November 22, 2018

Well, so much for the rally.

HIMIPref™ Preferred Indices
These values reflect the December 2008 revision of the HIMIPref™ Indices

Values are provisional and are finalized monthly
Index Mean
Current
Yield
(at bid)
Median
YTW
Median
Average
Trading
Value
Median
Mod Dur
(YTW)
Issues Day’s Perf. Index Value
Ratchet 0.00 % 0.00 % 0 0.00 0 -4.1032 % 2,749.9
FixedFloater 0.00 % 0.00 % 0 0.00 0 -4.1032 % 5,045.9
Floater 4.23 % 4.55 % 37,380 16.26 4 -4.1032 % 2,908.0
OpRet 0.00 % 0.00 % 0 0.00 0 -0.0067 % 3,197.0
SplitShare 4.55 % 4.91 % 65,403 4.14 6 -0.0067 % 3,817.9
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 -0.0067 % 2,978.8
Perpetual-Premium 5.93 % 5.98 % 49,557 13.89 3 -0.1198 % 2,861.5
Perpetual-Discount 5.70 % 5.83 % 74,207 14.09 31 -0.4920 % 2,874.2
FixedReset Disc 4.79 % 5.56 % 155,985 14.65 58 -0.9002 % 2,325.3
Deemed-Retractible 5.44 % 7.31 % 77,042 5.14 27 -0.3845 % 2,855.6
FloatingReset 4.04 % 4.80 % 36,218 5.33 6 -1.5681 % 2,597.7
FixedReset Prem 5.11 % 4.76 % 215,607 2.53 22 -0.3114 % 2,506.4
FixedReset Bank Non 2.98 % 4.27 % 126,169 2.96 6 -0.0895 % 2,565.7
FixedReset Ins Non 4.83 % 7.43 % 128,126 5.25 22 -0.9349 % 2,327.6
Performance Highlights
Issue Index Change Notes
BAM.PR.B Floater -6.09 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 15.26
Evaluated at bid price : 15.26
Bid-YTW : 4.59 %
BAM.PR.K Floater -4.73 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 15.31
Evaluated at bid price : 15.31
Bid-YTW : 4.57 %
BAM.PR.C Floater -4.65 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 15.37
Evaluated at bid price : 15.37
Bid-YTW : 4.55 %
TD.PF.C FixedReset Disc -4.28 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 20.12
Evaluated at bid price : 20.12
Bid-YTW : 5.65 %
PWF.PR.Q FloatingReset -4.23 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 19.25
Evaluated at bid price : 19.25
Bid-YTW : 4.32 %
EMA.PR.F FixedReset Disc -2.87 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 20.63
Evaluated at bid price : 20.63
Bid-YTW : 5.96 %
TRP.PR.F FloatingReset -2.73 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 17.47
Evaluated at bid price : 17.47
Bid-YTW : 5.25 %
BAM.PF.D Perpetual-Discount -2.54 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 19.98
Evaluated at bid price : 19.98
Bid-YTW : 6.24 %
BAM.PR.T FixedReset Disc -2.51 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 17.90
Evaluated at bid price : 17.90
Bid-YTW : 6.18 %
TRP.PR.G FixedReset Disc -2.34 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 20.85
Evaluated at bid price : 20.85
Bid-YTW : 6.13 %
BAM.PF.E FixedReset Disc -2.31 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 20.34
Evaluated at bid price : 20.34
Bid-YTW : 6.01 %
TRP.PR.E FixedReset Disc -2.13 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 19.33
Evaluated at bid price : 19.33
Bid-YTW : 6.06 %
IAG.PR.I FixedReset Ins Non -2.05 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.93
Bid-YTW : 6.70 %
MFC.PR.H FixedReset Ins Non -1.96 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.50
Bid-YTW : 7.43 %
TRP.PR.B FixedReset Disc -1.90 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 14.42
Evaluated at bid price : 14.42
Bid-YTW : 6.06 %
MFC.PR.Q FixedReset Ins Non -1.81 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 21.16
Bid-YTW : 7.90 %
BAM.PR.N Perpetual-Discount -1.76 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 19.50
Evaluated at bid price : 19.50
Bid-YTW : 6.20 %
NA.PR.W FixedReset Disc -1.71 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 20.15
Evaluated at bid price : 20.15
Bid-YTW : 5.64 %
SLF.PR.H FixedReset Ins Non -1.70 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 19.05
Bid-YTW : 8.86 %
MFC.PR.J FixedReset Ins Non -1.69 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.10
Bid-YTW : 7.22 %
MFC.PR.I FixedReset Ins Non -1.64 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 21.56
Bid-YTW : 7.43 %
BAM.PR.R FixedReset Disc -1.64 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 17.98
Evaluated at bid price : 17.98
Bid-YTW : 6.13 %
TRP.PR.H FloatingReset -1.59 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 14.83
Evaluated at bid price : 14.83
Bid-YTW : 5.09 %
IFC.PR.E Deemed-Retractible -1.56 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.66
Bid-YTW : 7.31 %
TRP.PR.C FixedReset Disc -1.56 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 15.11
Evaluated at bid price : 15.11
Bid-YTW : 6.07 %
MFC.PR.F FixedReset Ins Non -1.55 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 15.85
Bid-YTW : 11.39 %
BAM.PR.X FixedReset Disc -1.55 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 16.49
Evaluated at bid price : 16.49
Bid-YTW : 5.85 %
CU.PR.C FixedReset Disc -1.55 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 19.75
Evaluated at bid price : 19.75
Bid-YTW : 5.64 %
ELF.PR.H Perpetual-Discount -1.54 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 23.15
Evaluated at bid price : 23.62
Bid-YTW : 5.88 %
BMO.PR.W FixedReset Disc -1.52 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 20.69
Evaluated at bid price : 20.69
Bid-YTW : 5.45 %
