Why sell preferred shares?
At what point do you get rid of your preferred shares? Suppose that in the depths of the financial armageddon, you were able to pick up some bank preferred stocks are ridiculously low levels. There was a period of time when preferreds were yielding 13-14%. While in many cases, this would be a warning sign, those that saw the blood in the streets and bought instead, were rewarded handsomely. Ironically enough, I bought these stocks for the sole purpose of being defensive.
Now these very same preferred stocks are yielding about 6-7%. So from the time of financial armageddon until now, if you are still holding bank preferred, the upside you've received alone in capital gains can be anywhere from 60-80% (or even more). With the bonus of high yield that you're receiving, the question is - when do you decide to sell the preferred shares? Or do you just keep it indefinitely or until the bank retracts?
What are some strategies in this regard? Do you hold or sell? I'm choosing to hold - it's hard to let go of the golden goose laying the golden eggs.
Now these very same preferred stocks are yielding about 6-7%. So from the time of financial armageddon until now, if you are still holding bank preferred, the upside you've received alone in capital gains can be anywhere from 60-80% (or even more). With the bonus of high yield that you're receiving, the question is - when do you decide to sell the preferred shares? Or do you just keep it indefinitely or until the bank retracts?
What are some strategies in this regard? Do you hold or sell? I'm choosing to hold - it's hard to let go of the golden goose laying the golden eggs.
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