| Many who trade lack understanding of basic Wall | | | | issued. They trade much differently than common |
| Street terms and concepts. This often puts the | | | | shares. Whereas common shares have theoretically |
| advantage with the parties who possess deep | | | | unlimited upside, preferred shares have limited and |
| knowledge and fluency with the various components | | | | defined profit potential. However, as indicated above, |
| of the stock market. Which group are you in? Do | | | | they entail consequently less risk. So which type |
| you know when you should be selling common stock | | | | shares are for you? You've now made the critical |
| shares? Firstly, let us take a step back and define | | | | first step by understanding what the basic |
| what a common share actually is. Although it can be | | | | differences between them are. Further research can |
| much more complex, in basic terms companies issue | | | | increase your level of expertise. But, generally |
| two types of shares available for investment. The | | | | speaking, those of you with less tolerance for risk |
| first type is usually called preferred shares. On stock | | | | might be better off with preferred shares. Others |
| symbols, many times you will see an indicator within | | | | looking for more significant appreciation are better |
| the symbol of "PF" for these type shares. These | | | | suited to common stocks. This becomes a personal |
| shares have higher rights than common shares and | | | | and individual investment decision. It is quite possible |
| often receive a dividend the common shares lack. If | | | | that you currently own common stock in a company |
| the common stock also pays a dividend, the | | | | which also has issued preferred shares. It would |
| preferred share dividend is usually higher. A preferred | | | | behoove you to research to see if this is the case, |
| share also in most instances has greater voting rights | | | | compare the dividends between the two, and |
| than a common share in shareholder meeting | | | | project where you think the stock might go to |
| scenarios. A share of common stock has less rights, | | | | determine with type stock is right for you regarding |
| especially in adverse situations. In the unfortunate | | | | that particular company. Some of us like to be able |
| situation a company goes bankrupt or otherwise | | | | to sleep at night knowing they have decreased risk in |
| becomes defunct, the preferred shareholders are | | | | their portfolio should the worst occur with the |
| usually in a better position to at least recoup a | | | | market. Others are just fine with the risk and able to |
| portion of their investment. So why doesn't | | | | fall asleep fine each night. You have to determine |
| everybody buy preferred shares as opposed to | | | | which of these two people best describes you. If |
| common shares? There is also a difference on the | | | | you fall into the first category, you might be best off |
| upside. Preferred shares are often capped at what is | | | | selling common stock shares to buy preferred. |
| referred to as "par", or the original price the were | | | | |