For Immediate Release:
November 2, 2006
Contact: Ian Mathias 410-864-1652 imathias@agorafinancial.com Market Experts Aim to Profit as Canada Digs Their Own Grave Baltimore, MD: Yesterday, in a matter of minutes, the Canadian government destroyed approximately $25 billion in shareholder wealth. When Canadian Finance Minister Jim Flaherty quietly announced his intention to impose a sizable, retroactive tax on one of Canada’s most significant market sectors, nearly every investment trust in Canada plummeted. According to one investment expert, Flaherty’s endeavor may cripple Canada’s economy far beyond the mainstream’s expectations…but may also reveal unique investing opportunities.
“If enacted, this proposal will not merely bite the hands that feed the Canadian economy, it will amputate them,” said Eric Fry today in response to Flaherty’s folly. Fry, the editor of the market analysis newsletter The Rude Awakening, said that Flaherty’s surprising decision stands out as one of the more idiotic political maneuvers in recent memory. “If he had merely ended the investment trust mechanism, he could have halted the erosion of the Canadian tax base,” Fry went on to say, “without also destroying $25 billion of shareholder wealth in a single day, violating the trust of every investor in Canadian assets, and eroding the Canadian government's credibility.”
“The policy seems so ludicrous and counter-productive that we wonder if it might be retracted,” said Fry, “The sheer stupidity of the proposal, therefore, is reason number one for buying an investment trust.” If enacted, Flaherty’s proposal would force newly formed investment trusts to pay standard corporation taxes of 34%. Pre-existing trusts will have a four-year grace period before they must pay a 31.5% tax. Investors have sold off billions of dollars in trusts since this announcement, but Fry suggests that savvy investors are now purchasing select Canadian trusts. “We suspect the selling has been overdone and that rewards await those who take the plunge,” said Fry. In today’s Rude Awakening, Fry noted that some existing Canadian trusts are on track to yield over 10% annually before the grace period ends in 2011. According to Fry, massive sellouts may have undervalued a few of these select trusts. Eric J. Fry, The Rude Awakening's "Man On The Scene," has been a specialist in international equities since the early 1980’s. With over a decade of professional portfolio management experience, Fry’s well-respected familiarity has made him a regular on television financial news programs and a frequent contributor to selected investment research publications. Brought to you by Agora Financial, and written by the New York Times best-selling authors, Bill Bonner and Addison Wiggin, The Daily Reckoning is a daily, free e-letter that weaves information about the financial world, investing, and everyday life into an educational and entertaining format that has been engaging readers for over seven years. SOURCE: http://www.dailyreckoning.com and http://www.the-rude-awakening.com
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