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Old 04-08-2016, 08:45 AM   #601
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Sunsets - did you really get WFC-L at $1,064? Likely a typo, or you bought it in 2008-2009.

Here is where Mulligan and I diverge.

WFC-L is close to my largest holding. I started buying in May 2015 at $1,192, and watched it steadily erode throughout the rest of the year, to as low as $1,130. Depressing for sure - despite the dividends.

I realize this is a bank preferred, Wells Fargo is one of the strongest in the field, so that helps the risk factor. Dividends are QDI ( important for me ) and the issue cannot be called only converted at a common price in the 3 digits ( a most unlikely event ).

Thus I am comfortable with my WFC-L investment.
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Old 04-08-2016, 09:06 AM   #602
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I think I am going to dip my toe in these preferreds. I have the impression that Vanguard Brokerage Services is difficult to deal with for these thinly traded issues. Is VBS a problem? If so, then I would simply have a separate portfolio at another brokerage. If so, who do you guys use/recommend?
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Old 04-08-2016, 09:11 AM   #603
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I think I am going to dip my toe in these preferreds. I have the impression that Vanguard Brokerage Services is difficult to deal with for these thinly traded issues. Is VBS a problem? If so, then I would simply have a separate portfolio at another brokerage. If so, who do you guys use/recommend?
As I think Mulligan mentioned when I had to call in to Vanguard, once you call in once you seem to be able to trade any of them going forward.

So far for me, one call, two issues bought and two pending orders...

So if you want them in Vanguard, just give them that one call and be done...
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Preferred Stock Investing-The Good , The Bad and The In Between
Old 04-08-2016, 09:21 AM   #604
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Preferred Stock Investing-The Good , The Bad and The In Between

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As I think Mulligan mentioned when I had to call in to Vanguard, once you call in once you seem to be able to trade any of them going forward.

So far for me, one call, two issues bought and two pending orders...

So if you want them in Vanguard, just give them that one call and be done...


Im glad it is now working for you. I am still having issues at times, as they are wonky...I had to call them to buy GJP, then I bought some more online...Then flipped some no problem. But then a few weeks ago I tried to buy more again, and it wouldn't let me. Some other issues I have tried to buy and then it says call, while my Trade King or TD account for my HSA would allow it. Though oddly enough, an ETD issue tracking commodities I could not buy through the either 2, but Vanguard did though after flashing a warning pop up about the issue.
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Old 04-08-2016, 09:29 AM   #605
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I think I am going to dip my toe in these preferreds. I have the impression that Vanguard Brokerage Services is difficult to deal with for these thinly traded issues. Is VBS a problem? If so, then I would simply have a separate portfolio at another brokerage. If so, who do you guys use/recommend?


I probably make it sound a bigger deal than it is, unless Vanguard is experiencing high volume calls, it just I dont want to talk to anyone. I just want to punch buttons. I would think overall Vanguard is the worst in this area though. But if one doesnt want to open up a separate account, it can be manageable. I have been funneling money into Trade King last few weeks and like using it and the $4.95 trade price. Though I am getting free ones for the next few months.
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Old 04-08-2016, 09:44 AM   #606
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I think I am going to dip my toe in these preferreds. I have the impression that Vanguard Brokerage Services is difficult to deal with for these thinly traded issues. Is VBS a problem? If so, then I would simply have a separate portfolio at another brokerage. If so, who do you guys use/recommend?
I like both Fidelity and Schwab they both work great for these issues.
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Old 04-08-2016, 09:48 AM   #607
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I think I am going to dip my toe in these preferreds. I have the impression that Vanguard Brokerage Services is difficult to deal with for these thinly traded issues. Is VBS a problem? If so, then I would simply have a separate portfolio at another brokerage. If so, who do you guys use/recommend?

