Q&A: Stock Market Correction

Gordon Pape | February 3rd, 2014

A reader wants to know: If there’s a big correction in the stock market, how will preferred shares fare?

 

Q – Recently you suggested there is likely to be a pullback in the market. What do you think preferreds will do during a pullback? – John K.

 

A – That depends on the trigger for the correction. If it relates to interest rates and/or concern over the tapering of quantitative easing, preferreds and other interest-sensitive securities will be affected. However, if rates are not a major factor in the pullback, then preferreds should remain reasonably stable. – G.P.

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