PWF.PR.A Floater -1.52 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 19.50
Evaluated at bid price : 19.50
Bid-YTW : 3.56 %
IFC.PR.G FixedReset Ins Non -1.49 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.51
Bid-YTW : 7.10 %
BAM.PF.I FixedReset Prem -1.42 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 23.04
Evaluated at bid price : 24.25
Bid-YTW : 6.07 %
CM.PR.O FixedReset Disc -1.42 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 20.85
Evaluated at bid price : 20.85
Bid-YTW : 5.56 %
RY.PR.G Deemed-Retractible -1.40 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.70
Bid-YTW : 4.93 %
POW.PR.B Perpetual-Discount -1.39 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 22.49
Evaluated at bid price : 22.75
Bid-YTW : 5.95 %
BAM.PF.C Perpetual-Discount -1.37 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 20.10
Evaluated at bid price : 20.10
Bid-YTW : 6.14 %
BMO.PR.S FixedReset Disc -1.36 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 21.01
Evaluated at bid price : 21.01
Bid-YTW : 5.53 %
IFC.PR.F Deemed-Retractible -1.32 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.25
Bid-YTW : 6.91 %
IAG.PR.A Deemed-Retractible -1.31 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 20.33
Bid-YTW : 8.76 %
BMO.PR.T FixedReset Disc -1.28 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 20.80
Evaluated at bid price : 20.80
Bid-YTW : 5.46 %
MFC.PR.L FixedReset Ins Non -1.25 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 19.68
Bid-YTW : 8.95 %
TD.PF.B FixedReset Disc -1.22 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 20.99
Evaluated at bid price : 20.99
Bid-YTW : 5.47 %
BAM.PF.B FixedReset Disc -1.20 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 20.60
Evaluated at bid price : 20.60
Bid-YTW : 6.06 %
W.PR.K FixedReset Prem -1.19 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2021-01-15
Maturity Price : 25.00
Evaluated at bid price : 25.00
Bid-YTW : 5.55 %
CM.PR.R FixedReset Disc -1.18 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2022-07-31
Maturity Price : 25.00
Evaluated at bid price : 24.21
Bid-YTW : 5.47 %
CM.PR.S FixedReset Disc -1.17 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 21.60
Evaluated at bid price : 21.90
Bid-YTW : 5.39 %
SLF.PR.J FloatingReset -1.17 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 16.90
Bid-YTW : 10.46 %
BAM.PF.A FixedReset Disc -1.17 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 21.68
Evaluated at bid price : 22.05
Bid-YTW : 5.93 %
HSE.PR.E FixedReset Disc -1.15 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 21.84
Evaluated at bid price : 22.36
Bid-YTW : 6.49 %
BAM.PF.G FixedReset Disc -1.15 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 21.30
Evaluated at bid price : 21.58
Bid-YTW : 5.97 %
PWF.PR.E Perpetual-Discount -1.14 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 23.21
Evaluated at bid price : 23.51
Bid-YTW : 5.90 %
MFC.PR.M FixedReset Ins Non -1.13 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 20.08
Bid-YTW : 8.69 %
CM.PR.P FixedReset Disc -1.10 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 20.59
Evaluated at bid price : 20.59
Bid-YTW : 5.49 %
HSE.PR.C FixedReset Disc -1.10 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 21.51
Evaluated at bid price : 21.51
Bid-YTW : 6.33 %
TRP.PR.D FixedReset Disc -1.08 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 19.15
Evaluated at bid price : 19.15
Bid-YTW : 6.17 %
MFC.PR.G FixedReset Ins Non -1.05 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 21.64
Bid-YTW : 7.23 %
NA.PR.C FixedReset Disc -1.04 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 22.76
Evaluated at bid price : 23.80
Bid-YTW : 5.70 %
GWO.PR.Q Deemed-Retractible -1.03 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.12
Bid-YTW : 7.73 %
TD.PF.E FixedReset Disc -1.00 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 22.45
Evaluated at bid price : 22.77
Bid-YTW : 5.53 %
GWO.PR.G Deemed-Retractible 1.48 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.60
Bid-YTW : 7.36 %
Volume Highlights
Issue Index Shares
Traded
Notes
BNS.PR.H FixedReset Prem 233,000 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2022-01-26
Maturity Price : 25.00
Evaluated at bid price : 25.57
Bid-YTW : 4.22 %
BMO.PR.B FixedReset Prem 207,000 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2022-02-25
Maturity Price : 25.00
Evaluated at bid price : 25.26
Bid-YTW : 4.52 %
MFC.PR.K FixedReset Ins Non 102,000 YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 19.97
Bid-YTW : 8.77 %
TD.PF.H FixedReset Prem 68,300 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2021-10-31
Maturity Price : 25.00
Evaluated at bid price : 25.52
Bid-YTW : 4.22 %
POW.PR.G Perpetual-Discount 52,000 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 24.17
Evaluated at bid price : 24.51
Bid-YTW : 5.78 %
PWF.PR.T FixedReset Disc 48,100 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 21.60
Evaluated at bid price : 21.95
Bid-YTW : 5.35 %
There were 19 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
TD.PF.C FixedReset Disc Quote: 20.12 – 20.88
Spot Rate : 0.7600
Average : 0.4761

