Biotech Values

[biomaven0]

Most preferred stocks are callable by the issuer, which means the holder is making a 1-way bet on interest rates—i.e. you lose capital if interest rates go up, but you do not gain commensurately if rates go down because the stock will be called.

Many preferred stocks trade below par, and hence have some call protection. The other key point is that many preferreds pay qualified dividends, and so are taxable at the 15% rate.

My own fixed income investments are divided between munis, bonds (only in my IRA) and preferreds.

Peter