Sick and tired of having munis pushed down my throat

Tax exempt yields are historically LOWER than Treasury yields, yet right now they are higher. So even if rates go up, muni prices might not go down much, they might just go back to their historical yield discount to Treasuries.

SOME munis can default, others can't. Buy the ones that can't. Buffalo GOs? Pass. Triborough bonds backed by unlimited pledge to raise tolls for debt service? Buy 'em, how can they default?

Foreign bonds bring in both sovereign (Dubai bonds, anybody?) and currency risk. You could easily make or lose 20% in a year due to currency fluctuations. Good investment? Maybe. More "prudent"? Nope, more risky.

buy metro cards

If you must, buy individual bonds. DO NOT buy bond funds. Individual bonds have a maturity date. With bond funds, you may never get your principal back. Caveat Emptor. I am not a pro, but I trade for a living. I'm 90% in cash now, earning virtually nothing, but have done reasonably well this year, and still have a truckload of BMY. Caveat Emptor.

"If you must, buy individual bonds. DO NOT buy bond funds. Individual bonds have a maturity date."

if your 1 bond defaults, or one bond in a bond fund defaults, in which case would you lose more $$ ?

Munis benefit two ways, one is the current tax advantage, and the second is the future tax advantage if rates go up. If you are worried about credit risk pay a big premium and buy pre-refunded or escrowed to maturity bonds. Agree on not buying bond funds.

hey I agree that metrocards are the way to go. Bond funds are not. And I'm not recommending bonds at all. At this point, legging into SDS may be the way to go. but I don't have the balls. Marco, besides metrocards, which don't come in million dollar denominations, what else are you recommending? What are you doing with your 10 million portfolio? Inquiring minds want to know.

Im just a squirrel tryin to get a nut. what little I do have is all in cash. stay in straight cash homie for the next couple months then take another look

Munis may be tax free if you are not subject to the alt-min tax. People living in high income tax areas, like New York, with modest incomes (below 600K) are usually subject to the alt-min tax and the munis become fully taxable.

Bystander, if you are single, you are hit by AMT well below the 600k figure, even if you have no extraordinary deductions. The AMT is an anachronism, and punitive, and impossible to plan for, unless you go on strike against the IRS and refuse to earn anything. (the only form that I am aware of that is more machiavellian is the foreign tax credit form and it's usually not worth the bother).

or forever stamps!

Crap, were the wealth management professionals actually hocking munis down in the delivery room??? "Beware good-looking young men in nice suits."

maybe this is irrational but i'm hesitatant towards all fixed income, because when interest rates start going up bond prices will go down and maybe you don't want to hold it to maturity.. other than real estate i am at a loss what to do in the short term.. in cash as well! (except for the IRA's..)

bystander, most munis are not subject to the AMT. It is easy enough to buy only those that are AMT-free.

Medium to longish term fixed income seems to me to be the only guaranteed loser given the inflation and higher rates likely to kick in at some point. So, dabble a bit in foreign/emerging stocks, gold, commodities, currencies, and earn zippo on your cash. Things suck right now.

glamma,

don't confuse short term rates (which are near zero and have to go up at some point) with longer rates, which don't have to move in same direction. In fact we have had inverted yield curves at times, where short rates were going up and long rates went down (and therefore prices of the bonds went up, not down).

if i buy long term bonds priced at 1008 today, what do you think they will be going for in 12-18 months when i need the cash? do you think we're headed for an inverted yield curve? also do you guys think there's a whole lot more room for gold to go up? CASH is a four letter word.. and it's not k-i-n-g... really not sure what to do!

The great Icelandic Krona (ISK) revival! Get in on the ground floor!!!

Gaongaon: You are more likely to hit the alt-min tax if you are a family of 4 than if you are single. This tax is specifically targeting moderate income families in the 100-600K range. Once you are at a much higher income you pay 35% federal tax rather than the 28% alt min tax.
Glamma: most munis that pay a decent return are subject to alt-min tax.
Many New Yorkers are not even aware that they are paying 28% tax on their “tax deductable” condo fees.
Keeping your fiat currency in the mattress or in bonds make no difference when the $ looses value. Since interest rates cannot go much lower, bond prices may be near their peak. If interest rates stay low at least you are getting some return on your investment. A long term bond is a long term investment.

If you need the money in 12-18 months you shouldn't be buying long term bonds unless you can take the risk of principal fluctuation. CD rates suck but you could get 1.5% or so with no risk.

Gold may be done for a while but will likely hit new highs sometime next year.

You should treat wealth management "advisors" like brokers, i.e., assume they are saying whatever it takes to get you to put a commission in their pocket...

thanks guys, lol, liberty stamps it is!

Long-Term Tax-Exempts Gain as Build America Bonds Sap Supply
By Jeremy R. Cooke

Dec. 9 (Bloomberg) -- Tax-exempt bonds with long maturities are gaining more in price this month than those due in less than 10 years as states and cities sell taxable Build America Bonds with federal interest-rate subsidies.

The yield gap between AAA-rated two- and 30-year tax-exempt bonds narrowed to a three-week low of 3.91 percentage points, as the so-called yield-curve slope flattens from a record steepness of almost 4 points, based on a daily survey by Municipal Market Advisors of Concord, Massachusetts.

Buyers seeking tax-exempt bonds at maturities that pay the highest yields are finding fewer new bonds available as public agencies choose to finance public works with long-term taxable debt, for which the U.S. government covers 35 percent of the interest cost under the stimulus program. New York City and the Maryland Transportation Authority plan to sell more than $1 billion in Build America Bonds as soon as today.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aQwGmNkxEY.k&pos=7

Long term munis have done recently and over the long run.
https://personal.vanguard.com/us/funds/snapshot?FundId=5044&FundIntExt=INT

Guru on Bloomberg radio calls bond funds at this point in time "a roach motel". You check in, and you never get out whole. That was my contention.