Municipal Bond Forum

Should Have Stuck To Experience And Avoided Bond Laddering

You are spot on with your article, “Today’s Market Especially Cruel to Bond Ladders.” Unfortunately, I did fall for the short-term trap in 2016 when I bought corporate bonds. I rolled over an IRA and felt yields were on the low end of my range so I committed 70% of my capital to bonds maturing in 12 to 20 years and deployed the other 30% in a three-year, short-term fixed annuity. I thought yields would be higher in 2019 than in 2016. Now I have those funds at my disposal but yields have fallen below the level I’m comfortable with. I should have stuck with my 30 years of experience with munis and just committed my funds as they were available. Trying to predict the future direction of rates often ends badly!
J.T., Florida

James A. Klotz responds:

We are always pleased to hear from friends and clients who share our philosophy.

We don’t know why some muni investors “don't get it” and disregard their own experience.

Our clients, for the most part, recognize the futility in trying to predict the future direction of interest rates.

We’re glad you’re keeping your interest clock ticking.