Rob Carrick was kind enough to quote me in his piece The Brightest Spots in the Market Gloom:
“In 2008, there was widespread fear that the global financial system was breaking down,” said James Hymas, president of Hymas Investment Management and an expert on preferred shares. As much as there’s reason to worry about a global economic slowdown and the debt problems of some countries, “we’re very definitely not in the state of panic we were three years ago.”
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High yields are also a factor in the strength of the preferred share market lately. The dividend yield on the S&P/TSX preferred share index as of late this week was 5.3 per cent. Mr. Hymas, the preferred share specialist, said that’s substantially more than you can get from corporate bonds, which themselves are a step up in yield from government bonds. “There’s a great number of investors whose portfolio could use a few preferreds in them,” Mr. Hymas said.The big difference in the preferred share market between today and 2008? Mr. Hymas said it’s that investors aren’t questioning the stability of the banking system this time around. The preferred share market in Canada is 80-per-cent exposed to banks and insurance companies, all of which were treated as toxic in the 2008-09 crash.