One thing that really stuck with me was when someone observed that preferred stock for a solid company in a relatively reliable industry (banking, real estate, utilities) offers about the same rate as “junk” bonds. If we believe the market to be at least mostly efficient, there has to be a reason for that. Looking at the attributes of preferred stock you can see why the rate is what it is. Preferred stock is essentially an open-ended loan _subordinate_ to the company’s other debt. The company can just pay a fixed amount per year (which because of inflation makes borrowing cheaper for them and less profitable to you each year) and if they run into trouble they can defer or even skip those interest payments. That’s a good amount of uncertainty to take on, so you’d better get paid.
I really like that you use Canada in a lot of examples and topics. I read things like the intelligent investor (Ben Graham) and similar materials and they're always talking about things from an american perspective. Most of it transfers over but there are a few details every once in a while that makes things different for us Canadians. The problem is that as someone who is only about a year into their financial literacy journey, I don't always know how to spot those details. Hey, maybe that could be a video idea. Just a 5 min video on some of the key things like terminology differences and the like
I don't touch the leveraged Class As, but I have the preferreds of a couple of Split Share Funds, Financial 15, and Middlefield eCommerce and Real Estate. Financial 15 pays over 6 points, and Middlefield pays just over 5. The Middlefield one is a bit like having a global 1st mortgage, with a LTV of under 40%, on the entire real estate portfolio (the total NAV is approaching 30$ with the pref at 10). That's quite a lot of downside protection for the yield. Financial 15 has almost as much downside protection with its unit NAV at about 120% of the pref share value.
Sir I have a doubt. Can you please clear. Talking about the great depression, when people started selling their shares in huge numbers, who purchased their shares?
No, the price of the stock would just drop if no one wanted to buy, until it was at an attractive price for buyers. Price is all about supply and demand. There rarely are no buyers - only people who are willing to buy for a cheaper price.
HEY! could you please make a video explaining the repo rates, and how all this short term funding market for banks work?? It has been a huge topic in the financial world this week, and I just can't wrap my head around it and I'm pretty sure a lot of people have been having the same issue.
If The Plain Bagel has not done so yet, I would suggest a video on convertible bonds. If The Plain Bagel has already presented such a video, please let me know. Thanks!
Hello, thank you for the great videos. You seem to know a lot about the domain of finance in Canada, what are the jobs outlooks for finance in Montreal? Will I have good opportunities there?
Hi there! I work in Ottawa but have been to Montreal a few times for work. There’s a larger finance/investment industry in Montreal than Ottawa so I would imagine there are good opportunities there, but I wouldn’t know for sure
Hi there! I work in Ottawa but have been to Montreal a few times for work. There’s a larger finance/investment industry in Montreal than Ottawa so I would imagine there are good opportunities there, but I wouldn’t know for sure
Most times they render the useless currency invalid and start issuing a new one, often after a change in government, but I'm sure he can give a more detailed explanation
Stop creating (and printing) more money out of thin air. Since it is normally the government that creates/prints the money, that will usually lead to a lack of money for the government. To fix that there are basically three options: 1) Raise taxes, 2) Cut expenses, 3) Find new income sources. Socialists governments, like that in Venezuela, do not like cutting expenses(2), and it has already nationalised the oil industry(3). That leaves raising taxes, which will just lead to companies shutting down, the owners and rich people leave the country, and more unemployment and anger among the poor. Anger directed at government...
Please keep doing what youre doing! This channel is amazing, and it would crush me to see it go down the clickbait path of the infographics show
Never found such a concise explanation of preferred shares within ten minutes elsewhere. This channel is a gem.
Thanks for the detailed explanation! 👍
Jam packed video. Awesome work, Richard! I still do consider prefs = fixed income
Great vid, thanks. I would love to hear more about Options. I know that you've done vid about options before, but would love more detailed/longer vid.
One thing that really stuck with me was when someone observed that preferred stock for a solid company in a relatively reliable industry (banking, real estate, utilities) offers about the same rate as “junk” bonds. If we believe the market to be at least mostly efficient, there has to be a reason for that.
Looking at the attributes of preferred stock you can see why the rate is what it is. Preferred stock is essentially an open-ended loan _subordinate_ to the company’s other debt. The company can just pay a fixed amount per year (which because of inflation makes borrowing cheaper for them and less profitable to you each year) and if they run into trouble they can defer or even skip those interest payments. That’s a good amount of uncertainty to take on, so you’d better get paid.
Awesome man. This was my introduction to the topic, and now I'm going to spend my Sunday researching it further. Thanks!
I really like that you use Canada in a lot of examples and topics. I read things like the intelligent investor (Ben Graham) and similar materials and they're always talking about things from an american perspective. Most of it transfers over but there are a few details every once in a while that makes things different for us Canadians. The problem is that as someone who is only about a year into their financial literacy journey, I don't always know how to spot those details. Hey, maybe that could be a video idea. Just a 5 min video on some of the key things like terminology differences and the like
Thank you for making the video. it really helps a lot.
