Income Investor Perspectives

Independent municipal bond market insights for advisors

Month: March, 2015

Muni Bond News: Political Risk

The Wall Street Journal (March 30) has a column from Richard Ravitz (former NY Lt. Governor who was influential in dealing with New York City’s financial crisis) regarding the fiscal problems in Chicago and the upcoming election. The situation in Chicago is a good reminder that investors who hold (or are considering) municipal bonds need to evaluate and monitor the political risk associated with the bond issuer. Political risk does not just mean what the current politicians are saying, but includes the “mood” of the taxpayers / ratepayers and “baked in” structural taxing, borrowing or spending plans. Evaluating and pricing political risk should be a part of the credit evaluation process.  See my comments on Credit Risk / Political Risk here.  Subscribers can read the WSJ article here.



What equity investors should know about bond investing

  • Bonds are Not Stocks;
  • Ratings, Credit Risk and Political Risk
  • Dividends and Interest;
  • Low Rates Don’t Have to Mean Low Return;
  • Liquidity Risk
  • Bonds or Bond Funds
  • How About Bond ETFs?
  • Interest Rate Risk
  • How Will ____ Affect My Bonds?

An old bond trader’s maxim says that you make you money when you buy—not when you sell. Selecting bonds or a bond manager uses many of the same business decision making processes as are used in the equity portfolio, but because of the different characteristics of the two classes of assets, investors need to bring a different perspective to how they recognize and manage risks.

To read the article, please click here.

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