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re: Tax Free Muni Bonds
Posted on 6/29/15 at 9:01 am to TheHiddenFlask
Posted on 6/29/15 at 9:01 am to TheHiddenFlask
I've never heard any financial advisor make the ridiculous claim that munis are risky.
I mean, yeah, if you buy Puerto Rican or Detroit munis, it's risky.
But what about the vast majority of local government who are financially solvent?
I mean, yeah, if you buy Puerto Rican or Detroit munis, it's risky.
But what about the vast majority of local government who are financially solvent?
2
Posted on 6/29/15 at 2:36 pm to goodbuds
It's not a ridiculous claim in the least bit. You've never heard them make that claim because they make stupid margins trading them.
If these things were really yielding 5% tax free (effective ~7% return), then every hedge fund in the word would be giv long these things up leveraging themselves 20x and collecting their paycheck.
If you don't think Munis are risky, you don't even know what a bond rating is and you certainly have never read about Vallejo.
If someone offered me a 20 year Chicago muni (that I had to hold to maturity) or 20 years worth of toilet paper, I would take the toilet paper in a heartbeat.
If these things were really yielding 5% tax free (effective ~7% return), then every hedge fund in the word would be giv long these things up leveraging themselves 20x and collecting their paycheck.
If you don't think Munis are risky, you don't even know what a bond rating is and you certainly have never read about Vallejo.
If someone offered me a 20 year Chicago muni (that I had to hold to maturity) or 20 years worth of toilet paper, I would take the toilet paper in a heartbeat.
Posted on 6/29/15 at 2:39 pm to goodbuds
I'm not even going to get into the interest rate risk in these things. Your statement that they are getting beat up in anticipation of a fed hike is dense at best, but more likely intentionally misleading. They have been getting crushed because the long end of the interest rate curve has started to whip. I have been preaching this for a long time, and doubled down on it when QE ended. The fed took their foot off of the tail and it's starting to wag.
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