Thank you for your work ! i learn so much with your videos ! Bravo ! You are the besst. Simple, clear and very useful !
I saw your video for the first time and I wish I had come across your channel before. I am glad to be here
Great video! Would love to see a video on vulture funds.
One of the best channels
I don't touch the leveraged Class As, but I have the preferreds of a couple of Split Share Funds, Financial 15, and Middlefield eCommerce and Real Estate. Financial 15 pays over 6 points, and Middlefield pays just over 5. The Middlefield one is a bit like having a global 1st mortgage, with a LTV of under 40%, on the entire real estate portfolio (the total NAV is approaching 30$ with the pref at 10). That's quite a lot of downside protection for the yield. Financial 15 has almost as much downside protection with its unit NAV at about 120% of the pref share value.
A few years ago in Spain banks pressed preferred shares to many savers who didn't understand what they are. Many of them lost lots of money.
woah 65k subs now, how many subscribers are you getting now? love the progress of the channel. A definite inspiration.
It’s been crazy lately, I’ve almost doubled my subscribers in the past few months. I’m sure it’ll slow down but it’s crazy to see!
421k
Thank you so much for this video!
Awesome video per usual!
Thanks for the video! How about debentures, where do they fall into this whole picture?
5:40 it doesn't sound like it's preferred at all
Sir I have a doubt. Can you please clear.
Talking about the great depression, when people started selling their shares in huge numbers, who purchased their shares?
Other people. Doesn't necessarily need to be Americans.. Could have been an individual Japanese investor, or an Malaysian Investment Fund, etc.
@@dodid0 but who would prefer buying shares in a depression in such large quantities?
@@tusharmahajan845 Someone who had a lot of money and was waiting for the depression to pass so they sell it and make huge profit
Thank you guys !! Cheers
No, the price of the stock would just drop if no one wanted to buy, until it was at an attractive price for buyers. Price is all about supply and demand. There rarely are no buyers - only people who are willing to buy for a cheaper price.
Awesome, nice thank you :)
You should have a join button!
Great video, highly informative
Great explanation!
Video starts 1:06
Not all heroes wear capes
Why would the retractable lower the securities yield?
HEY! could you please make a video explaining the repo rates, and how all this short term funding market for banks work??
It has been a huge topic in the financial world this week, and I just can't wrap my head around it and I'm pretty sure a lot of people have been having the same issue.
Reverse repo is now over a trillion!
Thank you Mr Coffin
should I be doing this at the beginning of my year 10 gcse???
Can you do a non-principal protected note?
If The Plain Bagel has not done so yet, I would suggest a video on convertible bonds. If The Plain Bagel has already presented such a video, please let me know. Thanks!
Can you do one on floating bonds please? And other types of bonds?
Could you talk about hybrid bonds?
Interesting video, thanks.
So preferred stockholders are basically short covered calls while hedging with puts
They should put this videos in school
Yield is now 5% compounded over 10 years. Easy retirement if you have enough cash.
Thank you
Hello, thank you for the great videos. You seem to know a lot about the domain of finance in Canada, what are the jobs outlooks for finance in Montreal? Will I have good opportunities there?
Hi there! I work in Ottawa but have been to Montreal a few times for work. There’s a larger finance/investment industry in Montreal than Ottawa so I would imagine there are good opportunities there, but I wouldn’t know for sure
Hi there! I work in Ottawa but have been to Montreal a few times for work. There’s a larger finance/investment industry in Montreal than Ottawa so I would imagine there are good opportunities there, but I wouldn’t know for sure
@@ThePlainBagel Alright thank you very much.
Please do a video for perpetual bonds.
A video of when to stop investing your downpayment, 24 months, 3 years?
Talk about cryptocurrency ETF and futures
"A" preferred shares
W Richard
Liked
I have a question .If a country have hyperinflation , what to do in order to get back to normal situation?
Most times they render the useless currency invalid and start issuing a new one, often after a change in government, but I'm sure he can give a more detailed explanation
Stop creating (and printing) more money out of thin air. Since it is normally the government that creates/prints the money, that will usually lead to a lack of money for the government. To fix that there are basically three options: 1) Raise taxes, 2) Cut expenses, 3) Find new income sources.
Socialists governments, like that in Venezuela, do not like cutting expenses(2), and it has already nationalised the oil industry(3). That leaves raising taxes, which will just lead to companies shutting down, the owners and rich people leave the country, and more unemployment and anger among the poor. Anger directed at government...
好
你好
Plain Bagel Corporation sounds pretty darn plain
This is CFA material for free ahhaha
What did country done after hyperinflation example Germany, Zimbabwe
OMAGA .W Germany made a new currency tied to land to give it real value, and then switched to a normal currency after the economy stabilised
Zimbabwe switched to using other countries' currencies mainly the US Dollar and the South African Rand.
@@MatthewAllisonSouthAfrica and does they stay forever using other countries currency????
@@jijov.j1545 for 10 years they did. It's only as of February this year that they've reintroduced their own currency called the RTGS dollar.
something i am fast at
Example venezuela .what must government to do after hyperinflation???
Pls answer my question