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Selling and rebuying muni bonds


Sorry but I do not follow your article (“What’s Concerning Some Muni Investors”). Of course, all of the smart investors sold their bonds at a profit the first of this year and then bought them back when interest rates went up. I only wish that I had done that! That would have been much smarter than to hold them. I have seen my $3 million-plus municipal bond portfolio go from being worth a premium of more than 10% to negative of about 15%.

F.G., Georgia


James A. Klotz responds:

There is no reason for you to despair regarding your inability to predict the future.

We are not aware of any of our bond investors who sold their bonds at the beginning of the year at a profit and bought them back when interest rates rose. How could anyone know the precise time to do so?

Having been in the bond business for more than 50 years, we have never seen any individual who was able to predict the future direction of interest rates for any period of time. This is why we never recommend basing investment decisions on attempts to time the market.

Please keep in mind, higher short-term rates will eventually lead to lower long-term rates.

Take solace in the fact that your bonds’ prices are not depressed because of their credit quality and should continue to pay you a dependable stream of tax-free interest, which is why you purchased municipal bonds in the first place.


Sep 22, 2022

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