Profit From the Fear Mongering

Klotz on Bonds

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<h3>James A. Klotz</h3>

James A. Klotz

Fear mongers have grabbed most of the headlines, but as we point out in our latest message in The Wall Street Journal, the real news is being made by prominent investors, who see a tremendous buying opportunity and are quietly pouring money into the muni market.

Yields on quality 30-year municipal bonds have risen to near two-year highs, with some offering more than 9.00% in tax-equivalent returns. Even institutions that traditionally invest in taxable bonds are crossing over and buying tax-frees. These investors understand that the recent decline in prices is primarily due to supply and demand factors, not the ability of state and local governments to pay their bills.

Of course, all investments have risk, but as even one well-known doomsayer says, there is opportunity if you do your homework. This  advice is being heeded by experienced investors who ignore the media glare.

To see the full message, click on the image below:

Muni Investors Can Profit

James A. Klotz is the President of FMSbonds, Inc.
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Jan 21, 2011

Please note that all investing entails risk. Fixed income securities are subject to risks that will affect their value prior to maturity. Some of these risks can be related to changes in market conditions, issuer creditworthiness, and interest rates. This commentary is not a recommendation to buy or sell a specific security. All references to tax-free income refer to U.S. federal income tax. Income earned by certain investors may be subject to the Alternative Minimum Tax (AMT), and or taxation by state and local authorities. Please consult with your tax professional prior to investing. For more information on these topics please click on the “Bond Basics” link below or search by keyword at the top of this page.