As soon as Ralph Goodale’s decision to not interfere with Income Trust taxation was official, the predictable masses started to valuate trust securites to higher worth on the stock exchanges. I see this as a ridiculous, irrational reaction to media attention. A long term investor would know better than to jump in and out, especially when the news could potentially turn out to be only a temporary stay of execution.

I guess it’s human nature to jump on bandwagons. But I wonder, do people believe good news more, or bad news more? Personally, I am more easily convinced by bad news in the financial world simply because most good news are either sales tactics or merely serve to promote an industry where the customer must be sold. So let’s get in a timely article by the Toronto Star warning about the stability of Income Trusts. Enjoy!

Editor’s Note: Do remember that this article only talks about business trust. It helps that it’s the trust type that I’m most familiar. I’ve also previously blogged that I feel too many businesses are converting to trusts that have no reason to utilize such a structure in the first place!

TheStar.com: ‘Income trust study raises red flags’ by James Daw [via Stingy Investor]