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Posts Tagged ‘deleveraging’

Why Municipal Bonds?

June 23rd, 2021 by Kurt L. Smith

The obvious answer to the question “Why municipals?” is they are tax-free. That is a good reason, especially if the benefit is greater than the alternatives. From the days of double-digit yields of the early 1980’s the added benefit of the tax-free feature has almost always been worthwhile to investors in the highest tax brackets.

Of course, an almost forty year bull market for bonds helps as well, but that is over. Bond performance no longer has the wind to its back; bond performance now faces many headwinds. Selection is key no matter the market, but in today’s new bond market, selection is paramount.

The final stages of the bond bull market have wreaked havoc with investment managers and their investor clients. Where is the yield and what has performed well in these final throes of the bull? You know it is junk, or high yield. For municipals this means prisons, nursing homes, dormitories and other housing or land-based, new projects. For corporates, well you can find lower rated credits across industries.

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Any Further Than I Can Throw Them

January 30th, 2014 by Kurt L. Smith

Crippling debt is not a problem for companies, governments, municipalities or even individuals until the day it is a problem.  The power of greater leverage can be downright amazing and spectacular.  But when it comes to your money I no longer believe the risks associated with leveraged issuers are worth the reward. (more…)

High Prices Be Damned

December 20th, 2013 by Kurt L. Smith

For some things in life, the price is the price.  You must pay it because you have to or you need to pay it.  With one son in college and another on his way next year, I know all about prices one must pay.  Some people look at investing the same way: the cost is the price one must pay. (more…)

QE3, Municipals and You

October 10th, 2012 by Kurt L. Smith

Federal Reserve Chairman Ben Bernanke kicked off Year Six of the Financial Crisis by announcing a mortgage bond buyback scheme dubbed historic as the Fed is now focused on the employment woes of the nation.  Will it work?  One only need look as far as a Federal Reserve Bank president, Charles Plosser, to find a cogent critic.  Thank goodness this is America and one can voice dissent. (more…)

NEWS FEED

The $247 trillion global debt bomb washingtonpost.com/opinions/the-2…