Municipal bonds - concerns?

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bfeenix44
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Joined: Thu Dec 26, 2019 8:05 pm

Municipal bonds - concerns?

Post by bfeenix44 »

FOLKS' FULL PROFILE POST NOW AT THIS LINK:
viewtopic.php?f=1&t=315263

ORIGINAL POST EDITED 5/17/20: To include muni bond details and intent w/ regard to moving from Ed Jones.
EDITED 5/18/20: to include tax bracket, and link to full profile

My father has several individual municipal bonds in his Ed Jones portfolio. Is there reason for concerns with these given the current economic situation? His tax bracket is 12%.

I have already moved my own portfolio from Ed Jones to Vanguard.
I'm currently in process of putting together my folks' full portfolio post to put up on the forum. My intent is to move their portfolio away from Ed Jones, I just need some confidence along the way...the current financial market has me a bit spooked.

MUNI BOND DETAILS:
% = percent of total portfolio

0.55% CUSIP: 83703FEM0 Bond Rating: AA/WD
South Carolina Jobs Econ Dev Hosp Rev Rfdg Palmetto Hlth

0.27% CUSIP: 880461BF4 Bond Rating: AA+/Aa1
Tennessee Housing Dev Agency Residential Fin Prog Revenue B

1.04% CUSIP: 46257TDT3 Bond Rating: AA/Aa2
Iowa State Special Oblig Ijobs Pg Series A Revenue

1.65% CUSIP: 90343SAV7 Bond Rating: AA/Aa3
Usf Financing Corp Florida Capital Improvement Revenue

1.56% CUSIP: 259230MV9 Bond Rating: AA-/AA-
Douglas Cnty NE Hosp Auth No 2 Hlth Facs Nebraska Medicine

1.09% CUSIP: 432299AT2 Bond Rating: AA+/Aa1/AA+
Hillsborough Cnty Florida Communications Svcs Tax Rev

thanks...
tamara
Last edited by bfeenix44 on Mon May 18, 2020 2:54 pm, edited 4 times in total.
retired@50
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Re: Municipal bonds - concerns?

Post by retired@50 »

bfeenix44 wrote: Mon Apr 27, 2020 1:14 pm My father has several individual municipal bonds in his Ed Jones portfolio. Is there reason for concerns with these given the current economic situation?

thanks...
tamara
I'm more concerned about the "Ed Jones portfolio" part. :shock:

Regards,
This is one person's opinion. Nothing more.
DarkHelmetII
Posts: 690
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Re: Municipal bonds - concerns?

Post by DarkHelmetII »

retired@50 wrote: Mon Apr 27, 2020 1:36 pm
bfeenix44 wrote: Mon Apr 27, 2020 1:14 pm My father has several individual municipal bonds in his Ed Jones portfolio. Is there reason for concerns with these given the current economic situation?

thanks...
tamara
I'm more concerned about the "Ed Jones portfolio" part. :shock:

Regards,
+1. EJ aside too little details to make assessment. In general keep in mind munis have higher credit risk than treasuries and are callable.
retired@50
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Location: Living in the U.S.A.

Re: Municipal bonds - concerns?

Post by retired@50 »

bfeenix44 wrote: Mon Apr 27, 2020 1:14 pm My father has several individual municipal bonds in his Ed Jones portfolio. Is there reason for concerns with these given the current economic situation?

thanks...
tamara
The risk of an individual municipal bond is largely determined by the revenue source used to pay the interest on the bond. Some municipal bonds are considered "general obligation" bonds and can be funded with any money the issuer has available. Other bonds are strictly tied to a water district, a bridge, or perhaps a school district. These details are probably spelled out in the prospectus.

You can likely contact your person at EJ and get the relevant details and/or a copy of the prospectus.

Regards,
This is one person's opinion. Nothing more.
Topic Author
bfeenix44
Posts: 103
Joined: Thu Dec 26, 2019 8:05 pm

Re: Municipal bonds - concerns?

Post by bfeenix44 »

I'm more concerned about the "Ed Jones portfolio" part. :shock:

Regards,
I'm concerned about this, too, but I may have to pick my battles one at a time with him. I'm going to do a more in depth post with regard to the portfolio in total, but I'm not quite there yet.
aristotelian
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Re: Municipal bonds - concerns?

