Municipal Bond Forum
Credit quality is always top priority
Q
I’m an avid investor in munis, primarily with FMS (Andrew Blum is excellent to work with), and I agree with much of what you say in your article, “Where the Action is.” But maybe your articles border on the optimistic? A recent article in the Wall Street Journal is a bit more sobering than the state budget/revenues report that you cited, and though the article talks about the safety of munis, the current economic conditions are certainly of some serious concern.
A
James A. Klotz responds:
We appreciate your business and kind words about Andrew Blum, who we consider a consummate professional.
We agree with your thoughts as well as those of the Pew report outlined in the Wall Street Journal article, and we expressed a similar caveat in our commentary when we noted: “Of course there are still hurdles. Economic uncertainty remains and many states expect to face financial issues in the next fiscal year.”
Although we readily concur with the Pew Project that local governments may find themselves strapped for cash, we also share its optimism that “their budgets usually aren’t so tight they will skip bond payments or file for bankruptcy.”
As you know, no investment is without risk. This is why we always recommend that credit quality be the bond buyer’s first priority.
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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.