Young Research & Publishing Inc.

Investment Research Since 1978

Disclosure

  • About Us
    • Contributors
    • Archives
    • Dick Young’s Safe America
    • The Final Richard C. Young’s Intelligence Report
    • You’ve Read The Last Issue of Intelligence Report, Now What?
    • Dick Young’s Research Key: Anecdotal Evidence Gathering
    • Crisis at Vanguard
  • Investment Analysis
    • Bonds
    • Currencies and Gold
    • Dividend Investing
    • ETFs & Funds
    • Investment Strategy
    • Retirement Investing
    • Stocks
    • The Efficient Frontier
  • Investment Counsel
  • Retirement Compounders®
  • Free Email Signup

The Two Reasons Muni Bonds Don’t Belong in Your Portfolio

September 16, 2019 By E.J. Smith

By zimmytws @ Shutterstock.com

Two reasons municipal bonds don’t belong in your portfolio are underfunded pensions and Wall Street.

In the case of underfunded pensions look at what happened to GM. It was the bondholders who got skewered. When push comes to shove who do you think will get paid first, you or the government employees (pensions)?

And then there’s Wall Street. Tom McGinty and Heather Gillers explain in The Wall Street Journal, writing:

When the West Contra Costa Unified School District in California needed money to repair and upgrade deteriorating classrooms, it hired Piper Jaffray Cos. to sell $191 million of municipal bonds.

As far as school officials knew, the March 2016 sale went off flawlessly, enabling the district to refinance older debt and tackle tasks such as removing asbestos and upgrading science labs.

However, within a day of the initial sale, the original buyers sold, or “flipped,” $35 million of the district’s bonds for a profit of $306,000, a Wall Street Journal analysis of trading in the bonds found.

Within 10 trading days, the post-offering trading had generated $1.24 million of market-adjusted profits. Piper Jaffray participated in some of that trading, buying back bonds and reselling them.

Newly issued municipal bonds, which are marketed as long-term investments, aren’t supposed to trade like that. The post-offering buying and selling suggests West Contra Costa’s bonds—sold in what is called a negotiated offering—were initially underpriced. That means the district will pay more in interest over the life of the bonds than it would if the bonds had been priced closer to what subsequent investors paid.

Read more here.

Originally posted on Your Survival Guy. 

Share this:

  • Email
  • Twitter
  • Facebook

You Might Also Like:

  • Muni Bonds at Risk
  • Bonds Break Through 3%
  • Do ETFs Belong in Your Portfolio?
  • Author
  • Recent Posts
E.J. Smith
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris.

Please get in touch with E.J. at ejsmith@youngresearch.com

Click here to sign up for my free monthly Survive & Thrive letter.
Latest posts by E.J. Smith (see all)
  • Your Retirement Life: Adventure Awaits - February 3, 2023
  • Early Advice from Her Dad on Tipping at Charlie Trotter’s - February 2, 2023
  • Reagan’s America Remembered by Your Survival Guy and More - February 1, 2023

Search Young Research

Most Popular

  • Tom Brady Retires, Again. Should You?
  • Suddenly, Holding Cash Looks Good Again to Many
  • What Happens if the "Fed Put" Is Over for Good?
  • Are the Realists Winning the Debate over the Future of EVs?
  • Warren Miller: If You Don’t Do It This Year, You’ll Be…
  • Reagan's America Remembered by Your Survival Guy and More
  • Vanguard Wellesley (VWINX) vs. Wellington (VWELX): Which Fund is Best?
  • Biden Administration Destroying Retiree Fiduciary Protections
  • What Kind of Life Are You Investing For?
  • CATO: Global Freedom Is in Sharp Decline

Don’t Miss

Default Risk Among the Many Concerns with Annuities

Risk and Reward: An Efficient Frontier

How to be a Billionaire: Proven Strategies from the Titans of Wealth

Could this Be the Vanguard GNMA Winning Edge?

Cryptocosm and Life After Google

Warning: Avoid Mutual Fund Year End Distributions

Is Gold a Good Long-term Investment?

How to Invest in Gold

Vanguard Wellington (VWELX): The Original Balanced Fund

What is the Best Gold ETF for Investing and Trading?

Procter & Gamble (PG) Stock: The Only True Dividend King

The Dividend King of the North

You’ll Love This if You’re Dreaming of an Active Retirement Life

RSS The Latest at Richardcyoung.com

  • EVs and Human Trafficking/Modern Slavery
  • USA and Russia: A Global War for Resources?
  • TERROR TACTICS: Globalists Use Fear to Demand Compliance
  • Your Retirement Life: Adventure Awaits
  • Are Flights About to Get MORE Expensive?
  • Dick Young: Learn from Hillsdale College Online
  • Is Amazon’s Slowdown a Warning?
  • Chinese Spy Balloon Traveling Over Sensitive U.S. Sites
  • Breaking News: Reform at New College, Sarasota, Florida
  • German Opposition Leader Denounces the Country’s “Insane Drunkenness about War”

RSS The Latest at Yoursurvivalguy.com

  • Your Retirement Life: Adventure Awaits
  • Zumwalt-Class Guided Missile Destroyers to Get Hypersonic Weapons
  • Early Advice from Her Dad on Tipping at Charlie Trotter’s
  • Treasury Bonds Ready to Rock and Roll
  • Survive and Thrive February 2023: 4 Life Changing Words: “You Should Try This”
  • Tom Brady Retires, Again. Should You?
  • Reagan’s America Remembered by Your Survival Guy and More
  • America’s Unprecedented Debt Problem
  • Iran’s Ballistic Missiles Could Give Russia the Edge in Ukraine
  • What Kind of Life Are You Investing For?

About Us

  • About Young Research
  • Archives
  • Contributors

Our Partners

  • Richard C. Young & Co.
  • Richardcyoung.com

Copyright © 2023 | Terms & Conditions

 

Loading Comments...
 

    loading Cancel
    Post was not sent - check your email addresses!
    Email check failed, please try again
    Sorry, your blog cannot share posts by email.