a trust it has dropped 5.00. 12.55-7.55. Wicked for anyone doing a buy and hold in a bear market. This raised a question and I wonder if Graham or anyone else could explain, answer the following question: what is the necessary relationship between distribution and price of a trust? Many blue chip companies are now paying less than 2% dividend. Trust companies are paying far higher than that and yet the price falls as the distribution falls. I assume the difference between the blue chip and the trusts re dividend/distribution is risk. However, that doesn't seem to hold up much in the face of BBD.A. That aside, does anyone have some information on what the relationship of distribution to price of a trust is required for buyers to support a price? If a trust is paying 30% and the distribution is cut to 20% what would the expected drop in price of the stock be? 1/3? Does the ratio hold? Is this the case if the other trusts keep their distribution ratio because holders of the trust that is dropping flee to higher paying trusts? If so, what happens if all the trusts are cutting the size of their distributions? Does that restrain sellers because there is no safe haven? Is that what we are seeing now with similar patterns in price reduction for various OG trusts? Lots of questions but my major one is about the ratio. If the distribution drops, is the price drop of the trust predictable because an expected ratio has to be maintained? Thanks in advance for anyone willing to explain this.

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