How many times have you heard this:
Preferred stock is the best of both worlds: The upside of common stock and the protection of bonds?
Not so fast.
According to a study by Guohua Li, Ph.D and Edward O'Neal, Ph.D., principals of SLCG, Inc., this view of preferred stock is "overly simplistic."
From July, 2007 to March, 2009, the S&P Preferred Stock Index fell by almost 70%, while common stocks fared relatively better, losing 50%. The bond markets had positive returns.
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