Post by aristotelian »

Yes, I would be concerned regardless of the economic situation. EJ put my MIL's life savings in a single 30 year AT&T corporate bond. I recently helped her get out of it after switching to Vanguard (to their credit, she sold with a $2k gain). Even if muni bonds are appropriate, he should be in a diversified index fund.
GaryA505
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Location: New Mexico

Re: Municipal bonds - concerns?

Post by GaryA505 »

Whoa, I'm in VWALX and VWSUX at about 80/20.

Reading all this I should be shaking in my boots, but I'm not.

I just ignore the noise. :D
Robot Monster
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Re: Municipal bonds - concerns?

Post by Robot Monster »

bfeenix44 wrote: Mon Apr 27, 2020 1:14 pm My father has several individual municipal bonds in his Ed Jones portfolio. Is there reason for concerns with these given the current economic situation?

thanks...
tamara
What are the credit ratings of these bonds? Big difference if they're aaa-rated vs. something in the high-yield category. UBS says the high-yield niche may see ‘surge of defaults’ in the article "UBS Sees Muni-Bond Market Facing Biggest Storm in Modern History".
https://www.bloomberg.com/amp/news/arti ... ssion=true
“There are no answers, only choices.” ― Stanislav Lem, Solaris
aristotelian
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Re: Municipal bonds - concerns?

Post by aristotelian »

Yes, I would be concerned. Exactly how concerned would depend on the credit rating and state.
aarondearu
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Re: Municipal bonds - concerns?

Post by aarondearu »

Post the CUSIP numbers.
Topic Author
bfeenix44
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Re: Municipal bonds - concerns?

Post by bfeenix44 »

Thanks so much for your responses. I will post more info soon...I'm working on a full portfolio post, where the Muni bond info will be included.

I clipped the tip of my finger off recently in a pruning accident, so typing is waaaayyyy slow right now...please bear with me!

tamara
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midareff
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Re: Municipal bonds - concerns?

Post by midareff »

aristotelian wrote: Thu May 14, 2020 2:00 pm Yes, I would be concerned. Exactly how concerned would depend on the credit rating and state.
Very concerned. I have friends that held individual bonds in the financial crisis of 2007/8 and experienced defaults and bankruptcies. Your bonds are your "safe" money and credit quality is extremely important. As an example the Vanguard Intermediate Term Municipal Tax-Ex Fund holds 9760 Bonds of which 20.1% are AAA rated, 48.9% are rated AA and 21.8% are rated A. That covers 90.8% of holdings. at high to superior credit ratings.
aristotelian
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Re: Municipal bonds - concerns?

Post by aristotelian »

midareff wrote: Sun May 17, 2020 8:33 am
aristotelian wrote: Thu May 14, 2020 2:00 pm Yes, I would be concerned. Exactly how concerned would depend on the credit rating and state.
Very concerned. I have friends that held individual bonds in the financial crisis of 2007/8 and experienced defaults and bankruptcies. Your bonds are your "safe" money and credit quality is extremely important. As an example the Vanguard Intermediate Term Municipal Tax-Ex Fund holds 9760 Bonds of which 20.1% are AAA rated, 48.9% are rated AA and 21.8% are rated A. That covers 90.8% of holdings. at high to superior credit ratings.
Yes, definitely would not touch High Yield. Still, ideally I would want my bonds to go up in a crisis. Treasuries have done the job better when needed most. To get the same diversifying power through muni bonds you would need to hold a lot more, so the return you would gain on the yield side you would lose by having to reduce your stock allocation.
2002
VWITX +7.9%
VFITX +14.2%
VINIX -22%

2008
VWITX -.14%
VFITX +13.3%
VINIX -37%

2020 YTD thru April
VWITX -1.7%
VFITX +7.2%
VINIX -9.29%
User avatar
midareff
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Re: Municipal bonds - concerns?

