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California State Bond Sale next week
Old 10-11-2008, 04:47 PM   #1
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California State Bond Sale next week

This is one of the no commision sales , must use specified brokers. Schwab , RBC , and ML Stern are the only ones on the list I have herd of. http://www.buycaliforniabonds.com/

Does anyone have an idea of the rate ? Thanks.

P.S. I did a search of threads on this , if I missed a relevent thread , someone please tap me on the back of my head with a 2 x 4.
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Old 10-11-2008, 05:17 PM   #2
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I can't answer your question but I'll be very interested in the results of their bond sale. I consider California at the lower end of where I'd like to invest in bonds.
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Old 10-11-2008, 10:03 PM   #3
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2B or anybody else...

Since I recently bought into Vanguard's Calif. Intermediate Muni Bond Fund, how concerned should I be that this isn't going to be all that I had hoped for?
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I'd be cautious
Old 10-11-2008, 10:05 PM   #4
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I'd be cautious

Having grown up in San Diego, CA, I would be pretty cautious of California bonds. Governor AS (sorry, I can't spell his name right off) is going to the Fed to ask for a short term loan, and I don't think he's going to get it, as it would open a floodgate of demands from other governors to bail out states, counties and municipalities.

I see California as having to cut back severely, including laying off many of the admittedly-bloated state government bureaucrats and programs. This means lawsuits and protests, further leading to decreases in California's ability to pay back the bonds.

Do I see a bankruptcy for California -- I surely hope not, but ...
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Old 10-11-2008, 10:21 PM   #5
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Having grown up in San Diego, CA, I would be pretty cautious of California bonds. Governor AS (sorry, I can't spell his name right off) is going to the Fed to ask for a short term loan, and I don't think he's going to get it, as it would open a floodgate of demands from other governors to bail out states, counties and municipalities.

I see California as having to cut back severely, including laying off many of the admittedly-bloated state government bureaucrats and programs. This means lawsuits and protests, further leading to decreases in California's ability to pay back the bonds.

Do I see a bankruptcy for California -- I surely hope not, but ...

I didn't like ScooterGuy's opinion, can I have another one?
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Old 10-11-2008, 10:44 PM   #6
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I didn't like ScooterGuy's opinion, can I have another one?
Do you really want to buy a piece of a state that's going to slide into the ocean? That might happen in the next few hundred thousand years and I'll be darned if I lose my money on that! I've already got enough underwater after this last week....
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Old 10-12-2008, 12:09 AM   #7
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Actually, Marquette, after reading your post, I'm beginning to appreciate The Scooter's wisdom a bit more.
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Old 10-12-2008, 04:36 AM   #8
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2B or anybody else...

Since I recently bought into Vanguard's Calif. Intermediate Muni Bond Fund, how concerned should I be that this isn't going to be all that I had hoped for?
I would worry about any investment that is non-diversified. If you are buying the California bonds to avoid the state income tax, you're putting a lot of your eggs in one basket for not a whole lot of savings. If your exposure is less than 4% of your total net worth, you're probably not out of balance. If you have your whole fixed income portion of your portfolio there, you may find yourself in a very bad position someday.

California is probably the least credit worthy of the 50 states although there are some contenders. The best part about California is that no matter what is done to cut expenses there is some judge that will tell them they can't do it.
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Old 10-12-2008, 09:03 AM   #9
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OK, so the Calif. Muni bond fund may be too risky. I'm assuming that VWITX (Vanguard Muni Bond Fund) would be less risky because it's much more diversified. Both these funds receive a "2" ranking regarding risk on Vanguard's website with a "1" being the safest. The GNMA fund also has a "2" ranking. It seems odd to me that all three of these funds are ranked the same regarding safety.
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Old 10-12-2008, 09:06 AM   #10
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It seems odd to me that all three of these funds are ranked the same regarding safety.
None of them have been hit with defaults. I think it's safe to say the rating agencies aren't all that good.
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Old 10-12-2008, 09:23 PM   #11
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CA needs to cut it's government obligations and increase taxes. Many of the real-estate areas in CA are the ones leading the national average in deflation - many of the cheater loans were given to Californians for their houses. CA has a net negative in immigration (except for the illegal kind), so the population base to provide the taxes is decreasing.......need I go on? I think those bonds are a high risk and/or very long term investment. I myself am leaving CA for good in a week....nice place to visit, too expensive to live and I have a good profession, engineering.
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Old 10-13-2008, 08:11 AM   #12
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CA needs to cut it's government obligations and increase taxes.
And unfortunately, CA already has many of the highest taxes in the country. There would seem to be a finite amount of times CA can raise taxes and not chase all the jobs away.

One positive aspect of Prop 13 here is that so many homes are appraised at well below market values because of the 2% annual cap in appraised values that even if these homes drop in market value sharply, their assessed value for tax purposes is still likely to be 2% higher. At least for those who have held their homes for close to a decade or longer, anyway.
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Old 10-13-2008, 10:55 AM   #13
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And unfortunately, CA already has many of the highest taxes in the country. There would seem to be a finite amount of times CA can raise taxes and not chase all the jobs away.

One positive aspect of Prop 13 here is that so many homes are appraised at well below market values because of the 2% annual cap in appraised values that even if these homes drop in market value sharply, their assessed value for tax purposes is still likely to be 2% higher. At least for those who have held their homes for close to a decade or longer, anyway.
I own a lot of CA munis and I worry very much about these issues. The state has the highest top marginal tax rate and there is constantly talk of tax increases. The Nov ballot is filled with bond measures. CA is considered one of the most business unfriendly states in the nation.

At some point, many people--myself included--are going to decide that the weather doesn't justify the excessive levels of taxation. There are plenty of alternatives. If the high wage earners began leaving the state in droves, it could be a disaster.
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