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Tag Archives: munis
Its been almost 4 months (June 26 to be precise) since I last posted on municipal bond valuations. I thought this would be a good time to do a quick update on muni valuations. In short, there is still compelling value in municipal bonds for long term investors willing to ride out the fear being priced in to this market. Since my last post, muni prices are about flat. Below is the 6 month chart of the HYMB ETF which represents high yield longer term munis which is where I focused my discussion last time. It currently yields over 5%. … Continue reading
The recent “taper-tantrum” over the Fed’s potential coming removal of quantitative easing has caused quite some unrest in the bond market. This has caused interest rates, in particular longer term rates (10yrs +) to move substantially higher across the board. Long term munis were no exception and the sell off has left some compelling value in long term munis for long term investors. The chart below takes a long term look (from 1954) at the 20 year muni bond buyer index vs the 20 year US Treasury. Data points are monthly and can be found at the Federal Reserve site. … Continue reading
I’ve been thinking about writing an income investing newsletter at some point….but haven’t quite committed to that concept yet. Baby steps, baby steps….so, with that in mind I thought I’d start out with a monthly commentary on the positions I hold or have held throughout the month. Feel free to comments and let me know what you think. For my current long positions I’ve linked to my last relevant post on the topic. Here it goes… Current long positions: EPD – my largest position and has been for quite some time. This company is firing on all cylinders. The strength … Continue reading
The fiscal cliff is coming and the politicians are going to let us drive right over it. At least that’s the drumbeat you hear in the financial news media. And with 5 months to go until the end of 2012 the drumbeat is picking up its tempo. With that in mind I thought it would be useful to take a look at what impact the fiscal cliff would have on asset classes, the likely outcomes, and the implications for investors. That’s the bad, scary news. The likely outcome of what I described above is very very small in my opinion. … Continue reading
How many times a week do you read that interest rates have no where to go but up? That bonds are terrible investments and will be crushed by rising rates? And when was the first time you started to hear these stories? If you read pretty much any source of investment news then you’ve been hearing these stories for almost 4 years now and, at least to me, they seem to be constant. Yesterday the latest one I heard was ‘the bond bubble will pop tomorrow’. Oh dear. Well, today I wanted to provide a counterpoint to all the rising … Continue reading
Here we go again. Just as we hit the one year anniversary of Meredith Whitney’s famous, or more accurately infamous, muni bond call a new muni bond scare has surfaced. This time its the potential change to municipal bond’s tax status. Lets take a look at this latest fear and see if it is justified. First, I can’t let this chance pass to comment on last year’s muni bond scare. Back in January of this year I wrote a post about the sell off in munis in response to Whitney’s call. I noted that the sell off seemed unwarranted based … Continue reading
Now that the first half of 2011 is over I wanted to step back and look at the performance of the sectors in the income investor dashboard. Lets look at the YTD performance of the dashboard and see if it offers any insights. Below are the 1H 2011 total returns (including dividends) for the dashboard. Starting with the global equity indices, the US market outperformed the Europe, Emerging Market, and All World indices. This was an unexpected result based on the predictions at the beginning of 2011. Markets have a funny way of confounding the consensus. As for the second … Continue reading
Just when you thought it was safe to back in the water…here comes the shark again…in this case muni bond ultra bear Meridith Whitney. Whitney is back in the spotlight again renewing her call for massive defaults in municipal bonds. Absolute Returns (AR) did a great screencast the other day summarizing Whitney’s renewed call and the reaction to it. It’s worth watching and reading the associated links. Below is the AR email. The muni bond market has recouped nearly all the losses it has seen since Meredith Whitney made a high profile call last year. A forecast of massive muni … Continue reading
Last month I introduced my income investor dashboard that helps me keep tabs on the investment landscape from an income investor’s point of view. I’ve updated the dashboard as of this morning. Here it is: I added this month’s updates to the table and calculated the change in yields from last month. A negative change in yield means prices went up and a positive change means the sector or product became less expensive. I approach this from a long term value investor’s point of view so those positive changes are highlighted in green. I also added a line below the … Continue reading
In my Time to buy munis? post the other day I think I left out a couple of key elements in my desire to keep the post from becoming too long. As I said in my last paragraph, an even slightly aggressive income investor may want to look at muni closed-end funds as a way to take advantage of the muni sell off and collect some great yield at the same time. Great yield and a chance for capital appreciation – what’s not to like about that? First, a closed-end fund is similar to a mutual fund except that it … Continue reading