I also experienced problems at VBS when trying to buy WFC-L. Finally I bought in another brokerage account, simply not worth the hassle to call in and get transferred from place to place. Then to be told it is a bond-like security, they assume I'm totally ignorant about bonds, and read me 12 pages of boiler plate disclaimers.
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Old 04-08-2016, 10:15 AM   #608
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Do most of these issues pay qualified dividends and would be better held in a taxable account (at least in my case since I stay within the 15% tax bracket)?

For now I'll probably stay with VG since I know who to call there if I'm having issues. My VG rep has been pretty good at clearing some of the VG silliness things up for me.
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Old 04-08-2016, 10:31 AM   #609
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Do most of these issues pay qualified dividends and would be better held in a taxable account (at least in my case since I stay within the 15% tax bracket)?

For now I'll probably stay with VG since I know who to call there if I'm having issues. My VG rep has been pretty good at clearing some of the VG silliness things up for me.


Depends on what you buy... The word "preferred stocks" is ambiguous word at best... Generally a true traditional preferred stock is paid with after tax income from company so it is QDI. But many are not...Reit preferreds, trust preferreds, and "baby bond" preferreds are not QDI. Quantumonline usually is very accurate in telling you in the summary whether it is QDI or not. After a while, you almost know by looking at issue whether its QDI or not. This issue is important to me being in 25% fed and 6% state bracket. I have more QDI mostly because I do not have a lot of tax free space.
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Old 04-08-2016, 10:35 AM   #610
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Do most of these issues pay qualified dividends and would be better held in a taxable account (at least in my case since I stay within the 15% tax bracket)?

For now I'll probably stay with VG since I know who to call there if I'm having issues. My VG rep has been pretty good at clearing some of the VG silliness things up for me.

If you are within the 15% Fed Tax Bracket, QDI dividends are taxed at 0%. Your state might tax at full marginal rate, however.

And I believe you have to hold the stock for 60 days - not sure if the period can straddle the buy date; I bought my stock in the May-July 2015 time frame so have forgotten about this.

My WFC-L holdings are all in a Taxable Account.
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Old 04-08-2016, 05:22 PM   #611
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You must have held those shares of stock unhedged for at least 61 days out of the 121-day period that began 60 days before the ex-dividend date.

For certain preferred stock, the security must be held for 91 days out of the 181-day period beginning 90 days before the ex-dividend date.
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Old 04-09-2016, 04:40 AM   #612
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Sunsets - did you really get WFC-L at $1,064? Likely a typo, or you bought it in 2008-2009. Here is where Mulligan and I diverge. WFC-L is close to my largest holding. I started buying in May 2015 at $1,192, and watched it steadily erode throughout the rest of the year, to as low as $1,130. Depressing for sure - despite the dividends. I realize this is a bank preferred, Wells Fargo is one of the strongest in the field, so that helps the risk factor. Dividends are QDI ( important for me ) and the issue cannot be called only converted at a common price in the 3 digits ( a most unlikely event ). Thus I am comfortable with my WFC-L investment.
Sorry-my bad. Cost was 1,164, not 1064.
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Old 04-09-2016, 04:42 AM   #613
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You must have held those shares of stock unhedged for at least 61 days out of the 121-day period that began 60 days before the ex-dividend date. For certain preferred stock, the security must be held for 91 days out of the 181-day period beginning 90 days before the ex-dividend date.
I'm not following this. What rule states the stock must be held for 61 or 91 days before x-div date?
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Old 04-09-2016, 05:22 AM   #614
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I think it is saying 61 days for common stock and 91 days for preferred stock.
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Old 04-09-2016, 10:43 PM   #615
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I probably make it sound a bigger deal than it is, unless Vanguard is experiencing high volume calls, it just I dont want to talk to anyone. I just want to punch buttons. I would think overall Vanguard is the worst in this area though. But if one doesnt want to open up a separate account, it can be manageable. I have been funneling money into Trade King last few weeks and like using it and the $4.95 trade price. Though I am getting free ones for the next few months.
I also hate phoning Vanguard to place a pink sheet trade, they are nice about it, when you finally get the right person and they do it for the online trade cost since their system prevents you from doing online.

