Tuesday, January 6, 2015

Preferred Stock Buyers Change Tactics For Double-Digit Returns

Dramatically falling oil prices throughout the fourth quarter of last year have reduced inflation pressure, delaying, once again, any hope of a rate increase. On December 18, 2014 Fed Chair Janet Yellen stated that the Fed "…could continue to be patient." For preferred stock investors, downward pressure on rates means upward pressure on prices.

During such periods, savvy preferred stock investors can frequently purchase shares at wholesale (sub-$25) prices when new preferred stock issues are being distributed to the market. 83 percent of the non-convertible preferred stocks issued during 2014 (54 of 65) were introduced to the market by their underwriters using a temporary trading symbol on the wholesale Over-The-Counter (OTC) stock exchange. So how did buying shares during OTC distribution work out for preferred stock buyers during 2014?...

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