I became, primarily, a preferred investor when I discovered I was not as smart as I thought I was. This came as a rude awakening at the beginning of 2009, when I still believed I was smart enough to dig down into the numbers and understand a company's financial statements enough, at least, to figure out how well a company was actually performing.

After spending hours listening to a number of conference calls, it dawned on me that they were often spun to make the bad seem good and down appear as it were up. Around that time I also discovered Seeking Alpha and began reading its articles to help me make sense of all the information I was trying to absorb. However, no matter how intelligently each article seemed to be written and constructed, I found, more often than not, the comments of other SA participants often contradicted or were vehemently opposed the contributor's point of view.

My problem was that I didn't have a clue as to which side I should be on. I realized I simply didn't have sufficient information and knowledge to make a credible decision. And that's when I realized that I should either exit the market or find a way, given my limited knowledge, to ultimately succeed and prosper as an investor.

That's when I discovered preferreds, and after intensive study, realized that all I had to do was determine whether or not a company I intended to invest in was relatively safe from any imminent existential threat. Notice I qualified that as an imminent threat. I state this because I don't have a crystal ball, nor to my knowledge does anybody else; consequently, nobody can with any certainty, predict a company's long-term profitability. However, I also also knew that it would be a hell-of-a-lot easier to judge the viability of a company than how well it would perform over the next quarter or year.

Past is prologue; that's the basis of my research. It may not be perfect, but I believe this is data I can rely on. I can't tell the future, or even rely on financial reports, but I can, with a great deal of reliability, monitor how well a company performed over the past few years, or for as many years as I am prepared to research. Company officers lie at worst, or spin at best, during conference calls. Financial reports, likewise, can be spun utilizing legal accounting tricks. But investors wage their hard-earned capital on what they truly believe is in their perceived economic interest, which might be correct and might not be. Regardless, the record of price movement of a company's stock cannot be spun or tweaked; it's a matter of record. This I have come to rely on.

Additionally, I like to do a brief review of each company's balance sheet and charts as displayed on Yahoo Finance . There I can get a snapshot of their assets, liabilities, and debt structure. Finviz's financial highlights also helps me fill out the financial picture of the company sufficient for me to decide whether to invest or not.

Considering an investment in a company's preferred shares should not be considered exactly as one would consider an investment in that company's common shares. There are a number of reasons for this disparity of thought:

• Preferred shareholders are primarily interested in a stable source of income rather than price appreciation, which is most often the primary goal of the common shareholder. Consequently, the common shareholder is, and must be, more attuned to near-term corporate events. Although similarly relevant to the preferred shareholder, unless they are harbingers of potential existential threats, they should be of no major concern. Likewise, the knowledgeable preferred shareholder should view periodic price fluctuation with little concern or interest beyond the possibility of making opportunistic acquisitions of additional shares.
• Most importantly, the only way a cumulative preferred shareholder can ultimately lose on his investment is if the issuing company goes bankrupt or if the holder is forced, or decides, to sell his shares at a loss. Although it might take years, should the company survive, all missed payments will have to be repaid at some future date, and the price will most assuredly not only return to its call value but surpass it by approximately the total amounts of missed dividend payments due.
• More often than one might expect, the interests of the common shareholder are not only not aligned with those of the preferred shareholder, but they are diametrically opposed; examples of which I will discuss and explain in later articles.

I'll close here because this is my opening article as a TalkMarkets contributor. I'm simply an average market investor with one claim to fame: I know more about preferred investing than most, and the majority of my articles will be concentrated on preferred investing and how to make preferreds a profitable part of you portfolio.