FMSbonds, Inc.’s Municipal Bond Forum is an exclusive opportunity for investors to submit questions and comments on the bond market or to respond to one of our articles.
To participate, just send us an e-mail. Be sure to include your name or initials and your state of residence. Posted e-mails may be edited for length and clarity. If you prefer a private response, please note that in your e-mail. Responses are provided by James A. Klotz, president and co-founder of FMSbonds, Inc., a municipal bond specialist for more than 35 years, and other members of the firm as noted.
Postings are listed by date. If you have any questions, please call us at 1-800-367-2663 or e-mail us.
Based on your recent article, “A Lifeline After Sandy” and efforts in Congress to change or abolish the muni bond tax exemption, doesn’t it make sense for you to start a petition or letter to Congress signed by all of your muni bond clients? More than 50% of bond investors make less than $200,000 a year and any change will drastically hurt many retirees living off the income.
J.C., California
Why does a CNBC analyst say municipal bonds are bad investments and should be avoided? I hold many munis.
R.D., Vermont
I’m thinking of buying long-term bonds but I’m worried that upon my death, my estate may have to sell the bonds at a loss if interest rates have risen above the bond interest. I understand that for every 1% rise in interest rate, bonds decrease 3%. Am I correct in this?
C.C., California
I just read an article on Vanguard’s Web site that discussed the “non crisis” in the muni market. It occurred to me that you wrote the same thing more than 1 ½ years ago in your article, “A Funny Thing Happened While the Pundits Were Screaming“. I bet this guy makes the big bucks for his expertise!
J.S., Pennsylvania
What do think about the idea being discussed in Washington of capping the benefit of municipal at 28%? Does that mean that if you have $100,000 in tax-free bonds, only $28,000 would be tax free and the balance would be taxable?
A.C., New Jersey
I read your article “In Fiscal Cliff Debate, One thing is Clear“, and I agree the No. 1 investment for investors is tax-free bonds. I’m a poster boy for tax-free bonds and have been buying bonds for the past 20 years. In fact, I have several million dollars worth of bonds with your firm and have enjoyed my buying experience with Andrew Blum. When will the supply of munis increase, and when will we start seeing those long-term 5% yields at par?
L.S., Texas
Can you tell me about the new 3.8% tax and its impact on tax-free muni bonds?
T.B., Florida
How important are the early call options when purchasing long-term bonds? Many of my long-term bonds paying 6% are now being called, so I am losing the benefit the longer term afforded me.
J.S., Pennsylvania
Under the Master Settlement Agreement, are payments by the tobacco companies to the states required to continue in perpetuity or do they sunset after a certain year? If they continue in perpetuity, will there ever be a default on tobacco bonds, or just a delay in repayment?
P.K.
I read recently that both Gov. Romney and President Obama are trying to make tax-free muni interest taxable. I would assume that if it did happen, it would only affect new issues. Do you have anything you could tell me on the likelihood of this happening and if it would affect current issues?
W.A., California
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