UnThreaded | Threaded | Whole Thread (17) | Ignore Thread Prev | Next
Author: BruceCM Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 77710  
Subject: Re: TCO-K Date: 3/20/2013 7:48 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 3
I'm still not sure why anyone would take interest rate risk with PFDs at 5-7% unless they had liabilities they had to match.

Probably the need for reliable income....which may be what you mean by 'liabilities to match'.

Writing puts carries the added risk of asset loss if the stock's price suddently drops. An investor (generally, retiree) requiring income does not pay attention to security price fluctuation....only to the securities ability to sustain its distribution. This is uniquely true with preferreds, where a decline in shareprice (do to ascending interest rates) usually means a more secure dividend.

But with today's pitiful yields and artificially low market interest rates, if I'm investing for total return, preferreds is not where I'd be.

BruceM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (17) | Ignore Thread Prev | Next

Announcements

Related Boards
Real Estate Investing
This is a great board for Real Estate other than REITs.

Buying & Selling a Home
Get your personal advice about mortgages, agents, etc. here.
Foolanthropy 2014!
By working with young, first-time moms, Nurse-Family Partnership is able to truly change lives – for generations to come.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Macro Economics

Economic Implications of Cuba
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement