Sunday, March 21, 2010

Oh, Canada?

A comment to my Junk Bonds for Dummies post suggested I take a look at Canadian Royalty Trusts as a proxy or alternative for high yield junk bonds.
American hockey fans know to first consider Canadian royalty trusts, before trying out the thin ice of junk bonds at a time balance sheets of most financials, muni's and sovereigns are fraudulent. Yield is still excellent (despite run-up since 03/09)

I've been looking at time today and wanted to share my general findings.  I'll do it with one of the better yielding ones, AAV, with a 5 year annual average dividend yield of 14.4%.  Over the past six months, it's Trend Model looks like this:

AAV Daily Trend Model

Sell 10/26  @ 6.81 = +9.5%
Buy 12/14 @ 6.16 = +9.9%
Sell 1/20 @ 6.77   = -2.4%
Buy 2/11 @ 6.93  = +7.2%
Sell 3/8 @ 7.43    = +6.1%

Total Return  = +30.3%

In other words, trading in and out of these as per the trend models seems superior in every way to buy and holding them for the yield.  

Thank you Henrik Zetterberg:
Vancouver, British Columbia -- What are the odds of scoring a tying goal and winning goal with a fraction of a second left on two consecutive nights? 
"Probably not very good," said Henrik Zetterberg, whose backhander with .3 seconds left in overtime Saturday beat Roberto Luongo and gave the Red Wings a critical 4-3 victory over the Canucks.