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

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  • Peds
    replied
    Originally posted by Kennyt7 View Post
    ric ferri advocates PFFD a preferred stock index fund with low Expense ratio
    he does. its my only knock again him.....
    "I personally own PFFD.

    But don't buy what you don't understand. This asset class is not for everyone. Preferred stocks are mainly issued by finance companies that must stay below certain debt levels for banking regulations. However, the companies don't want to issue common stock because of shareholder dilution. Preferred stock solves the riddle. It's high yielding equity that acts like debt. In addition, about 60% of the dividends are qualified, making this suited for taxable accounts.

    Rick Ferri"

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  • Kennyt7
    replied
    ric ferri advocates PFFD a preferred stock index fund with low Expense ratio

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  • Tim
    replied
    "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?"
    I am not throwing stones at you. You stated that you didn't understand a strong distaste for fees.
    I stated the value of an advisor is in the risk choices and portfolio construction, not in the tactical positioning of specific investments. The insider deals are honestly promotional, not contributing in a meaningful way. The next significant FA contribution is to settle on an appropriate metric. The portfolio is designed to under perform the S&P 500! Surprise! It's not 100% equities. Takes a tremendous effort to have satisfied clients that don't lose sight in significant periods either up or down. Active tactical management adds little value (at least that is what I have read). If there is a desire for "tilt" , again an FA can add value.

    My point was simply pointing out that the "not understanding" was less than full disclosure. You understand it very well and deal with that at virtually every new client meeting. It is a significant part of your client interaction skills. I am not criticizing your business model. The risk and portfolio allocation is the meat in the sandwich. No more, no less. What would a portfolio of yours look like without the active management portfolio? I would welcome your comments and contributions.

    https://www.whitecoatinvestor.com/15...er-than-yours/


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  • 28mm
    replied
    Originally posted by Peds View Post
    I wonder if you know your IRR adjusted for taxes vs appropriate index benchmark....
    You are hitting the nail on the head. Trying to know how much you made and take into the very complicated (to me) K1's, capital calls and capital distributions (for PRivate Equity), I do not have hard numbers I can hold onto especially when calculating the tax implications. It used to drive me crazy. I had big money in them and kicked myself enough times. Yet I can't deny I have made money and some have performed very well and are very diversified which was part of my original intention.

    I am sure some are really good but far and few between they are no longer and never were really good for me.

    For some structured products I have owned till maturity, I do know my rate of return as it's very easy to know. For the PE, not so much!
    Last edited by 28mm; 11-22-2019, 01:27 PM.

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  • thehonestadvisor
    commented on 's reply
    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?

  • 28mm
    replied
    Originally posted by Tim View Post
    “I agree with you but it was me asking him about preferred stocks and he floated that he does do this and the 1% for the service.”
    You obviously know its not a good idea to swim with sharks. Curious why you would cast a line at MS Lake. Just saying. Google is alot safer. Glad to hear you cut the line.

    I don't want to take the position and be seen as a apologist for MS and or investment bankers. That being said, I also have no problem with professionals making money on fees. In fact, I've put about 10% of my investments with someone I would call a FA. He charges me at most half a point to do so. He's got a very good track record and it's only individual stocks that I can and have picked as well or better than him. My reason for that is to put a buffer in between my impulse to sell and to at least have a discussion if that's what I want to do!

    I really did get entangled in the web at MS. To again be fair, it was me pushing more than them to go heavier into PE and some structured investments that are ultimately not my speed or comfort zone. I've made ok money but the illiquidity and the opaqueness of them, etc. overhwhelms and sets off alarms as they are just not for me anymore.

    The reason I got involved years ago with MS was only to look for some diversity and boy did I made a ton of money on some structured notes tied to the SP500 with leverage of 1.8x...and downside protection..They were absolutely amazing.

    But that was then and at this point in my life, I need easier to understand investments with overall less risk..

    Nothing against MS as a whole, my experience has been fair and good. That being said, I certainly can see how badly some individuals at investment houses can really take big advantage and make tons of money while it being rather invisible to the individual.

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  • Tim
    replied
    “I agree with you but it was me asking him about preferred stocks and he floated that he does do this and the 1% for the service.”
    You obviously know its not a good idea to swim with sharks. Curious why you would cast a line at MS Lake. Just saying. Google is alot safer. Glad to hear you cut the line.

    Leave a comment:


  • 28mm
    replied
    Originally posted by Peds View Post
    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.
    ok

    Last edited by 28mm; 11-23-2019, 11:53 AM.

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  • Peds
    replied
    I wonder if you know your IRR adjusted for taxes vs appropriate index benchmark....

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  • 28mm
    replied
    Originally posted by Tim View Post
    •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.
    You are dead on. It is the investment side and he is not acting as a FA. Shouldn't have said he was. I've bought a lot of Private Equity over the years, while some have done well, they are not for me for many reasons such as they are too complicated to really understand. Can't really figure out easily the tax consequences, they are not liquid to say the least, have made it hard to forecast when and if I need to have capital available for the calls and on on and on.

    But I have some and all I can do is collect the distributions and have bought individual stocks with the funds. Never PE again or any of the structured products that are also illiquid and no longer interest me for all reasons plus more I've stated in the thread.

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  • 28mm
    replied
    Originally posted by Peds View Post
    You're thinking wrong.
    Thank you
    Last edited by 28mm; 11-23-2019, 11:52 AM.

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  • 28mm
    replied
    Originally posted by CordMcNally View Post
    Why the sudden change in investing style?
    Not sure if I replied to this but it's not a sudden change in investing. I just knew about preferreds peripherally and did mention it to MS. That was when he floated the product he offers and the related fee. From what it sounds like, even if there were no fee, I have no pressing need for preferred stocks regardless.

    Leave a comment:


  • 28mm
    replied
    Originally posted by Tim View Post
    •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.
    I agree with you but it was me asking him about preferred stocks and he floated that he does do this and the 1% for the service.. I am 100% not doing it as it's exactly what I don't need with more complication to tax returns, fees, etc.

    Thank you for the comment. Very appreciated.

    Leave a comment:


  • 28mm
    replied
    [QUOTE=Hank;n166463]Wow. Just wow.




    Last edited by 28mm; 11-23-2019, 11:51 AM.

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  • 28mm
    commented on 's reply
    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
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