Municipal Bond Forum
High quality bonds a priority
Q
Many of us try to time the market in an attempt to stay nimble and flexible. We would all like to be able to buy and hold to maturity, but it’s quite hard to predict what might come our way in the next 20 or 30 years. No one wants to get trapped, and maybe have to give back some or all (or worse, even more) of that higher coupon.
A
James A. Klotz responds:
Your point is well taken. However, if you think about it, you will realize it has never been easy to predict future events, although it may seem so in hindsight. This is precisely the point we try to make in our commentary,“Dow’s Recent Rise Obscures the Real News.”
It is because of possible adversities that we always stress quality before yield. You will notice we use the example of a 4.5% bond rather than a lower quality, higher yielding security.
As you know, no investment comes without risk. Our point is that “market value risk” is misinterpreted, and the unintended consequences of trying to avoid it can be very costly.
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.
The responses provided in this forum are meant to address specific questions posed by investors about their municipal bonds and to provide market insight for our general audience. Please note, your investments, objectives, results and experience may differ significantly. Our answers and any potential strategies discussed should not be construed as a solicitation to buy nor sell any security or investment product. All investing entails risk.