Munis Part 2

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radernation-1's picture
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Very Good Info from all of you regarding Individual Munis . Can you think of an example where Muni Bond Funds may be beneficial for clients. Say for an example a 45 yr old who has maxed out his 401k and retirement plans, and who is looking to put some additional money to work. What would you say about buying a muni bond fund and reinvesting the monthly dividends ? As opposed to say a Variable Annuity and the expense fees that come with it.

troll's picture
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radernation-1 wrote:

Very Good Info from all of you regarding Individual Munis . Can you think of an example where Muni Bond Funds may be beneficial for clients. Say for an example a 45 yr old who has maxed out his 401k and retirement plans, and who is looking to put some additional money to work. What would you say about buying a muni bond fund and reinvesting the monthly dividends ? As opposed to say a Variable Annuity and the expense fees that come with it.

 
Why in the world would you buy them muni's when you could buy them more silver and gold stocks?

babbling looney's picture
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Joined: 2004-12-02

What tax status is your client in?
What is his risk tolerance?
Does he need growth or tax free income?
When will he need/want income or prinicpal return?
Rates are really low right now, but you might check and see if there are any muni zeros if tax reduction is the driving force.  I suppose a muni fund could be benefical if you consider everything the client owns and can answer the above questions.

youcanhatemenow's picture
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Joined: 2005-09-20

Right now high yield muni funds show the most promise.  Leveraged close-ended funds you should avoid.  Spreads between NR muni's and high investment grade looks attractive.  If you want long term management quality, take a look at Oppenheimer Rochester National Muni, ORNAX. 
That's my two cents

radernation-1's picture
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I wouldn't be makin gto much fun about silver and gold stocks JOE your top tier mining companies were up an average of 5% for the day. Also know with the "lets throw money out of the helicopter " fed chief coming on board soon. I am really starting to lick my chops!

tjc45's picture
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youcanhatemenow wrote:
Right now high yield muni funds show the most promise.  Leveraged close-ended funds you should avoid.  Spreads between NR muni's and high investment grade looks attractive.  If you want long term management quality, take a look at Oppenheimer Rochester National Muni, ORNAX. 
That's my two cents

Ornax is a very good fund. Be aware that a few weeks ago the fund cut it's dividend because of it's exposure to airport terminal lease rev bonds, where Delta and Northwest are the leasees. Bankruptcy doesn't shield either of these airlines from their obligation to pay these leases, yet operating under the you can't get blood from a stone payment plan, Opco Roch manager Ron fielding decided to cut the fund's dividend anyway.
Fielding is the best of the best, and manages this fund for income, not total return. Not employing a CYA management style has enabled this fund to exceed all expectations. To the casual obserer Fielding may seem like a real craps player. He takes strong contrarian positions, backed by top notch research.
The fund is still yielding above 5%. This fund is only suitable for clients who are rated aggressive for risk and can stand a fair amount of volatility.

radernation-1's picture
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Joined: 2005-06-07

Thanks for the Muni Bond Fund Ideas . Does anyone have an opinion on Franklins Muni Funds (not the closed end ones)

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exdroneNewbieJoined: July 01 2005Posts: 18

Posted: Oct. 16 2005 at 1:45am | IP Logged

Heres part of a post I found surfing the web.  Ex-Jones brokers aren't the only ones who get it.
Monday, October 3. 2005
You Don't Want My Business
The company is Edward Jones. Yes, I thought we were done with this shady company after its last major indictment and settlement with various authorities, from the Feds to state and industry regulators. But no. The company can't seem to stop scamming customers.The list of its settled crimes in the last five years is quite long and includes fraudulently selling certificates of deposit (settled with the Securities and Exchange Commission, SEC) to taking demanded kick-backs and financial incentives to push mutual funds. Even though the ink was barely dry on the last series of settlements and arbitration cases are still underway (its customers are trying to get some of their money back), Edward Jones moved on to another fraudulent scam.The scam involved what’s the bedrock of folks' investment portfolios: bonds, more specifically, tax-free municipal bonds. These are the assets that many of us depend on for income and security, both before and during our retirement.The scam: Edward Jones wasn't telling folks what the effective interest rate or yield was when they were trading bonds held inside their portfolios through their Edward Jones brokers. And the management--from the top down--admitted that it knew about this, dating back as far back as 1995.Everyday investors--who weren't as savvy or weren't up to do battle with Edward Jones, their brokers and bond traders--were or have been duped according to the National Association of Securities Dealers (NASD) and the US Municipal Securities Regulation Board (MSRB). The trades involve billions of dollars.What did Edward Jones get for admitting and settling its crimes? How about a $300,000 fine. That’s chump change for what its bond traders were scamming.It gets worse. According to filed settlement papers, Edward Jones' settlement won't disclose the facts of the case or provide individuals with restitution or adequate disclosure to empower them to file claims in arbitration procedures.This is bad. I'm working on something to help those of you who were scammed get your money back. Stay tuned. At a minimum, this is another wake-up call reminding us to be cautious if and when we’re dealing with Edward Jones.
Here's the link to the whole article.http://www.neilgeorge.com/archives/966-You-Dont-Want-My-Busi ness.html

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troll's picture
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radernation-1 wrote:

I wouldn't be makin gto much fun about silver and gold stocks JOE your top tier mining companies were up an average of 5% for the day. Also know with the "lets throw money out of the helicopter " fed chief coming on board soon. I am really starting to lick my chops!

 
hey don't get me wrong, i'm glad you had a good day and i hope you make a big pile of $$.  I have plenty of exposure to the sector myself.  But, my book isn't riding on it.
I just think your strategy is severely flawed, and I don't think you've fully considered how much it will hurt you(and your clients) if you are wrong....or for that matter if you're right but you don't take profits in time.....
just food for thought....

radernation-1's picture
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Joined: 2005-06-07

I apreciate that. The thing is when the cycle changes I will move my clients to a different sector. Again most of my clients have their retirement money elsewhere. I work mainly with clients that are looking for individual stock ideas and I like it that way . See my newest post on the other Muni board

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