Post by midareff »

aristotelian wrote: Sun May 17, 2020 8:48 am
midareff wrote: Sun May 17, 2020 8:33 am
aristotelian wrote: Thu May 14, 2020 2:00 pm Yes, I would be concerned. Exactly how concerned would depend on the credit rating and state.
Very concerned. I have friends that held individual bonds in the financial crisis of 2007/8 and experienced defaults and bankruptcies. Your bonds are your "safe" money and credit quality is extremely important. As an example the Vanguard Intermediate Term Municipal Tax-Ex Fund holds 9760 Bonds of which 20.1% are AAA rated, 48.9% are rated AA and 21.8% are rated A. That covers 90.8% of holdings. at high to superior credit ratings.
Yes, definitely would not touch High Yield. Still, ideally I would want my bonds to go up in a crisis. Treasuries have done the job better when needed most. To get the same diversifying power through muni bonds you would need to hold a lot more, so the return you would gain on the yield side you would lose by having to reduce your stock allocation.
2002
VWITX +7.9%
VFITX +14.2%
VINIX -22%

2008
VWITX -.14%
VFITX +13.3%
VINIX -37%

2020 YTD thru April
VWITX -1.7%
VFITX +7.2%
VINIX -9.29%
Unless you are drawing from bonds on a weekly/monthly basis why would "my bonds going up in a crisis matter"?.... I would agree that treasuries have gone up the most in a crisis but to what end? Unless you are timing the market and selling treasuries to buy more equities I ask again, to what end? To make one's portfolio "feel" better? What do you suggest a retired investor who would like income do with a ten year treasury yielding in the .6% range? Is 9760 bonds not diversified enough?
aristotelian
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Re: Municipal bonds - concerns?

Post by aristotelian »

midareff wrote: Sun May 17, 2020 9:24 am
aristotelian wrote: Sun May 17, 2020 8:48 am
midareff wrote: Sun May 17, 2020 8:33 am
aristotelian wrote: Thu May 14, 2020 2:00 pm Yes, I would be concerned. Exactly how concerned would depend on the credit rating and state.
Very concerned. I have friends that held individual bonds in the financial crisis of 2007/8 and experienced defaults and bankruptcies. Your bonds are your "safe" money and credit quality is extremely important. As an example the Vanguard Intermediate Term Municipal Tax-Ex Fund holds 9760 Bonds of which 20.1% are AAA rated, 48.9% are rated AA and 21.8% are rated A. That covers 90.8% of holdings. at high to superior credit ratings.
Yes, definitely would not touch High Yield. Still, ideally I would want my bonds to go up in a crisis. Treasuries have done the job better when needed most. To get the same diversifying power through muni bonds you would need to hold a lot more, so the return you would gain on the yield side you would lose by having to reduce your stock allocation.
2002
VWITX +7.9%
VFITX +14.2%
VINIX -22%

2008
VWITX -.14%
VFITX +13.3%
VINIX -37%

2020 YTD thru April
VWITX -1.7%
VFITX +7.2%
VINIX -9.29%
Unless you are drawing from bonds on a weekly/monthly basis why would "my bonds going up in a crisis matter"?.... I would agree that treasuries have gone up the most in a crisis but to what end? Unless you are timing the market and selling treasuries to buy more equities I ask again, to what end? To make one's portfolio "feel" better? What do you suggest a retired investor who would like income do with a ten year treasury yielding in the .6% range? Is 9760 bonds not diversified enough?
To reduce overall volatility and improve risk adjusted return.
grok87
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Re: Municipal bonds - concerns?

Post by grok87 »

DarkHelmetII wrote: Mon Apr 27, 2020 1:43 pm
retired@50 wrote: Mon Apr 27, 2020 1:36 pm
bfeenix44 wrote: Mon Apr 27, 2020 1:14 pm My father has several individual municipal bonds in his Ed Jones portfolio. Is there reason for concerns with these given the current economic situation?

thanks...
tamara
I'm more concerned about the "Ed Jones portfolio" part. :shock:

Regards,
+1. EJ aside too little details to make assessment. In general keep in mind munis have higher credit risk than treasuries and are callable.
agree that callability is a concern. but just to be clear, not all muni bonds are callable.
RIP Mr. Bogle.
MikeG62
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Re: Municipal bonds - concerns?

