Monthly Archives: August 2012

Summary of conversation we have with clients a few times a week: Aren't you worried about interest rates going up? The ten-year treasury is only paying 1.7%...rates are probably probably going to go up, and bond prices decline when interest rates go up. Why are you buying 10-year muni bonds? Simple answer: Because the muni bond yields are high enough to provide us a fair rate of after-tax return, even if ...

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This week, a research team from the New York Fed released a report that correctly notes that municipal bond default rates are far higher than normally reported. Moody's counts 71 defaults in the past 40 years; the Fed report counts 2,521 defaults! At first blush, that seems like muni bonds are a lot riskier than we thought. But the report serves to confirm what we have been saying for years. There ...

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