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08-20-2008, 10:02 AM
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#1
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Full time employment: Posting here.
Join Date: Mar 2008
Posts: 654
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New Issue Muni's
Hello,
I was talking with a Judge (as in Lawer) in my area yesterday and thought I would run the jest of our conversation by you guys for your thoughts and opinions. This Judge is involved in the underwriting of Municipal bonds for Morgan Keegan. He told me that he personal buys a lot of individual muni's and always goes long term (20 yrs). His thoughts were to go for the higher yield and don't worry about the bonds being called. He also holds til maturity/never sells. I'm looking into buying individual muni's myself so found this interesting. I'm looking at cities in my State (G O bonds only) for the better tax benefit. I plan to build a fairly large ladder for my retirement income. Any advise Pro or Con would be appreciated.
Thanks,
Steve
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08-26-2008, 12:02 PM
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#2
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Full time employment: Posting here.
Join Date: Mar 2008
Posts: 654
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Anybody interested in or buy individual muni's ?
Trying to decide if its a good thing for income during upcoming FIRE.
Second try for commits.
Thanks,
Steve
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08-26-2008, 01:28 PM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2005
Location: Central MS/Orange Beach, AL
Posts: 9,072
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Must not be any individual muni bond buyers out there. Wish I could help you but I only own a fund.(NXQ) I might buy a few individual ones as time goes on, if the rates make it worth my while. Most of my portfolio is in my taxable account so muni's make sense.
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Retired 3/31/2007@52
Investing style: Full time wuss.
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08-26-2008, 01:32 PM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
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I like General Obligation (GO) bonds myself. There is a bit of failsafe in that the taxing authority of where they are issued in effect "pays" the bond interest. If your community builds a library or puts in some new roads, that is generally done with GO bonds.
I would ladder the maturity, and not go out longer than 10 years, unless it's a double exempt and a stable issue with a juicy dividend (5%)
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Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
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08-26-2008, 01:42 PM
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#5
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Full time employment: Posting here.
Join Date: Oct 2003
Posts: 961
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IIRC, and someone should correct me if I'm wrong, but when you buy muni bonds at issue you don't pay a markup - the issuer pays the underwriter/dealer the commission. So, it's probably cheaper to buy the muni bonds at issue and hold to maturity to avoid the fees associated with the secondary muni market.
My guess is that your lawyer friend is in a high tax bracket, so munis make sense for him over fully taxable bonds.
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08-27-2008, 05:35 AM
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#6
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Full time employment: Posting here.
Join Date: Mar 2008
Posts: 654
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Thanks for the reply's.
I guess there are very few people that buy muni's direct, compared to mutual funds. But if you build a ladder of them and you are after tax exempt income they do begin to make sense.
Thanks Again,
Steve
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08-27-2008, 05:47 AM
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#7
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Thinks s/he gets paid by the post
Join Date: Jul 2007
Posts: 2,487
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I buy california munis, mostly GOs, AA or AAA rated, and 20-30 years. I have not sold any yet and don't plan to. All were bought with 5% yields or better. I am buying for income (tax-free) not accumulated interest 20-30 years from now. I'm trying to build a my portfolio so that it kicks off plenty of cash for living expense without touching the capital gains....we'll see if it works.
R
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08-27-2008, 07:50 AM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
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Quote:
Originally Posted by Stevewc
Thanks for the reply's.
I guess there are very few people that buy muni's direct, compared to mutual funds. But if you build a ladder of them and you are after tax exempt income they do begin to make sense.
Thanks Again,
Steve
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If it were me,I would keep the ladder shorter (5 years or so). I believe interest rates will be higher in the future, and although munis aren't as sensitive to interest rate increases as corporates, they still would be affected........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
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08-27-2008, 08:22 AM
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#9
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Thinks s/he gets paid by the post
Join Date: Nov 2007
Posts: 1,052
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Depending on your age, the one of the best things you can do, in my opinion, is to ladder out 0% coupon muni's. In this way you can have tax free income coming due every year. Make sure they're AAA.
As to buying and selling muni's, I do it all the time. Buy bonds at a discount, if they move up enough, I'll sell and buy others at a discount. In this way, you do have a capital gain, but you're capturing it now rather than waiting years. JMO.
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08-27-2008, 08:25 AM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
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Quote:
Originally Posted by Art G
Depending on your age, the one of the best things you can do, in my opinion, is to ladder out 0% coupon muni's. In this way you can have tax free income coming due every year. Make sure they're AAA.
As to buying and selling muni's, I do it all the time. Buy bonds at a discount, if they move up enough, I'll sell and buy others at a discount. In this way, you do have a capital gain, but you're capturing it now rather than waiting years. JMO.
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Good strategy, but sometimes it's hard to find munis at a discount. I'll buy up to about 103 if it's a good issue. Much above that and you don't come out ahead, IMHO...........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
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08-27-2008, 08:40 AM
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#11
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Thinks s/he gets paid by the post
Join Date: Nov 2007
Posts: 1,052
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I won't buy anything over 101. Too aggravating when an extraordinary call hits. Some of my best trades ever have been deeply discounted muni bonds. I once bought some at 19 that came back to par after about a year and a half. I think they were 6%'ers. Figure out the return on those puppies!
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08-27-2008, 09:13 AM
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#12
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
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Quote:
Originally Posted by Art G
I won't buy anything over 101. Too aggravating when an extraordinary call hits. Some of my best trades ever have been deeply discounted muni bonds. I once bought some at 19 that came back to par after about a year and a half. I think they were 6%'ers. Figure out the return on those puppies!
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Which bankrupt city were they issued from??
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
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08-27-2008, 09:14 AM
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#13
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Thinks s/he gets paid by the post
Join Date: Nov 2007
Posts: 1,052
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American Airlines backed munis.
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08-27-2008, 09:16 AM
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#14
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
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Ok............a bankrupt airline...............
Are you in Plano??
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
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08-27-2008, 09:38 AM
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#15
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Thinks s/he gets paid by the post
Join Date: Nov 2007
Posts: 1,052
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Plano? No. That's where the people who overpaid for their homes live.
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08-27-2008, 10:28 AM
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#16
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
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That's where "Bobby Hull" lives, and I know his real name........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
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08-27-2008, 12:02 PM
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#17
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Thinks s/he gets paid by the post
Join Date: Nov 2007
Posts: 1,052
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Seriously?? Is that my buddy? Gimme his name, I wanna visit him. Since he knows me, it's only fair.
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08-27-2008, 12:28 PM
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#18
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Thinks s/he gets paid by the post
Join Date: Nov 2007
Posts: 1,052
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Quote:
Originally Posted by FinanceDude
Ok............a bankrupt airline...............
Are you in Plano??
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Among places with 250,000 or more residents, the affluent Dallas suburb of Plano, Texas, boasts the highest median income: $77,038.
The wealthiest (and poorest) places in the United States - Aug. 28, 2007
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08-29-2008, 08:23 PM
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#20
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Full time employment: Posting here.
Join Date: Mar 2008
Posts: 654
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Thanks to everyone that added to the discussion. I'm doing my best to read and learn about buying bonds.
The link to removing the fog was very good.
From some of the books I've read on bonds, it seems that trying to find & buy new issue muni's is the best way to keep from being ripped off by the brokers. Do any of you have first hand knowledge as to this being true.
Thanks again to all,
Steve
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