Post by MikeG62 »

midareff wrote: Sun May 17, 2020 8:33 am
aristotelian wrote: Thu May 14, 2020 2:00 pm Yes, I would be concerned. Exactly how concerned would depend on the credit rating and state.
Very concerned. I have friends that held individual bonds in the financial crisis of 2007/8 and experienced defaults and bankruptcies. Your bonds are your "safe" money and credit quality is extremely important. As an example the Vanguard Intermediate Term Municipal Tax-Ex Fund holds 9760 Bonds of which 20.1% are AAA rated, 48.9% are rated AA and 21.8% are rated A. That covers 90.8% of holdings. at high to superior credit ratings.
I agree that credit quality is key.

FWIW, I held a low seven figure portfolio of individual muni bonds in '07-'09 and experienced zero issues with any of them. I hold even more muni bonds today, and hope to experience the same result this time around. However, that remains to be seen. I will add that prior to the pandemic, 40% of the value of my muni bonds were rated at AAA and 58% were rated at AA.
Real Knowledge Comes Only From Experience
grok87
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Re: Municipal bonds - concerns?

Post by grok87 »

MikeG62 wrote: Sun May 17, 2020 10:07 am
midareff wrote: Sun May 17, 2020 8:33 am
aristotelian wrote: Thu May 14, 2020 2:00 pm Yes, I would be concerned. Exactly how concerned would depend on the credit rating and state.
Very concerned. I have friends that held individual bonds in the financial crisis of 2007/8 and experienced defaults and bankruptcies. Your bonds are your "safe" money and credit quality is extremely important. As an example the Vanguard Intermediate Term Municipal Tax-Ex Fund holds 9760 Bonds of which 20.1% are AAA rated, 48.9% are rated AA and 21.8% are rated A. That covers 90.8% of holdings. at high to superior credit ratings.
I agree that credit quality is key.

FWIW, I held a low seven figure portfolio of individual muni bonds in '07-'09 and experienced zero issues with any of them. I hold even more muni bonds today, and hope to experience the same result this time around. However, that remains to be seen. I will add that prior to the pandemic, 40% of the value of my muni bonds were rated at AAA and 58% were rated at AA.
here is a recent article that discusses (critically) muni bond ratings
https://www.bondbuyer.com/news/municipa ... oronavirus
wrote: More sophisticated market participants view municipal bond ratings — already a subject of criticism among analysts and issuers alike for years — somewhat moot amidst this turmoil.

MMA's Washburn said issuers now being downgraded are likely to keep getting downgraded, and many may land at a rating level lower than warranted once the crisis abates.

“This situation is less a failing of the individual rating agencies, more of a feature of a system whereby federal regulations require adherence to published methodologies and metrics that conform to historical, rather than emergent, default risk,” she said.

Still, many market participants said rating agencies are not equipped to deal with the uncertainty — and therefore predictability — of what they are rating.

Ratings agencies look at predictability of default, but sources told The Bond Buyer the current state of affairs raises questions about even that foundational principle.
i think one of the lessons of the last financial crisis was to treat ratings with some skepticism.
RIP Mr. Bogle.
MikeG62
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Re: Municipal bonds - concerns?

Post by MikeG62 »

grok87 wrote: Sun May 17, 2020 10:33 am
MikeG62 wrote: Sun May 17, 2020 10:07 am I agree that credit quality is key.
i think one of the lessons of the last financial crisis was to treat ratings with some skepticism.
While muni credit ratings themselves are not beyond reproach, the facts don't seem to support the view that the last financial crisis has taught us to treat them with greater skepticism than before.

https://seekingalpha.com/article/406612 ... rare-occur

"Muni bonds, in general, are second only to U.S. Treasuries in terms of perceived safety. Headline-grabbing though the above cases may be, municipal bond defaults remain extremely rare. In the period from 1970 through the end of 2015, out of the thousands of muni bonds issued across the country, there were just 99 defaults. That translates into an annual default rate of 0.09% for all-rated municipal bonds throughout the 46-year period. In fact, investment grade "Aaa" and "Aa" rated munis experienced zero defaults."

That's a period of 45 years, including the last (2008) financial crisis and extends out to 7 years beyond that.
Last edited by MikeG62 on Mon May 18, 2020 6:29 am, edited 2 times in total.
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baritone
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Re: Municipal bonds - concerns?

