Today's high preferred stock prices and corresponding lower yields are likely to be a temporary spike more so than a "new normal" going forward.
The average market price for high quality preferred stocks started this year at $25.32 per share and closed July at $26.00 - a full dollar above their $25 par value. While there is no way to determine in advance what future prices will do, there is a case to be made that today's high prices will probably come to an end sooner rather than later (months not years).
In fact, as discussed here, it is the short-term behavior of European investors, much more so than our Federal Reserve's monetary policy or any other factor, that will likely lead to lower preferred stock prices in the U.S.
It is tempting to think that today's high preferred stock prices are a direct result of the Federal Reserve's "Operation Twist" monetary policy...
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The average market price for high quality preferred stocks started this year at $25.32 per share and closed July at $26.00 - a full dollar above their $25 par value. While there is no way to determine in advance what future prices will do, there is a case to be made that today's high prices will probably come to an end sooner rather than later (months not years).
In fact, as discussed here, it is the short-term behavior of European investors, much more so than our Federal Reserve's monetary policy or any other factor, that will likely lead to lower preferred stock prices in the U.S.
It is tempting to think that today's high preferred stock prices are a direct result of the Federal Reserve's "Operation Twist" monetary policy...
Note To Readers: This article was chosen to appear on the popular investing website 'Seeking Alpha'.
By clicking here a new window/tab will open on your screen to this article as it appears at SeekingAlpha.com.
Receive my Seeking Alpha articles by email: When viewing one of my articles at Seeking Alpha, click on the "Follow" button under my picture. You will be notified by email when I post a new article to Seeking Alpha.
Please enjoy reading this article at Seeking Alpha.
Many Happy Returns.
