There is a popular notion held, and spread, by commentators and advisors…
Stocks outperform bonds over the long run.
There is only one issue with this assumption; it may not be entirely accurate.
“…according to research by Ibbotson Associates, as reported in “USA Today” last year, bonds actually outperformed stocks over the past 30 years. Ibbotson’s bond index, comprised of a broad cross section of bonds, returned 11.03% per year on average over the previous 30 years, compared with a 10.98% return for the S&P 500 during the same period,” according to James A. Klotz, FMSbonds, Inc. President.
Our friends over at FMSbonds, Inc. discuss this matter in more detail. For more of the story, head over to the FMSbonds website.
We tend to consult with our friends over at FMSbonds, Inc. quite a bit here at KriKnows. Not only are they knowledgeable in municipal bonds, but their opinions are often interesting — at least to us.
Last month, James A. Klotz of FMSbonds took a look back to Meredith Whitney’s “infamous predictions of massive muni defaults” from a few years ago.
“’I expect multiple municipal defaults to trigger indiscriminate selling, which will prompt a federal response,’” Whitney wrote in a Nov. 3, 2010, Wall Street Journal op-ed piece.
Of course, Whitney’s prediction wasn’t entirely accurate.
“The selling did happen, of course. But investors who heeded her forecast sacrificed billions of dollars when prices rebounded. The defaults never happened, the federal government never got involved—in fact, prices soared as yields on municipal bonds tumbled to historic lows,” writes Klotz.
Klotz goes on to explain Whitney’s backlash a bit more in depth. Head over to the FMSbonds website to read on.
If you consult with the “municipal bonds specialists,” FMSBonds, Inc., you’ll find the most breaking and relevant muncipal bonds news around.
So, what is the latest news to leak from the FMS camp? Well, it seems like the municipal bond market may be getting a clean bill of health.
“A steady, if unspectacular stream of recent news items that indicate the municipal bond market – bashed almost gleefully by doomsayers a little more than two years ago – is getting healthy,” writes James A. Klotz, FMSBonds columnist.
Though, you should know that despite some promising signs, there are still a few threats that remain.
“It’s not all clear skies for state and local governments. Many still face underfunded pension obligations. Health-care costs may rise and there is a threat of cuts in federal aid. Rating agencies are expected to downgrade a number of issuers this year, and some efforts aimed at reducing or eliminating the tax benefit of municipal bonds remain,” writes Klotz.
Head over to FMSBonds.com for the complete story.
In today’s economy, there are constantly new market predictions virtually on a day-to-day basis. So, what is the next hot topic?
James A. Klotz of FMS Bonds, Inc. discusses “The Great Rotation” of investment dollars from bonds into stocks in 2013.
“The theory, as espoused by Bank of America, among many others, posits that persistent market volatility in the last decade, which prompted investors to seek refuge in the bond market and cash investments, would give way this year to more sustained growth in most economies.” writes Klotz.
“Moves by governments to address deficit spending along with a rise in consumer confidence will ultimately lead to a massive flow of investment dollars into equity funds from the safe haven of bonds.”
Head over to the FMS Bonds, Inc. website to read more on this coming rotation.
If you don’t consider yourself a speculative investor, but still hold tobacco bonds originally purchased as investment-grade securities, Moody’s recent announcement may give you pause.
This month, the rating agency announced it had placed more than $20 billion of municipal bonds backed by revenues from tobacco companies under review. Moody’s is concerned that a proposed settlement between the major tobacco manufacturers and 17 states, the District of Columbia and Puerto Rico may reduce the cash flow that supports the bonds.
Our friends over at FMS, Bonds Inc. are at it again. Take a look at this article by James A. Klotz originally published on Jan. 29.
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