Portfolio strategists, pundits and investment company sales people have (for years) warned investors that, eventually, interest rates will return to normal. Bond Squad does not disagree. Portfolio strategists, pundits and investment company sales … [Read more...]
Let’s Find A Great Muni Bond ETF
I have to admit that I was not a fan of muni bonds for quite some time. In some ways, I’m still not. What they have going for them is that they rarely default, and the income they throw off is generally free of both federal and state taxes. So … [Read more...]
Is There Value In Municipal Closed End Funds?
In a recent article here on LearnBonds, I discussed why investors might want to consider municipal bonds. The short story on municipals is that they bring tax advantage, diversity, and stability to portfolios that may be overloaded with dividend … [Read more...]
Puerto Rico Municipal Bonds – Are They A Buy?
No discussion of the municipal markets would be complete without mentioning Puerto Rico. Other than the nightmare which is Detroit (where bondholders could be crammed down in favor of public employee pensions), Puerto Rico has been the dominant story … [Read more...]
Two Moderately-Aggressive Asset Allocations For Income-Focused Investors
In last week’s article, “A Conservative Asset Allocation For Income-Focused Investors,” I noted that the process of managing cash flows starts with the following calculations: 1. Calculate the annual amount of money you need to live. 2. Subtract … [Read more...]
Are You Missing Out On Municipal Bond Market Value?
A lot of people I have talked with recently are suggesting that if an investor is looking for more (after tax) yield these days that it might be a good idea to look at the bonds issued by state and local governments. States, cities, counties … [Read more...]
A Closer Look at Zero-Coupon Bonds
It has been a long time since I searched the inventory of available zero-coupon bonds. But given the dearth of investment articles on zero-coupon bond opportunities, I thought I’d write a bit about what I discovered when recently searching for … [Read more...]
Muni Bonds: A Case Study of Detroit’s Fiasco
My biggest concern with folks who buy muni bonds is that they don’t do the proper due diligence on a given municipality. It’s very easy to just assume that if a municipality or a city is big enough, there’s simply no chance of default. Given that … [Read more...]
How Will the Affordable Care Act Impact Municipal Bonds?
The Affordable Care Act (ACA), also known as Obamacare, is unlikely to have much impact on the municipal bond market, and the ultimate impact may take years to discern. There are two primary ways the ACA may affect municipal bonds: 1) via direct … [Read more...]
Don’t Get Ripped Off by This Bond Market Shenanigan
In his book, The Big Short, Michael Lewis describes in the following way how Danny, the head trader for Steve Eisman, approached trades that seemed perfect. “When a Wall Street firm helped him to get into a trade that seemed perfect in every way, … [Read more...]
How to Find Opportunities in the Municipal Bond Market
Municipal bonds are interesting right now after the ‘taper tantrum’ that started at the beginning of May when the Federal Reserve telegraphed its intent to taper off their bond buying program known as quantitative easing. Actually, all bonds are a … [Read more...]
Here’s How Much Detroit Bond Exposure Your ETF Has
On Thursday of last week, the city of Detroit filed for bankruptcy. This was the largest municipal bankruptcy in United States history. Given the size of the bankruptcy and the attention it is getting in the press, municipal bond investors should be … [Read more...]
What Tax Rate Is Applicable to Your Investment Decision?
There is disagreement as to which income tax rate should be applied when deciding whether to purchase, for instance, a municipal bond or a corporate bond. Some people say that you should use the tax rate for your last dollar of taxable income―the … [Read more...]
Municipal-to-Treasury Yield Ratios Signal Value
A seasonal summer boost in the municipal bond market has yet to materialize, but value has emerged and investors are taking notice. Municipal valuations are at their most attractive levels of the past several years, according to average … [Read more...]
Q2 in Review – A Tale of the Bipolar Bond Market
Dictionary.com defines “bipolar” as “characterized by opposite extremes.” In searching for a word to describe the bond market’s behavior during the second quarter of 2013, bipolar seems rather appropriate. In terms of yields, the 30-year U.S. … [Read more...]
Who got hurt the most by the rise in yields?
Over the last month, the yield on 10 year US Treasury has risen from 2.02% to 2.53%, or roughly 25%. The rise in rates has not been triggered by any particular incident,but a general sense that the US Federal Reserve will need to start cutting back … [Read more...]
HYD: Here’s How To Calculate Your True Taxable-Equivalent Yield
In Monday’s article, “HYD: A Rare Opportunity In This Municipal Bond ETF,” I noted the significant discount to its net asset value at which HYD was trading, and I outlined several key features of the fund. On Monday morning, the discount to NAV … [Read more...]
HYD: A Rare Opportunity In This Municipal Bond ETF
Last week’s post-FOMC-statement selling brought with it some notable dislocations in the world of ETFs. One ETF in particular, the Market Vectors High-Yield Municipal Index ETF (HYD), closed the week at a 5.65% discount to net-asset value, its … [Read more...]
Municipal Moment
After a difficult month of May, municipal bond investors are now faced with what has historically been a difficult start to June. On a positive note, the start of summer in late June typically ushers in one of the more attractive times of the year to … [Read more...]
Are municipal bonds currently a good investment?
The short answer is probably not. Certificates of deposit (CDs) are safer and have a major yield advantage, even after factoring in the tax benefits of municipal bonds. There are two main reasons that investors like to buy municipal bonds: The … [Read more...]