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  • PIMCO's Old And New Bets: Should You Replace Treasuries With Munis? [View article]
    Terrific article Michael.

    Muni bonds are actually very cheap relative to treasuries currently (as of today, October 29th, 2012).

    Munis historically have traded at a yield of approximately 85% of their comparable maturity treasury.

    Today muni yields are HIGHER than treasury yields AND they are tax free!

    The 30 year treasury is around 2.9% taxable compared to a new 30 year AAA rated state general obligation bond which is yielding around 3.5 - 3.75% tax free.

    Munis departed from their traditional relationship with treasuries a few years ago around the time of the financial collapse. This was a result of the Fed's involvment in buying treasuries as well as the compounding of the difference by very large safe haven investors.

    Muni bonds are great as a higher yielding safe haven for individuals, but not when you are looking for a home for $300 - $500 million at a clip.

    Issues this size aren't readily available every day. And if you want to turn around and jump out real quick, good luck finding a bid on $500,000,000 in munis! Not many bidders at that level.

    But there's plenty of bidders at the $50K and $100K levels. So it's really ideal for individual investors.

    Check out the article I wrote on building the Ideal Municipal Bond Portfolio:

    I strongly believe building your own individual bond portfolio is far better than buying a bond fund.

    I'll write an article on that subject as soon as I have a chance...

    Again, great article Michael. Keep 'em comin'!

    Glen Rosenberg
    Oct 29, 2012. 01:29 PM | Likes Like |Link to Comment
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