Cinram

Lets try and be topical about this investing thing.

Cinram International Income Fund , the world's largest provider of prerecorded multimedia products such as CDs and DVDs, announced today that it is cutting its distributions and plans to suspend them amid weaker prices and slumping demand for its product.

In the household here, over the last five years, I've noticed that CDs and DVDs have lost the "fizz" appeal in the needless things marketplace, which means that we don't buy them anymore.

So, the Cinram situation comes as no surprise.

If you'd bought this Income Fund back in July you would have paid about $27 a share, and by the look of it, quite a lot of "investors" were buying at that level.

The same amount of investors who were selling actually.

At the conclusion of todays trading, before the announcement, Cinram was being bought, and sold, at $12.80 which was down 5 cents on the day. If you check tomorrow, there should be blood on the streets with this stock as everyone runs to the exit door.

The lesson here is reasonably straight forward, it was unlikely that a CD and DVD manufacturer and distributor would grow it's business in this video and music on demand, digital environment. The odds would be that growth would be flat, or diminish and that at some point, distributions from this "trust" company would vaporize.

That's the sort of thing that you should be thinking of before you take that important step of investing your money in any company, especially an income trust.

I apologize, but another short list is about to be thrown in your face.

1. Research all aspects of the company, do your homework.
2. Past performance does not guarantee future success.
3. Dividends or Distributions can always vanish

I'll post an update tomorrow about how the stock performs.