Chapter 18 - Slides 01-17 - Preferred Stocks and Convertible Securities

Hybrid Securities – The Best (and Worst) of Both Worlds. Preferred Stock! Isn’t that what you want? Well, if you are the typical retail investor, no, not really. Leave the preferred stock to the corporate holding companies such as Warren Buffet’s Berkshire Hathaway. Convertible Securities! Doesn’t that sound sexy? Well, again, like convertible cars, the reality is often a very different experience than the image. These hybrid securities which look and act both like bonds and stocks may be of interest to some investors. However, in my humble opinion, for the vast majority of us retail investors, we are better off sticking to stocks for growth and income and bonds for income (or mutual funds of stocks and bonds).


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