Announcement

Collapse
No announcement yet.

Want to learn more and invest in preferred stocks.....I think!

Collapse
X
Collapse
First Prev Next Last
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Want to learn more and invest in preferred stocks.....I think!

    I have never bought preferred stocks and was curious about them, likely not for me.

    Thanks for reading!





    Last edited by 28mm; 11-22-2019, 11:30 PM.

  • #2
    I dont understand your relationship with your FA...but as a general rule, a person with an FA should probably stick to non-fancy investing.

    Comment


    • 28mm
      28mm commented
      Editing a comment
      While he is a FA and we do discuss investments, some of which I have bought, he is not overseeing or getting paid directly for the balances I keep there. Yes of course, I do understand that MS wraps up fees all sorts of ways when buying or selling some of the more 'fancy investments', which theoretically I don't hvae a problem with but no longer want anything to do with anything 'fancy'. Love your use of the word!

      thank you for the comment

  • #3
    Wow. Just wow.

    Preferred stocks are the worst of both worlds. Less protection than senior debt, less upside than common stock, and convertible at management’s discretion at a time and in a manner that’s most to your detriment. What’s not to love?

    Why are you sticking with this financial advisor from Merrill Lynch? No seriously, why?

    Comment


    • #4
      •Preferred stocks, hmmm know what you are buying. Morgan Stanley is in a “sales mode” in this case. I would suggest a strong NO.
      •What place in your AA do you need to fill?
      Stocks or bonds?
      •You have a preference on dividends and have a cap on the price but downside risk. It’s purely a dividend play. Stash those funds in your bonds, safer. Why would you consider a 1% fee on bonds at today’s interest rates? You can find a bond fund for diversification much easier.
      If you look at the holdings in PFF, impressive rates. Don’t bite, they trade like a bond, at a discount. You don’t need this.
      •It sounds like your “MS Broker” is actually selling you products from the investment banking side of the house. That is NOT an FA. MS makes big bucks on investment banking, service for raising capital.

      Comment


      • #5
        You're thinking wrong.

        Comment


        • #6
          Why the sudden change in investing style?

          Comment


          • #7
            I doubt your FA is not charging you.

            Comment


            • #8
              Years ago when I was investing at Merrill-Lynch I had a managed account that was preferred stocks. This was 2008 I think. I did make a capital gain when I sold it. All that income produces taxes and my monthly statement was 100 pages. It also complicated my taxes. Stay away from this stuff. You are being charged a quarterly fee buried in the statement. 2008-10 was a unique time when this type of investment some sense but I would recommend sticking with indexing in actual retirement.

              Comment


              • 28mm
                28mm commented
                Editing a comment
                100% am not going to do it. I have enough regret with the Private equity and Structured Investments and other fancy instruments that they offer and some that I own. I've been slowly unwinding them and moving the money into individual stocks that I pick and that there has never been a charge to buy or sell.

                Thank you for the comment.

            • #9
              I am an FA with MS and my team do not touch preferred stocks. What we do is put clients in SMA's, or separately managed accounts, where teams of analyst actively manage which stocks are in and out of the portfolio, and will constantly shave positions, add more to positions, etc. Shows activity and performs extremely well. (Our large cap dividend growth strategy is +30% this year with a pretty low standard deviation). We charge at support for how many assets you have, which is usually around .75. Never understood the hate around a 1% fee, especially if your account is being actively managed by huge teams of analyst who also manage to portfolio in a tax efficient way.

              Comment


              • thehonestadvisor
                thehonestadvisor commented
                Editing a comment
                Most people hate on a 1% fee, mainly because their advisor sucks and doesn't pay them attention, and because the advisor doesn't take the time to show the client all that MS offers when it comes to banking, as well as bonus perks like 10% off range rovers and other deals with companies that work with us. It's called our "reserved living and giving". Pretty interesting stuff.

            • #10
              basically no, stop.
              you have a large knowledge deficiency.
              go spend time reading some books, then some forums.
              then find out how much your FA is charging AUM, and how much your current retirement accounts cost.

              then youll have more targeted questions.

              Comment


              • thehonestadvisor
                thehonestadvisor commented
                Editing a comment
                If he/she is at MS, it will show up on the statement, or just go to their morgan stanley online account and see, as it is listed there. Or even better, call the advisor, and have them tell you how much they're charging and ask them to justify it.

            • #11
              There is a preferred stock ETF: PSK that is a basket of about 160 preferred stocks with an annual income of 5.81%. Distributions are monthly. It has an ER of 0.45%.

              Comment


              • #12
                Originally posted by Lordosis View Post
                I doubt your FA is not charging you.
                unfortunately they are probably “legally” killing your net worth. Why would they “help” you for “free” ? Ask how they get paid. I imagine they get commissions to put you in certain “ investments “.

                Bill Bernstein said to treat them all like hardened criminals and you had better listen to Bill.

                Comment


                • #13
                  You're going to have to do your research and stay on top of it.

                  Even paying a FA, you will probably still need do spend a lot of time on this.

                  One company's "preferred stock" is not the same as another's. Usually it functions more like a bond. Usually companies will convert these before paying off other lower interest debts.

                  Plus in this zero rate environment, the market is going to drive the yield on these down regardless.

                  Definitely look into it, but don't get your hopes up too much.

                  Comment


                  • #14
                    thehonestadvisor
                    "Never understood the hate around a 1% fee, especially if your account is being actively managed by huge teams of analyst who also manage to portfolio in a tax efficient way."
                    Honestly, you don't understand hate around 2/10 either. One year on an investment or a portfolio is NOT the measure of a good advisor. Understanding the risk profile and portfolio construction with a little bit of rebalancing its the most value. Not actively shaving here and there. I don't mean it personally, but trying to pick the outperformers requires leverage to amplify the winners and a short leash on the losers. No one has achieved a system that will consistently produce over 30 years. The are skills, most definately. They work until they don't. I am sure as an honest advisor you understand the resistance to fees and are loaded for bear with your counter arguements.

                    Comment


                    • thehonestadvisor
                      thehonestadvisor commented
                      Editing a comment
                      I totally agree, one year means nothing. One thing I preach to people who come in asking about returns and how much money I will "make them", is that I put an emphasis on managing their risk, and keeping their risk in line with what they need to achieve within their financial plan to reach their goals in retirement. Based on some peoples risk tolerance and financial situation, they don't need to have incredible returns on their money to reach their goals, and they sure as ************************ don't need to take the risk associated with those returns. I think we have a different perception on what the SMA accounts are, it's not just shaving and adding to positions here and there at all. A lot more goes on than that haha. There is always going to be resistance to fees, especially if someone doesn't see the value that you add to their situation... but then again, if someone doesn't see your value, would you want to work with them anyways?

                  • #15
                    Originally posted by Craigy View Post
                    You're going to have to do your research and stay on top of it.

                    Even paying a FA, you will probably still need do spend a lot of time on this.

                    One company's "preferred stock" is not the same as another's. Usually it functions more like a bond. Usually companies will convert these before paying off other lower interest debts.

                    Plus in this zero rate environment, the market is going to drive the yield on these down regardless.

                    Definitely look into it, but don't get your hopes up too much.
                    Thank you for that. From the posts I've read and knowing my desire to not do anymore Private Equity or structured note investing, this was just something I've known about for years and mentioned to my contact at MS. I should not refer to him as my FA even though he does operate in that capacity to an extent.

                    It sounds clear I don't need an investment like preferred stocks whatsoever!

                    Comment

                    Working...
                    X