The fellow said once he placed the one for me, that I could do more on my own, and its true.

They do not allow AON orders on 100 , but if you order 200 then you can put an AON.

I did open another brokerage account, just to do these trades as I really like a hassle free (non-nanny) experience.
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Old 04-09-2016, 11:53 PM   #616
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6) BGEPF, although a preferred it is a convertible preferred that pays a higher dividend than the common though it trades as a "tracker" to the common. If you are wanting true preferreds this wouldnt be one to be interested in.
Why BGEFP? It looks like an interesting security, but seems very different than the very specific things you normaly buy.
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Old 04-10-2016, 08:57 AM   #617
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Why BGEFP? It looks like an interesting security, but seems very different than the very specific things you normaly buy.


Its a preferred, but for my personal scoring purposes its a common stock that pays a higher yield. I do not have very much $ in common stocks, so I consider this issue to be part of that allotted money. Big
Ag is down, so I wanted some long term exposure in this area while market is down. And yes, this is a "tracking prefered" of the common.
Regular traditional preferreds usually do not follow movement of the common stock. The fact that is was a non mandatory convertible made it more appealing to me.
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Old 04-10-2016, 10:30 AM   #618
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Its a preferred, but for my personal scoring purposes its a common stock that pays a higher yield. I do not have very much $ in common stocks, so I consider this issue to be part of that allotted money. Big
Ag is down, so I wanted some long term exposure in this area while market is down. And yes, this is a "tracking prefered" of the common.
Regular traditional preferreds usually do not follow movement of the common stock. The fact that is was a non mandatory convertible made it more appealing to me.

I don't understand the relation of the price of the tracking stock to the common to buy any of this personally, but thanks for the explanation. I do have some BG that has done OK lately, so that and a little ADM are probably enough ag.


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Old 04-10-2016, 10:42 AM   #619
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I don't understand the relation of the price of the tracking stock to the common to buy any of this personally, but thanks for the explanation. I do have some BG that has done OK lately, so that and a little ADM are probably enough ag.


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It tracks in this manner, as I really didnt explain it well. A common stock just goes up and down. The cumulative preferred of Bunge has an inherent $100 par value. If company (little chance) were to liquidate its face value would start at $100 assuming company had the assets......As common price rises, preferred has to rise as common approaches conversion price. As the market has to respect the chance of a call. As common drops, the preferred drops less because its yield is considerably higher than the common and is higher up in capital Structure than common. So you cant have the preferred trading at $50 yielding 9.8% while common at $55 yielding under 3%. ultimately there is little difference between the 2 other than the you get paid to wait longer in dividends, but get less potential price appreciation.
I flipped in and out of the common and made a fee thousand easy bucks when it dropped below $50. Now I am just buying PAGG which has a decent amount of Bunge and ADM in it also.
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Old 04-10-2016, 12:03 PM   #620
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I don't understand the relation of the price of the tracking stock to the common to buy any of this personally, but thanks for the explanation. I do have some BG that has done OK lately, so that and a little ADM are probably enough ag.


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Let me try and see if I can explain it a bit better than Mulligan... all made up numbers so do not try and look anything up...

This example if if the holder of the PS has the option to convert... IOW, the company has no say when it will convert....

Par value of PS... $100
PS can convert 1 for 1, IOW, when it is time to convert you can get one share of CS for each share of PS...

If the CS is trading at $50 per share, then the chance of the PS getting converted is zero.... nobody is going to give up a $100 PS for a $50 CS... this means the PS trades as a PS and is based on the yield of the PS...

Now, say the CS goes up to $150.... well, that means you can convert the PS to CS worth $150... the price of the PS will be close to the $150 price since it is now not based on the yield, but the underlying CS price... it is close because you actually do get more yield and that comes into the calculation of the price...

So, if the CS drops 10% for whatever reason, then the PS will probably drop by 10% also... it is 'tracking' the price of the CS... hence the use of the term tracking stock.... but, if it drops below $100, then the PS price reverts back to a normal PS and again trades based on its yield...
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