Post by baritone »

bfeenix44 wrote: Mon Apr 27, 2020 1:14 pm My father has several individual municipal bonds in his Ed Jones portfolio. Is there reason for concerns with these given the current economic situation?

thanks...
tamara
Please take the advice you'll get here and extricate him from Edward Jones !!!
VaR
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Re: Municipal bonds - concerns?

Post by VaR »

retired@50 wrote: Mon Apr 27, 2020 1:48 pm The risk of an individual municipal bond is largely determined by the revenue source used to pay the interest on the bond. Some municipal bonds are considered "general obligation" bonds and can be funded with any money the issuer has available. Other bonds are strictly tied to a water district, a bridge, or perhaps a school district. These details are probably spelled out in the prospectus.

You can likely contact your person at EJ and get the relevant details and/or a copy of the prospectus.
This advice, though it might require a bit of study, is well-worth taking. I read somewhere that historical recovery rates on general obligation municipal bonds has been 100%.

Bond credit ratings will tell you the probability of default (but not the probability of downgrade). Recovery rates will tell you how much of your principal (and lost interest) you will eventually recover. Knowing both is essential to knowing the credit risk of your bond holdings.

I also agree with other posters that a bond fund is a better way for most people to gain exposure to the bond market.
Topic Author
bfeenix44
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Re: Municipal bonds - concerns?

Post by bfeenix44 »

ORIGINAL POST EDITED 5/17/20: To include muni bond details and intent w/ regard to moving from Ed Jones.

Thanks for advice -- much appreciated!

I have already moved my own portfolio from Ed Jones to Vanguard.
I'm currently in process of putting together my folks' full portfolio post to put up on the forum. My intent is to move their portfolio away from Ed Jones, I just need some confidence along the way...the current financial market has me a bit spooked.

My father has several individual municipal bonds in his Ed Jones portfolio. Is there reason for concerns with these given the current economic situation?

MUNI BOND DETAILS:
% = percent of total portfolio

0.55% CUSIP: 83703FEM0 Bond Rating: AA/WD
South Carolina Jobs Econ Dev Hosp Rev Rfdg Palmetto Hlth

0.27% CUSIP: 880461BF4 Bond Rating: AA+/Aa1
Tennessee Housing Dev Agency Residential Fin Prog Revenue B

1.04% CUSIP: 46257TDT3 Bond Rating: AA/Aa2
Iowa State Special Oblig Ijobs Pg Series A Revenue

1.65% CUSIP: 90343SAV7 Bond Rating: AA/Aa3
Usf Financing Corp Florida Capital Improvement Revenue

1.56% CUSIP: 259230MV9 Bond Rating: AA-/AA-
Douglas Cnty NE Hosp Auth No 2 Hlth Facs Nebraska Medicine

1.09% CUSIP: 432299AT2 Bond Rating: AA+/Aa1/AA+
Hillsborough Cnty Florida Communications Svcs Tax Rev

thanks...
tamara
L82GAME
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Re: Municipal bonds - concerns?

Post by L82GAME »

Echoing/summarizing others’ comments here:
  • Credit risk, depending
  • Price risk (e.g., callable, sinking fund provision?)
  • Event risk
  • Liquidity risk
  • Pricing asymmetry
Ownership of individual municipal debt securities is a tricky business. Default instead to a MF.
“Simplicity is the ultimate sophistication.” - Lao Tzu
Topic Author
bfeenix44
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Re: Municipal bonds - concerns?

Post by bfeenix44 »

VaR wrote: Sun May 17, 2020 11:27 am
retired@50 wrote: Mon Apr 27, 2020 1:48 pm The risk of an individual municipal bond is largely determined by the revenue source used to pay the interest on the bond. Some municipal bonds are considered "general obligation" bonds and can be funded with any money the issuer has available. Other bonds are strictly tied to a water district, a bridge, or perhaps a school district. These details are probably spelled out in the prospectus.

You can likely contact your person at EJ and get the relevant details and/or a copy of the prospectus.
This advice, though it might require a bit of study, is well-worth taking. I read somewhere that historical recovery rates on general obligation municipal bonds has been 100%.

Bond credit ratings will tell you the probability of default (but not the probability of downgrade). Recovery rates will tell you how much of your principal (and lost interest) you will eventually recover. Knowing both is essential to knowing the credit risk of your bond holdings.

