Municipal Bond Forum
When do you load the boat?
Q
Your website is full of excellent and useful information on investing in municipal bonds. I know your feelings on buying good quality bonds when the money is available for investment. In your tenured opinion, doesn’t it seem that rates just do not seem all that exciting at the moment? And I realize that you probably are constantly buying, but is there a rate at which you really step up and load the boat? Again, you guys do great work, and when you said that rates might peak out after the first rate increase, you could not have been more correct. I know that you do not time the market, but you were correct.
A
James A. Klotz responds:
Thank you for the kind words. As you know, we also say that trying to forecast the future direction of interest rates is a treacherous and unrewarding pursuit. Although we always carry a large inventory of tax-free bonds, there are times when we think the muni market is particularly attractive. Most important to us is the relationship between tax-free and taxable yields. Even though tax-free rates may appear low, AAA munis yield as much or more than comparable Treasury bonds. There is also a decided yield advantage when compared to high-grade corporate bonds.
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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.