Municipal Bond Forum
Caution always makes sense
Q
While I agree with your article that the hype almost always exceeds the reality (“Embrace the Headlines“), there are thousands of bonds that are listed in default and several significant city defaults, like Detroit). This reveals that there is some rational basis for concern and to proceed with caution.
A
James A. Klotz responds:
There is always reason to proceed with caution because, as we said, all investments carry some degree of risk. Of course, perspective is valuable, too: According to Moody’s and Standard & Poor’s, less than one half of one percent of municipal bonds rated by these credit agencies have ever defaulted.
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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.