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Perferred Stock

When the average trader buys and sells stock, it’s typically the common shares that are traded. As in the importance of the different types of ways of being a shareholder, Owners of common stocks are at the bottom of the ladder. In cases of bankruptcy, common stocks are the last to “get paid”. First is the bondholders, perferred shareholder and any other debt holders.
With the preferred shares, it works a little different. They don’t call it preferred for nothing. The share is almost like a bond in regards to having a fixed dividend. It preforms as a fixed income security, but it’s not necessarily guaranteed.
The reason I bring this up to you is because I’ve been looking at the stocks of two companies that have been in the news lately, you have heard of them. The two stocks I speak of is General Motors and Ford Motor company. I will break each one down separately.
General Motors (NYSE:GM), the common shares were recently as low as $1.70 a couple of weeks ago and now it sits at $4.70 per share (a gain of almost 280%). That would have been a great payday for you if you were willing to take a chance and gamble on the stock. I didn’t take advantage of it because I don’t consider stock trading a form of gambling. The dividend for the common shares will be history once the “bailout” is approved. In regards to the preferred, it will continue to pay out it’s 37% yield per share at it’s current price of $4.25 per share. The payout will be on January 15th, 2009 for shareholders on record on December 26th, 2008. The symbol for General Motors preferred is (NYSE:GPM)
Ford Motors company (NYSE:F) is also another company that has had their common shares beaten up to their low of $1.01 just a couple of weeks ago too. It now trades at $3.23 per share ( a gain of over 300%). Again another beautiful gain for anyone willing to take that chance too. As for the preferred shares of this company, it’s trading at $9.20 per share and returns a 35% yield per share. The symbol for Ford’s preferred is (NYSE:FPS). I do know that the payout is due within the next month.
The reason I bring this up is for my readers who are willing to take on the risk of trading the common shares, then let me recommend that you sell now and move into the preferred stocks. After doing the research on these stocks I will also pick up some shares this week. In this coming payout, it will be a 17% yield or better, depending on my cost basis.
I just hope that I’m not too late since it’s expected that Congress will approve the rescue plan and I’ll miss the jump in the price (however big it may be), which is something else I’ll be banking on for this trade to be ideal.
Do your research and happy trading.

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2 Responses to “Perferred Stock”

  1. Owen Murphy says:

    as always, stock market is one of the best ways to earn lots of money.:’:

  2. Liam Price says:

    it is good to invest in the stock market but you must be very careful and not speculate on rising stocks.~;;


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