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Whitepaper: Preferred Shares Often Misunderstood

The financial crisis of 2008-2009 cut significantly into the portfolio values of stock market investors in Canada and around the world, motivating many investors to seek the shelter of safer, less volatile investments. Often preferred stocks were the refuge of choice. That shift in strategy, combined with the significant need of Canadian banks and insurance companies to raise capital to offset the impact of the turmoil and asset write-downs stemming from the global melt-down, spurred a dramatic resurgence in demand for preferred stock.

In this whitepaper, we will address

  • Why preferred shares are not as safe as many investors beleive
  • Show how common equity is typically a better investment
  • Explain how during asset write downs, preferred shares do not provide downside protection