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Energy Trend Setters: Canadian Income and Small Cap Stocks

Argumentum:
bravo. You nailed it with your comments on the "red herring" tax fairness argument that Flaherty made in crushing the income trusts. In addition to Price Waterhouse, CanAccord Adams did a phenomenal study which "destroyed" any credibility that the Govt had in its argument to defend the tax change. This was a sellout to ManuLife and the other giant finance/insurance cos that as you say could not or simply would not compete fairly with the income trust model. Sad to say the US Govt is not far behind with its incessant meddling in throwing money at banks, banning the shorting of financial stocks, and other idiotic ideas. It is a very pathetic state of affairs we are facing today. One final note to hearten energy investors is the fact that no currency that has ever lost more than 95% of its value has ever survived. The US Dollar has lost 98% of its value since 1930. You draw your own conclusions.




On Aug 20 12:03 PM argumentum ad crumenarum wrote:

> To cyberclark;As with all arguments against income trusts yours is
> thoughtless.The tax fairness plan is not designed to stop an unfair
> tax advantage .It is the destruction of an investment choice by investment
> vendors who could not or would not compete with them. It is an action
> by a govt interfereing in in the marketplace on behalf of a private
> interest unprecedented in canadian history.Start your study of income
> trusts by looking at the PricewaterhouseCoopers report on them so
> that you can speak with knowledge and not catchy sound bites.That
> sir,is not nonsense.

Canadian Royalty Trusts Will Never Return to Their Former Glory

Author raises some good points. However, I don't think any of us CANROY investors ever thought of them as E&P companies. What continues to amaze me is the shortsighted (idiotic) strategy of the Canadian and Alberta provincial Govt. By destroying the CANROY business model you achieve the following:

1. Less (not more) oil and nat gas production.
2. Less (not more) tax revenue.
3. More (not less) opportunity for Foreign investors to swoop in and buy up cheap assets.
4. Increase the likelihood of these trusts becoming more like an ECA, or IMO whose effective tax rate is 10%. Is that what Ottawa really wants out of their strategy? Talk about the "Law of Unintended Consequences."

Finally, Let's just set the record straight on why there was a Halloween Massacre to start with. Flaherty and his cronies basically caved into the pressures of "Big Insurance" (can you say Manulife?) who despised the thought of Candian investors avoiding their crappy and expensive retirement products in favor of a self-directed low cost/high return investment like the CANROYs. Never did Flaherty and his crooks expect the firestorm they got from private investors. In 2011 we will see a massive move to MLP structures (USA) or a conversion to an Encana-like corporate status. Trusts with the most tax pools like PWE and ERF will fare the best. Who knows what will happen to the rest. Meanwhile the trusts have basically given Alberta the " middle finger" salute. I sat in on a recent ERF investor presentation. Most if not all of their 2009 and 2010 CAPEX will be focused on Saskatchewan and BC, not Alberta. It's going to be a long, hard cold winter for those greedy Alberta politicians. Freeze, baby freeze.