Municipal Bond Forum
Free from prognostication
Q
I was reading your article, “Bernanke’s Message to Muni Investors” and the comment to “go long.” What exactly does that mean? I have Oregon munis.
A
James A. Klotz responds:
Some investors, to their detriment, attempt to predict the direction of interest rates and time their investment decisions accordingly. With the Fed’s announcement that interest rates would be kept extremely low through at least 2015, the guesswork for those trying to time the market has been effectively removed from the equation.
Trying to predict the market has been a futile and costly exercise, as evidenced by the disappointed investors who’ve parked funds in short-term money market instruments, waiting for interest rates to rise. Our philosophy has always been to “go long”; that is, buy long-term munis to maximize tax-free income. It’s worked for generations of investors who have profited handsomely while sleeping soundly at night. But for those holdouts still trying to read the market tea leaves, the Fed’s actions should, at least, release them from the burden of trying to be market prognosticators.
Start here.
Do you have specific criteria for bonds you’re looking for? Let us know and we’ll e-mail you bonds that fit your needs. There is no charge for this service.
This report is produced solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. This report is based on information obtained from sources believed to be reliable but no independent verification has been made, nor is its accuracy or completeness guaranteed.