I bought 1000 SBK pref shares with the last launch. My account was debited on 7 Des. They are now in the red with R9200. On Monday I expect my first dividend of R4123. My IPL pref shares also show a loss (less than SBPP) The model of the story: Earning 8% interest is much likely a better option !
I am with Robbie on this one. There appears to be no logical reason behind an investment in pref shares, if this is the way the market views them. What do we blame now, it was the budget last time around.
prefs price floats free but will revert to normal price as market corrects it. Should be R100 + any accured div. If cheaper then discount and worth a buy as it will get back to its level. Point is prefs are not for short term and as such day to day price moves should be of no worries.
I agree that it should be R100+ - in fact I did not think that it would get below R100. It appears that there was a sudden dump after LDT. Most people like action and dump shares with "too little action" It looks like Pref shares is only a good investment during a sharp downgoing market - then the Prefs don't go down as bad as the rest. Your opinion?
well they should fall at all or rise exceot for div related moves. BUT the market seems to not understand them, the ex-div saw a sell off as did budget day. I have seen some massive buying (+R200million) of prefs when they slip below the R100 mark. As for a crash, they should not move at all, but almost certainly panic and lack of knowledge will drive the price down and that be the perfect place to park cash (at discounted entry)for the duration of the crash and following bear market.
agree with you simon, i think many people (and i count myself in here) dont full understand prefs. last year ppl were prepared to pay a premium in pref shares, resulting in them being far above the 100 level (even taking into account accr divs). whereas the huge sell off post budget lead them to be cheap. once again now, probably cheap at any level below 100, as over the long term they should in theory hang around the 100 level plus accr div.