Municipal Bond Forum

I read your article and cannot agree with your investing principals. First, I own PIMCO shares, which have the lowest returns in my portfolio. So far this year, my cash flow is up 33% by buying (mostly bond funds) at their lows, drawing the 8% to 10% returns and selling when they hit “premium” status, which produces a little bonus. I then do it all over again. My broker is exceptionally adept at picking discounted bond funds that are poised to climb and also have a good return (7.5% and up) We have checked the tax-free stuff and can’t find one that will keep up with what we’re doing. I don’t know bulls from bears when it comes to investments, all I know is that I buy low and sell high only those investments with 7.5% return (rent for using my money) or better. When the shares hit a high, I collect my bonus and many times, less than one week later, I buy the same shares at a discount. The year so far has been on fire. I hope we can maintain the pace through the last quarter. You might want to re-look at your advice to investors. To my thinking, you are losing a lot of profit for your clients.

R F., Oklahoma

I just wanted to see if you would acknowledge the value of closed-end funds (CEFs) that pay 100 basis points more annually than comparable bonds, given your continual encouragement to buy long bonds for income and ignore their price fluctuation, and the futility of trying to guess on rates. Apparently, you will not do so, even outside of the Bond Forum. I guess I understand that this would amount to shooting yourself in the foot with respect to your business, so I certainly understand your position. Your comment about preferred shares makes no sense – one can buy the short-term preferred paper at any time. It is not reserved for institutions. I think what I’m doing – combining individual munis with CEFs for a yield boost, including buying an occasional bond from your company – makes a lot of sense.

A.L., Georgia