It's the economy, stupid: Obama vs. Romney has already begun

Please! What I wrote is still there. Municipal bonds - no qualifiers. The example given was a mutual fund, again I took no time to find it, it was on the first page of my Google search and I picked it simply to illustrate how condescending your post was. Now you try to rationalize it - it would have been better just to let it go.

Stop buying bond funds - The Globe and Mail

You don't understand the point made. An investor has choice. If productive investments are unattractive relative to other investments the choices are simple. People can invest in job/wealth creating things/project/etc. or they can invest in things like gold or bonds, etc. A growing economy needs productive investments. Oh but you say, investing in gold can be productive, investing in bonds is productive - to which I respond with one word - perspective.

There are triple A rated bonds and bonds that are considered junk - a bond investor can put together a portfolio that matches their risk tolerance. Either way when the concept of "rich" people making "sacrifice" comes up it is a joke. What is "sacrifice" to a billionaire??? I guess they won't build that $20 million dollar get away house on the beach this year. Oh, but that sacrifice costs people jobs! I say let 'em build the house.

It is a no-brainier for those who do the work and have the resources. It is clear to me that in your effort to try and prove what you think I don;t know, you are showing that you are the one who does not know. Occasionally it is wise to try to learn from others.
--- merged: May 11, 2012 at 12:48 PM ---

All smooth sailing for you? We should all be so lucky. Did you have some special political connections or a celebrity connection?

 

Nope. Just alot of hard work on the ground. I take pride in the fact that it saved our customer base $200+ hundred million in 2011.

Another program I started three years ago and in which I am still hands on, day-to-day, is now helping folks in need in more than 500 cities across the country...from Chicago to Saint Agatha, Maine. This one provides a public service and does rely on political connections, but we dont make a penny on this one.

To sum it up, I've been working directly with Fortune 500 companies and small businesses across the country for twelve years creating programs that are mutually beneficial -- profits for them, public good for me and my organization.
--- merged: May 11, 2012 at 1:08 PM ---
Can I do a commercial now?

TFPers..

- if you work for a city, county, school (K-12, higher ed), or any public institution or non-profit organization....I have a deal for you!

- if you currently dont have health insurance, I can help in a small but possibly meaningful way!

 

When Ace says he can make a killing in munis, he really means that some people occasionally make a killing in munis, and that if you ignore the fact that nobody consistently makes a killing in munis, and pretend that he's one of the people who can just get lucky and make a killing in munis, then, well, I guess I'm lost.

If Obama is anti-business, well then shit, it's a good time to live under a president who's anti-business if you happen to be a business. Because businesses seem have been doing just fine (if cash reserves are any indication). They just haven't been hiring people because the demand isn't there.

 

What impact is Obamacare going to have on the business?

 

I did not change anything. A bond mutual fund acts in a manner that is not much different than what a high net worth investor would do. I don't doubt for a second that I could get a long-term 10% return investing in municipal bonds. You jump to your conclusions rather than asking questions, just as you are about to do now.

Think in terms of risk adjusted rates of return, if you don't think an investor may avoid doing X and choose to invest in a manner that is passive. No matter how you look at it, investing in the debt of a governmental entity that has taxing authority in the US is low risk. It would take more effort to find municipal debt investments that have defaulted than to find some that pay 10%+

Yes that is 5.5.

From the same article:

U.S. Municipal Bond Defaults Rose in Past Two Years, Moody’s Report Says - Bloomberg

Time to move on.
--- merged: May 11, 2012 at 4:09 PM ---

I recall someone saying they had a municipal bond trader next door or somewhere close, perhaps we can get input from an insider in the market . I don't doubt that the average retail investor can not get a consistent long-term 10% return - but a high net worth person, with a focus on that market - come on we can't be this naive!

Look at economic activity. The numbers tell the tale.
Ask "business" why they have so much capital on the sidelines?
--- merged: May 11, 2012 at 4:21 PM ---

Four year high in sentiment, might get us to a 4 year high in actual consumer spending. But then again, if Obama is reelected maybe not.

Gallup Daily: U.S. Consumer Spending

Results reported in both a 3-day and 14-day rolling average



Here is a link to a chart extending into 2012, I could not copy it, but it is at the same levels as 2010. Generally you would want to see the 3 day higher than the 14 day moving average as a positive indicator of what consumers are actually doing rather than how they feel.


Gallup Daily: U.S. Consumer Spending

 

I don't know what to tell you other than do some homework on the subject. With a basic understanding and monitoring trends, it is not difficult to get 10% consistently on muni's. Given general interest rates constantly change, if a person has a 20 year bond and general interest rates change 1%, that will change the value of the bond in the current market. That 1% change alone can get you a +/- 10% on your bond. The key is to sell at the right time and otherwise hold until conditions turn in your favor. Another is to exploit market opportunities - be a buyer when most people want to sell, etc. Like I said it takes some work, but given general 5% yields, if a focused person with large amounts of money (lower costs, invest direct, etc) can't double that if that is there goal - they should focus on other things.