I also agree with other posters that a bond fund is a better way for most people to gain exposure to the bond market.
Thanks for this... I will do some more research on this...
tamara
aarondearu
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Re: Municipal bonds - concerns?

Post by aarondearu »

AAA/AA muni bonds have only had a 0.02% default rate from 1970-2018 according to Moodys.
https://www.fidelity.com/learning-cente ... ond-market

Housing and health munis have higher default rates than GOs but none of these look particularly risky.
If you can hold on to maturity that's what I would do. Presumably they were purchased for income and still serving that purpose.

Read the disclosures on EMMA and find out where the revenue comes from and look for any recent guidance.
https://emma.msrb.org
my name
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Re: Municipal bonds - concerns?

Post by my name »

Like you, I do not know enough about bonds, so stick with funds as recommended above.

I found great success with Vanguard's state tax-exempt muni funds. These states have had their fiscal challenges so their muni funds have performed really well, often outperforming taxable bond funds (before tax consideration). In a crisis, I am one who "stays the course" with my funds. It was great to see my NJ muni fund sail through the great recession. I slept well at night. When I moved to PA last year, it was easy to sell the NJ fund without worry about a tax hit (too tiny to see). Then buy into the PA muni fund, that performs as well.

If you don't live in a state that has one of these funds, there are national tax free bond funds. People have pointed to the intermediate term tax free national fund. If you have the money to buy enough, there is an Admiral shares for the fund that cost less.

While times are a little crazy right now, what might make the most sense is the thought that once there is a vaccine, things will straighten out. So we may have a year or so of unsettled weather.

Then, there are those who recommend the Total Bond Fund for bonds.
retired@50
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Re: Municipal bonds - concerns?

Post by retired@50 »

my name wrote: Sun May 17, 2020 2:17 pm ...When I moved to PA last year...
Looks like you need to update your Boglehead profile for the new location, as it still reads NJ.

Regards,
This is one person's opinion. Nothing more.
Topic Author
bfeenix44
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Re: Municipal bonds - concerns?

Post by bfeenix44 »

aristotelian wrote: Sun May 17, 2020 8:48 am
midareff wrote: Sun May 17, 2020 8:33 am
aristotelian wrote: Thu May 14, 2020 2:00 pm Yes, I would be concerned. Exactly how concerned would depend on the credit rating and state.
Very concerned. I have friends that held individual bonds in the financial crisis of 2007/8 and experienced defaults and bankruptcies. Your bonds are your "safe" money and credit quality is extremely important. As an example the Vanguard Intermediate Term Municipal Tax-Ex Fund holds 9760 Bonds of which 20.1% are AAA rated, 48.9% are rated AA and 21.8% are rated A. That covers 90.8% of holdings. at high to superior credit ratings.
Yes, definitely would not touch High Yield. Still, ideally I would want my bonds to go up in a crisis. Treasuries have done the job better when needed most. To get the same diversifying power through muni bonds you would need to hold a lot more, so the return you would gain on the yield side you would lose by having to reduce your stock allocation.
2002
VWITX +7.9%
VFITX +14.2%
VINIX -22%

2008
VWITX -.14%
VFITX +13.3%
VINIX -37%

2020 YTD thru April
VWITX -1.7%
VFITX +7.2%
VINIX -9.29%
Thank you for this comparison!
tamara
Topic Author
bfeenix44
Posts: 103
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Re: Municipal bonds - concerns?

Post by bfeenix44 »

MikeG62 wrote: Sun May 17, 2020 11:04 am
grok87 wrote: Sun May 17, 2020 10:33 am
MikeG62 wrote: Sun May 17, 2020 10:07 am I agree that credit quality is key.
i think one of the lessons of the last financial crisis was to treat ratings with some skepticism.
While credit ratings themselves are not beyond reproach, the facts don't seem to support the view that the last financial crisis has taught us to treat them with greater skepticism than before.

https://seekingalpha.com/article/406612 ... rare-occur

"Muni bonds, in general, are second only to U.S. Treasuries in terms of perceived safety. Headline-grabbing though the above cases may be, municipal bond defaults remain extremely rare. In the period from 1970 through the end of 2015, out of the thousands of muni bonds issued across the country, there were just 99 defaults. That translates into an annual default rate of 0.09% for all-rated municipal bonds throughout the 46-year period. In fact, investment grade "Aaa" and "Aa" rated munis experienced zero defaults."

