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Strategies & Market Trends : Ride the Tiger with CD -- Ignore unavailable to you. Want to Upgrade?

To: tyc:> who wrote (30558)	6/30/2005 10:09:33 AM
From: Cogito Ergo Sum	Read Replies (1) \| Respond to of 314050

Hi tyke, with the ultimate pay-out being in the future. This point is always a stickler for me and a tad philosophical wrt investing... Seems to me the future payout in commons mostly depends upon perceived growth and that someone else will see more growth down the line and is therefore willing to buy from you at a profit to you.. The much maligned greater fool theory IMO. There are other cases as with a stock like CKG where the expectation of many is not a greater fool but the reasonable hope of proving up a developable resource to be bought by a major... and this was a miner that FAILED to find new ore Did all the people that owned this issue make those returns ;o) If 100 people bought NOV and a fictitious income trust at the same time and all held... the income trust holders have realised a gain (or at worst a return of some money)... but the NOV holders do not until they sell. Now if the 100 NOV holders all want to sell on the same day.. what happens ? And how many NOVs are there ? Now take Nortel in the days that it was lighter than air... It blew the doors off any trust... no question... and the profit made by many (myself included :O) came from where ? Free cash flows generated by the business or the pockets of some other investor.. (not moralising here).. And yes the door is just as small for the trust holders but mitigated by the distributions received... Trusts are not savings bonds and have lots of risks. Most criteria that apply to stocks apply to trusts but some wrinkles apply... like getting that cash flow up front... many energy trusts have become hybrids and do reinvest now or risk becoming outright ponzi schemes... (a peak oil eventuality) Look at this one Peyto... I think teevee brought his one up when it was a tiny producer... Sadly for me I did not buy .. stockcharts.com[h,a]dahanyay[df][pd20,2!h.02,.20][vc60][iUp14,3,3!Ll14]&pref=G or this one Advantage that was a portfolio darling of mine... I'm out well before the peak, but was in from day one. stockcharts.com[h,a]dahanyay[df][pd20,2!h.02,.20][vc60][iUp14,3,3!Ll14]&pref=G without incurring a tax liability for the shareholder If I'm getting you ... the shareholder only has a liability when selling... so as long as it's going up... great... but the shareholder needs to crystalize some gains at some point... BTW the energy trusts can and do pass along tax advantages (kinda like flow through shares).. so that you will find much discussion on ROC (return of capital) wrt to trusts. Like an RRSP... you make non taxable money BUT the ROC component reduces your ACB so that trusts held in a non registered are really deferring taxes.. Maybe a way to look at it is that getting some of that cash flow reduces risk.... although a good trader can certainly simulate the same effect.. The mistake on Navigo was too little DD. I liked the yield and bought a small position with the thought to further investigate... assuming the current high oil prices would cover up any inadequacies for the time being... approx 16% yield I was getting before the cut.. Now approx 15% yield post cut.. but of course the unit price took a 20% haircut to maintain the payout %.... That is my error... Again the trusts are not that cut and dry... like all theory reality likes to throw curves... business trusts would normally fit the mature business model... low growth etc... I bought this in the 7's and doubled my money on selling... plus collecting 10% rent on my ACB... stockcharts.com[h,a]daclyyay[df][pd20,2!h.02,.20][vc60][iUp14,3,3!Ll14]&pref=G too much information ? :o) and in parting YES there is a lot of risk in trusts also... and I guess you can see that when I think the growth component is done I tend to move on... regards K