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 20.12
Evaluated at bid price : 20.12
Bid-YTW : 5.65 %

IFC.PR.C FixedReset Ins Non Quote: 21.10 – 21.98
Spot Rate : 0.8800
Average : 0.6607

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 21.10
Bid-YTW : 7.50 %

RY.PR.G Deemed-Retractible Quote: 24.70 – 25.29
Spot Rate : 0.5900
Average : 0.3770

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.70
Bid-YTW : 4.93 %

BAM.PR.B Floater Quote: 15.26 – 15.83
Spot Rate : 0.5700
Average : 0.3911

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 15.26
Evaluated at bid price : 15.26
Bid-YTW : 4.59 %

BIP.PR.B FixedReset Prem Quote: 25.00 – 25.50
Spot Rate : 0.5000
Average : 0.3433

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2020-12-31
Maturity Price : 25.00
Evaluated at bid price : 25.00
Bid-YTW : 5.95 %

PWF.PR.Q FloatingReset Quote: 19.25 – 19.80
Spot Rate : 0.5500
Average : 0.3994

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2048-11-22
Maturity Price : 19.25
Evaluated at bid price : 19.25
Bid-YTW : 4.32 %

4 Responses to “November 22, 2018”

  1. klargenf says:

    Holy smoke!

    My protfolio of minimum rate-reset preferred shares (including ECN, EFN, BPO, BIP, BEP, KML and CPX) looks like a blood bath today. Most of my holdings will reset in 2021. And I don’t know understand why their share prices had plunged so much recently. Can anyone tell me what’s going on?

