Are Canadian Oil Trusts a Good Investment?

I have followed Canadian oil trusts since they collapsed a year ago when Canada changed its tax treatment of these things.

I bought Canadian oil trusts a few months ago. I figured that oil prices were going to go back up and was attracted to the dividends (9 to 11 percent).

Well, oil prices went back and to boot the US dollar fell against the Canadian dollar. Yet, in the last two months I've gotten the dividend, but I haven't seen any meaningful appreciation in these stocks. Now, with oil prices hitting new highs day-by-day and these things just not moving up, I am getting very concerned. As I see it, $20 of the $86 / barrel price in oil is pricing in an imminent and new confrontation in the Middle east (either Turkey - Iraq or Iran - someone). If this doesn't happen, oil prices could easily go back to $68. Then, these things which haven't moved up will fall (hopefully, the fall will be cushioned by the dividend, but I don't know).

I would have done much better in Exxon, BP and certainly in China Petroleum, but I went with this. Now, should I stick with them?

Also, I don't really know the difference between these different trusts. I invested in PWE and ERF, but I also follow CNE, BTE, ENT, PDS, PWI and PGH. They don't all move the same. Does anyone know which is best?

Comments

Peter Wasden

November 11, 2007

Based on the performance of ERF which lost 8% on earnings the day that oil crossed $96, I would say that the answer is no.

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William Li

November 17, 2007

I would also say that the answer is no. I've owned ERF since it was at $45 and oil at $60 / barrel. It is now at $41 and oil is at $94 / barrel. I knew oil was going higher and picked the wrong pony. My grandfather taught me to always be skeptical when stocks start paying out huge dividends.

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juan from Corpus Christi

December 24, 2007

Hi,
There is so much market manipulation going on now, due to the huge fraud in real estate and the big guys covering their you-know-whatsand the carry trade unwinding i.e. trillions of dollars, that a lot of the market makes no sense. Most of my advisors, G. North for example, say hunker down into international bond funds, foreign cds, treasury funds, and stay away from oil for the short term (unless there's a geopolitical problem). Yes, I lost my butt in Canadian oil trusts, twice, and no, I won't be going back in any big way. As for what are the best stocks, try Peyto, which has large reserves according to Roger Conrad and will be there after the 2011 Canadian tax finger in the eye.
Sooner or later, oil will go way up, and the larger reserved companies will appreciate, but not as much as American companies because of the communists in Canada (I'm only joking).

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