 

Right. Your evidence is conjecture about some deified "high net worth person" who does nothing but play the market and win! Sounds like an Ayn Rand character, but with more depth. You find me one muni portfolio that's topped 10% for a whole year. If it's as easy as you seem to think, then it shouldn't be too hard to dredge one up. If anyone has been able to consistently post those types of numbers, they wouldn't be difficult to find for an astute investor such as yourself. Find this mythical 10% yielding portfolio, then tell me how that portfolio did the years before and after the year it produced 10%. Then tell me how that portfolio did the five years before and after that year. If it were as easy as you seem to think it is, everybody would be doing it, and if everyone were doing it, then you wouldn't have to make up stories about mythical investors.

 

You don't seem to understand. Only rich people are smart enough to pull this off. And that's why all of them invest in nothing but munis. Berkshire Hathaway? All munis. George Soros: only invests in munis. Because it's trivial to get 10% in munis. Wait! That's not true at all. I wonder why JP Morgan just lost $2billion from one of their hedges when they could have just put it in munis for a cool, automatic %10 yield. They're smart and rich.

Ace, if you were right, the bond traders that sit outside my cube would only invest in munis. But they don't. Because you're not right.

 

Its all part of the bigger Obama conspiracy to hit at the backbone of the country -- destroy small businesses, take away your guns, force churches to act against their will, allow gays to marry and the vision is complete -- an unarmed, unemployed and broke electorate surrounded by immoral influences and in a blink of an eye, Socialism is firmly implanted on US soil.

 

Well now at least the truth comes out! I think you may have forgotten the fifth column in that - class warfare to demoralize the job creators and provide a false sense of accomplishment for the lazy, unwashed heathens...but close enough.

 

This...from a blogger for the Tea Party Nation:

U.S. Small Businesses Should Not Hire...In Order to Defeat Obama

The ignorance of this kind of Tea Party mindset about Obama and the "global progressive socialist movement" is more destructive to the economy than any Obama policy.

 

The benchmark in the past year in the segment was over 10%.

Most retail investors in municipal bonds don't know how much they pay in commissions for each transaction. Depending on the brokerage firm and the relationship the individual has with that firm the commissions can vary by a great deal. If person A buys a $10,000 muni with 20 years to maturity in the secondary market, and pays $9,000 for the bond with the coupon $500 per year in interest or 5%, their yield to maturity is about 5.9%. If they pay 9,250 the yield to maturity is 9.6% - that is a .2% change based on a 2.7% commission or spread. If the spread is 10%, or the pay the yield to maturity goes down to 5.1%.

What if they sell the bond in one year, all other things being equal - they bought a $9,000 bond for $9,900, and they sell it only getting $9,000, they lost $400 on the transaction in the one year holding period and the next person may pay $9,900 for that same bond. What if a person can go into the market and buy and sell for their personal account at the wholesale level rather than the retail level? Aren't we seeing between $900 and $1,800 on the table? Isn't that like 10% to 20%? If the spread is not 10%, but is 5%, isn;t there like 5% to 10% on the table, not including the actual interest payment? But in this scenario we are only talking about typical "grandmother", type transactions - Grandma needs to hold to get a good return in part to overcome transaction costs. Big investors play at a different level, and if they are active can easily double "market" returns.

I am not saying people day trade muni's, but in part because the market on individual issues trade "thin", the spreads can be even greater than what I describe creating greater opportunity for informed high-net worth investors.

I will add one qualification, I have not been active in this area in over 10 years. Things may be different, but when I pull a list of available muni's from my discount broker, they don't show the spread. Perhaps yours does, do they? What is it?
--- merged: May 14, 2012 at 5:41 PM ---

Good investors avoid losses or at least keep them to a minimum.

If I were active in today's bond market i would be moving from bonds with long-term maturities to bonds with short-term maturities. I would protect my yields to maturity. I would more or less pocket appreciation made when the market conditions were favorable and focus on income. I would protect those 5% yields, creating a floor. Given time, I would smooth out my returns - I would get better returns than the market in good times and avoid losses. It doesn't take a genius to look at long-term interest rate trends and project where they are going.

There is no doubt in my mind that in 5 years interest rates will be significantly higher than they are today, potentially double or triple. The US dollar is under pressure by a over aggressive Fed. Reserve and the US debt is out of control. We may see double digit inflation in the US if Obama gets a second term. Then every bond investor is going to be getting over 10% in new money they put into the market. So, maturing bonds, will generate cash that can be re-invested in new bonds at higher rates. This is not "rocket science", but I guess it does involve the same kinda math - so maybe it is. Perhaps I should not assume everyone gets it - but I wish you folks would take some time to understand this stuff before taking shots at me.
--- merged: May 14, 2012 at 5:49 PM ---

Personally I have not ruled out moving to Canada. What does Obama want to do with the Cap gains rate? I have honestly lost track. Didn't at one point he wanted it doubled? Or did/does he want to go back to the Clinton era rate, but since there were two, which one?

Aren't the rates going up anyway at the end of the year? Could this be the reason we are seeing businesses sitting on so much cash, waiting to see what is going to happen?

Uncertainty is anti-business. Just tell everyone what the f'ing plan is! Is that too much to ask?