That's a period of 45 years, including the last (2008) financial crisis and extends out to 7 years beyond that.
Appreciate the article!
tamara
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grabiner
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Re: Municipal bonds - concerns?

Post by grabiner »

bfeenix44 wrote: Sun May 17, 2020 11:43 am MUNI BOND DETAILS:
% = percent of total portfolio

0.55% CUSIP: 83703FEM0 Bond Rating: AA/WD
South Carolina Jobs Econ Dev Hosp Rev Rfdg Palmetto Hlth

0.27% CUSIP: 880461BF4 Bond Rating: AA+/Aa1
Tennessee Housing Dev Agency Residential Fin Prog Revenue B

1.04% CUSIP: 46257TDT3 Bond Rating: AA/Aa2
Iowa State Special Oblig Ijobs Pg Series A Revenue

1.65% CUSIP: 90343SAV7 Bond Rating: AA/Aa3
Usf Financing Corp Florida Capital Improvement Revenue

1.56% CUSIP: 259230MV9 Bond Rating: AA-/AA-
Douglas Cnty NE Hosp Auth No 2 Hlth Facs Nebraska Medicine

1.09% CUSIP: 432299AT2 Bond Rating: AA+/Aa1/AA+
Hillsborough Cnty Florida Communications Svcs Tax Rev
As long as muni bonds make sense for your father (24% or higher tax bracket), holding the bonds is probably reasonable. No single bond represents a large part of his portfolio, the six bonds are in five different states, and all are high quality are thus that likely to default.

The problem with selling the bonds is that municipal bonds are illiquid; you will get less than a fair price for selling one at retail. However, if he is in the 12% tax bracket, the tax waste in keeping the bonds is probably high enough to justify selling them (and replacing them with taxable bonds).
Wiki David Grabiner
Topic Author
bfeenix44
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Re: Municipal bonds - concerns?

Post by bfeenix44 »

grabiner wrote: Sun May 17, 2020 9:20 pm
bfeenix44 wrote: Sun May 17, 2020 11:43 am MUNI BOND DETAILS:
% = percent of total portfolio

0.55% CUSIP: 83703FEM0 Bond Rating: AA/WD
South Carolina Jobs Econ Dev Hosp Rev Rfdg Palmetto Hlth

0.27% CUSIP: 880461BF4 Bond Rating: AA+/Aa1
Tennessee Housing Dev Agency Residential Fin Prog Revenue B

1.04% CUSIP: 46257TDT3 Bond Rating: AA/Aa2
Iowa State Special Oblig Ijobs Pg Series A Revenue

1.65% CUSIP: 90343SAV7 Bond Rating: AA/Aa3
Usf Financing Corp Florida Capital Improvement Revenue

1.56% CUSIP: 259230MV9 Bond Rating: AA-/AA-
Douglas Cnty NE Hosp Auth No 2 Hlth Facs Nebraska Medicine

1.09% CUSIP: 432299AT2 Bond Rating: AA+/Aa1/AA+
Hillsborough Cnty Florida Communications Svcs Tax Rev
As long as muni bonds make sense for your father (24% or higher tax bracket), holding the bonds is probably reasonable. No single bond represents a large part of his portfolio, the six bonds are in five different states, and all are high quality are thus that likely to default.

The problem with selling the bonds is that municipal bonds are illiquid; you will get less than a fair price for selling one at retail. However, if he is in the 12% tax bracket, the tax waste in keeping the bonds is probably high enough to justify selling them (and replacing them with taxable bonds).
Thanks for your response... he's in the 12% tax bracket, so I'll talk to him about this.
tamara
Topic Author
bfeenix44
Posts: 103
Joined: Thu Dec 26, 2019 8:05 pm

Re: Municipal bonds - concerns?

Post by bfeenix44 »

FOLKS' FULL PROFILE POST NOW AT THIS LINK:
viewtopic.php?f=1&t=315263

Thanks for the advice and suggestions on the muni funds -- the full portfolio post is now up at the above link!

tamara
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