Wednesday, April 15, 2009

The Canadian business media exposed its utter incompetence with articles like this



Although there are MANY, MANY, contenders, Jonathan Chevreau has to be one of the worst “business” journalists in Canada, for a litany of reasons, including articles such as this in which the modus operandi (on behalf of the Department of Finance) was to “blame the victim”.

Chevreau’s closes this diatribe of nonsense, entitled “Earth to investors: Don't blame Ottawa for your investing blunders” by claiming investors’ “rage” to be “manufactured”, completely and totally missing the fact that it is Flaherty’s and Carney’s tax leakage claims that are MANUFACTURED....no quotation marks required.

Have a read of this most ridiculous of articles:

Earth to investors: Don't blame Ottawa for your investing blunders
It's only a real loss if you sell


Jonathan Chevreau,
Financial Post Published:
Saturday, November 25, 2006


A month after the Halloween Massacre, income trusts continue to be a bone of contention for Boomers on the cusp of retirement. My e-mail inbox hasn't received such an onslaught of plaintive communiques since, well, the Liberals tried to tax trusts a year ago.

These appeals are being sent to any journalist remotely sympathetic to the cause. And much of the lobbying comes from those with a sharp axe to grind.

One camp is the industry itself and the army of lawyers and financiers feasting on it. Another is retail investors who made too large a bet, perhaps aggravated by margin debt. They're understandably desperate to persuade Ottawa to change its mind, in the hope they can recoup their personal losses.

One senior wrote: "I have lost over 45% of my margin account, because I was using borrowed money on top of the equity in the account."

Earth to this senior: That's appalling but did your financial advisor approve this idea or worse, initiate it? Did they warn you income trusts are equities, not bonds? Did they inform you Canada accounts for just 3% of the world's capital markets and that small- and mid-caps trusts are a small and risky slice of this tiny market? With the end of the 30% foreign-content limit, there's no reason for RRSPs or RRIFs to be so unbalanced.

A third camp is from those with a vested interest in getting the Tories booted from office. Presumably, they are card-carrying Liberals or members of other parties.

Had they been in power once corporate giants such as BCE and Telus decided to convert to trusts, they would have taken the same action.

When the Liberals retreated from their attempt to tax trusts a year ago, comparable losses were recouped and trust investors had a golden opportunity to retreat to a more prudent allocation. But, emboldened by what some viewed as the Tories' "promise" not to touch the sector, some plunged greedily back in again. Their faith in the Tory assurance reminds me of the "Greenspan put," whereby stock-market punters counted on the U.S. Fed to bail out the market by lowering interest rates anytime stocks faltered.

Now, those stubbornly overweight in trusts seek to punish the Tories for having the guts to implement the Liberals' own idea and fix a problem created on their watch.

The telltale line from the politically motivated is the cry "they promised" or "they lied."

"You promised!" may work with children pleading with parents but it's unlikely to sway professional politicians. As for lying, it's sad but regrettably true that prevarication is an occupational hazard for those who attain political office.

Circumstances change. The Tories were ill-advised to promise not to touch trusts in the first place, but what could they do once BCE decided to convert? Wait until all five big banks followed suit?

A structure once limited to small- and mid-cap energy trusts and obscure niches like cold storage suddenly threatened to engulf all of corporate Canada. We were becoming Income Trust Nation, while Australia and the United States and had long since moved to shut down similar arrangements.
More moderate observers agree the tidal wave of new conversions had to stop but feel the exemption for existing trusts should run beyond 2011 to 2017. That's reasonable and worth considering, as are some other suggestions for fine tuning the transition. See, for example, mad-as-hell.ca, a Web site for income trust investors to vent.

Generally, with pension splitting and now income splitting in the wings, what we've lost on the swings we've gained on the roundabouts.

I disclose here that I voted Tory last time and will do so again. My spouse and I also own income trusts through index funds. On paper, we've lost enough to sympathize with those whose nest eggs are temporarily depleted. However, like anyone with well-diversified portfolios, we have seen compensating gains in our dividend-paying stocks. Meanwhile, the trusts may yet come back. Remember -- it's only a real loss if you sell.

The manufactured rage is disproportionate to the alleged offence. It's time to let it be.

5 comments:

Dr Mike said...

"However, like anyone with well-diversified portfolios, we have seen compensating gains in our dividend-paying stocks. Meanwhile, the trusts may yet come back. Remember -- it's only a real loss if you sell." by Jonathan Chevreau

Two points from this idiotic statement : maybe he could explain why gains occurred in the dividend paying stocks---removal of the competition maybe.

he appears to be the mouthpiece for Jimmy as he states "it is only a loss if you sell"--what a stooooopid statement anyway as the loss resulted from the loss of the investment vehicle itself , along with the loss of confidence in the Canadian markets--of course , not to mention the loss of tax revenue & Canadian ownership.

What a jerk!!

Dr Mike

CAITI said...

Dr. Mike:

Re: "However, like anyone with well-diversified portfolios, we have seen compensating gains in our dividend-paying stocks. Meanwhile, the trusts may yet come back. Remember -- it's only a real loss if you sell." by Jonathan Chevreau


A permanent 31.5% tax can ONLY cause a permanent loss.

Chevreau is a fool.

Brent Fullard

Anonymous said...

From: "Corcoran, Terry (National Post)"
Date: Wed, 15 Apr 2009 10:54:55 -0400
To: CAITI

Wait a second, Brent. I thought I was the worst. How dare you!

CAITI said...

Terry:

That would have been a conclusion you reached on your own, or based on the feedback from others. I have never made such a statement, since you fail to qualify as a journalist in my mind, what with your slanderous and false statements about myself, on numerous occasions, as well as your complete and utter disregard for the facts of the income trust situation. Allow me to share the comment I provided you with yesterday, with this larger group copied on this email response of yours.

You might want to read my blog article that elicited this insightful comment:

Anonymous has left a new comment on your post "Not all coupon clippers are treated alike. Not all...

Yeah this CON government and their CON supporters are very malicious people. As for Terry Corcoran and Eric Reguly - who the hell helps inspire these ideas of vaporizing or encasing people in concrete and throwing them in Lake Ontario - Paul Bernardo? Sounds like these two deserve to be put on the Dangerous Offenders list. Totally agree if Flaherty had not taxed trusts things would be very different today. Unfortunately Canada's future is not looking good these days.

Dr Mike said...

Hey Terry

You never did answer my question yesterday in my email to you & Jonathan--let me give it another shot--here goes.

Was the imposition of the trust tax worth it??--was the tax gain enough to offset the harm caused to small investors everywhere??--was it correct to implement this policy without consultation with ALL groups involved??--was the tax saving enough to even offset the tax losses now in place from private takeovers of damaged trusts??

Give those few a shot if you would.

Thanks in advance.

Dr Mike Popovich