Past Performance is no guarantee of future results.

View from the Observation Deck

1. Financial stocks, particularly the banks, have been under tremendous pressure since the start of the subprime mortgage meltdown.

2. Congress passed new regulations under the Dodd–Frank Wall Street Reform and Consumer Protection Act that could negatively impact the profitability of banks.

3. Approximately 80% of preferred securities are issued by financial companies. (Raymond James)

4. Investors have clearly had a bias favoring fixed-income securities over stocks based on fund flows in recent years.

5. The majority of preferred securities tend to pay a fixed dividend and that dividend in most instances must be distributed before any dividends on common stock.

6. The yield on the Merrill Lynch U.S. Fixed Rate Preferred Index ($25 Par) referenced in the chart was 7.44% on 10/10/11.

7. As the chart shows, the prices of preferred securities have held up far better thus far in 2011 than their common stock counterparts.

8. One reason for the disparity, in our opinion, is investors like the high-level of income offered by preferreds and believe the dividends are likely solid at this time.