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.
I’ve been a long-time client and have been following FMS’ advice on taking tax-free income and holding my bonds to the end for return of capital. I am now 80 ½ years old. I read your article, “Bad Medicine for an Imaginary Illness,” and cannot see how it applies to my specific situation. As a client who is over 80, what do you recommend I do with my long-term holdings?
W.H., Florida
I read your story, “Don’t Try this at Home,” about the ill-conceived report that recommended investors engage in “selective selling” of their munis. I had this exact situation about eight years ago with an aggressive bond trader. He was looking to make some more money and suggested I sell. I said to him, “You want me to sell all my bonds because you think I should increase their quality level and cut my income nearly in half?” He said “Yeah.” I promptly moved my money elsewhere and kept all the bonds.
M.J.
Do you believe Ambac will satisfy its obligations related to the Las Vegas Monorail issue? If not, why would any insurance company ever pay another claim? It appears that underwriting policies and collecting premiums without paying claims is a pretty lucrative business model.
M.P.
Is it a crime to own interest-paying municipal bonds from different states?
H.R.
Your article, “Off the Table, or Not“, discusses whether the Obama Administration will press to limit the tax benefits of munis. Would this explain the recent rise in bond values I have seen? When does it make sense, if ever, to sell a muni before maturity to take advantage of these capital gains?
J.S., Pennsylvania
If the exemption on new municipal bond issues were eliminated, what would happen to the price of existing munis?
S.T., Texas
I read your article, “Time Flew, But Interest Rates Didn’t.” Six months later, do you still feel the same way? Interest rates have fallen and 5% is not available, not even on long-term (20-years-plus) bonds that are “AA” or better?
G.C., California
I recently noticed that the tax-free inventory being offered for sale by FMSbonds seems to have shrunk. I also noticed that most bonds are out to longer maturity dates for any decent returns. Many of them also seem to be carrying a heavy premium for a decently priced issue. If we intend to sell some decent holdings, it would seem that it should also work in the opposite manner. To what do you attribute the apparent shortage of tax-free new issues?
W.P., Florida
The returns you referred to in your article, “Man Bites Dog, Almost,” can only be achieved by bond traders churning their portfolios. If you buy and hold munis, you will get about 5% to 6% tax free. Still a good deal, but not exactly manna from heaven. Please tell me if I have missed something.
J.T., California
Can you please explain the bond return figures you quote glowingly in your commentary, “Man Bites Dog, Almost“? If you buy and hold a 4% bond to maturity, it returns 4%, etc. If I have to pay a premium for it, I realize even less. Am I missing something here in understanding my bond investments, or are you speaking in your article of people who trade bonds?
A.F., New Jersey
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