A Safer Way To Drive Down Wall Street

If you'd like to buy shares of a certain company, but its lofty stock price makes you nervous, see if a convertible is available. Since these securities (most often bonds but sometimes preferred stocks) can be exchanged for a set number of common shares, their prices tend to track their companion stock on the way up. But because they pay coupons higher than the stock dividends, they don't fall as far in a downturn. The result: "You get nearly the same returns as the stock at less risk," says John Calamos, president of Calamos Asset Management in Naperville, Ill.

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