  2. skeptical says:

    The preferred market is so retail that even dollar store shoppers don’t shop there 🙂
    I think this debacle started with the MFC short position initiated by the Muddy Water guys. There was only marginal impact of this on MFC common equity and bonds, but Preferred holders had a fine way of getting scared.
    That started the decline in MFC.PR.B, MFC.PR.C etc. and moved on to similar preferreds of IAG, SLF and GWO.
    I think that was the infection.
    Then we had volatility in the markets causing margin calls. If you compare to the broad indices, preferreds aren’t down quite a bit, but as compared to Tech or other sectors, Preferreds are still holding well.
    As Ben Graham used to say, “Mr Market is a maniac.” Read up here:
    https://en.wikipedia.org/wiki/Mr._Market
    Graham asks the reader to imagine that he is one of the two owners of a business, along with a partner called Mr. Market. The partner frequently offers to sell his share of the business or to buy the reader’s share. This partner is what today would be called manic-depressive, with his estimate of the business’s value going from very pessimistic to wildly optimistic. The reader is always free to decline the partner’s offer, since he will soon come back with an entirely different offer.[1]

    I think while other markets have kind of ‘matured’, the preferred market is kind of from yesteryears when panics were more frequent.

    For anyone holding preferreds, there should really be one major concern- Is the company solvent enough to pay dividends for a long time. That’s where James’ guidelines on holding P2L and above credit makes so much sense. You don’t have to sell. You can hold, collect coupons and relax.

    Other risks such as those related to interest rates can be managed in other asset classes. Volatility shouldn’t be ignored because your partner is a manic depressive or irrationally exuberant depending on his/her mood.

    I know the experts wouldn’t agree, but I think rate resets have brought in a whole lot of complexity to what should have been a simple product. Like in the US:

    https://www.marketwatch.com/investing/fund/pff/charts

  3. Nestor says:

    my guess it’s come down to rate expectations. in 2016/2017, people were buying rate rests because they thought bank of canada was finally going to normalize rates. plus, you were getting fantastic yields.

    since then, they’ve gone up and plateaued. most of 2018, saw them go nowhere. even though bank of canada was raising rates, the big move in the previous two years sort of factored some of that.

    this correction the last few weeks, and the collapse in oil prices, makes people think getting to “normal” will take much longer. instead of getting to say, 3% by the end of 2019, maybe it’s the end of 2020. .. or 2021?

    just a guess. who knows what the market is doing.

  4. jiHymas says:

    My protfolio of minimum rate-reset preferred shares (including ECN, EFN, BPO, BIP, BEP, KML and CPX) looks like a blood bath today.

    We can check out the GOC-5 yield at which the minimum rate guarantee would become useful:
    ECN.PR.A … 1.06%
    ECN.PR.C … 1.06%
    EFN … none have minimum rates
    BPO.PR.C … 0.82%
    BPO.PR.E … 1.14%
    BPO.PR.G … 1.11%
    BPO.PR.I … 1.52%
    BIP.PR.B … 0.97%
    BIP.PR.C … 0.71%
    BIP.PR.D … 1.22%
    BIP.PR.E … 2.00%
    BIP.PR.F … 2.18%
    BEP.PR.G … 1.03%
    BEP.PR.I … 0.74%
    BEP.PR.K … 1.18%
    BEP.PR.M … 2.00%
    KML.PR.A … 1.60%
    KML.PR.C … 1.69%
    CPX.PR.G … 0.74%
    CPX.PR.I … 1.63%

    I’ve never been too enamoured of the rate guarantee mechanism; what I have found very interesting over the past year is that the effect on price has not attenuated as the actual GOC-5 yield moves further away from the trigger yield.

    Perhaps now it is … although I haven’t done any work on this.

    Can anyone tell me what’s going on?

    During market corrections all correlations tend to one.

    In addition to the statistical argument presented in the above, remember that in this day and age, when CPD is not just a giant fund but probably the first choice of unsophisticated investors, there will be a legitimate causal mechanism: as investors sell CPD, market makers will sell individual issues, not with any regard to their relative merits, but primarily with regard to their weight in the index.

    I understand that Preferred shares have been getting beaten up recently. John Heinzl will explain why in Saturday’s Investor Clinic..

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