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Thursday, October 04, 2007

American Financial Advisor and Business Forecaster Recommends Investing in Alberta's Energy Sector

There are growing indications of an American recession on the horizon. The smart surviving American investor will be looking for secure investment alternatives. The Kiplinger Letter is advising Americans to invest in Alberta based energy income trusts.

Here are some key quotes that some in the Alberta based Big Oil would see as heresy because they are good news about the future of the energy sector in Alberta even considering a royalty increase.

"The trusts have recovered nicely from a big drop last year after Canada enacted legislation that would have the effect of forcing many income trusts to reorganize as corporations, effective in 2011. Currently, Canadian trusts operate similarly to U.S. royalty trusts and real estate investment trusts. As long as the trust passes through most of the income it generates to shareholders, it avoids or defers income taxes."

"Meanwhile, current yields on many of these trusts read like those of a roster of junk bonds issued by companies in bankruptcy: Harvest Energy (HTE), 17%; Canetic Resources Trust (CNE), 15%; Penn West Energy Trust (PWE) 13%, and Enerplus Resources (ERF), 11%. High yields generally suggest big risks, but how high can the risk be for trusts that own proven energy reserves?"

"There is optimism galore. And, frankly, there should be. Until the price of oil and gas starts to fall sharply, something that's unlikely unless there is a global recession, or Canada restricts investment in the energy sector, these investments offer about the best ratio of reward to risk that one can imagine. "

Albertans should not be terrorized or deterred from demanding a fair share of resource royalties. The doom and gloom rhetoric in some media is mostly a self-serving fear campaign coming from the Burghers in the Bubble of the Calgary Beltline.

1 comment:

  1. Ken,

    You left the real nugget of of a quote from that article out of your post. Hidden for those who take the time to read the whole article? If that was the idea I won't blow it but I have to add another "teaser" for your readers.

    The Kiplinger Letter goes on to state that...

    "In my view, a local tax increase of this size....."

    Does what? You'll have to read the whole article, I guess.

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