The Muni-Bond Mania Who is benefiting is obvious even without reading this WSJ editorial.
State tax-free income became more valuable to those who could no longer deduct state income taxes (SALT limitations), i.e. the very high earners in low income/low property value states and the middle class and above in high income/high property value states.
Consequently, states have to pay somewhat less interest on the bonds. This allows them to borrow more, but also benefits these taxpayers who ultimately bear the cost of state expenditures.
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Muni bond investors likely know that two of the NRSROs (Moody's and Fitch)
"recalibrated" their muni bond ratings in 2010. That is, they changed the curve on which they graded muni bonds, because AA muni bonds tended to be as safe as AAA corporates. So formerly AA munis were changed to AAA and so on.
This editorial challenges the recalibration, asserting that this lowered rates on muni bonds. Of course interest rates dropped. If a bond looks safer buyers demand less interest. However, nowhere does the editorial suggest that the recalibration was inaccurate.
My question is, given this professed concern by the Editorial Board in the accuracy of NRSROs, where was the WSJ back in 2007 when CDOs were all getting great ratings?
https://www.mercatus.org/publication/brief-history-credit-rating-agencies-how-financial-regulation-entrenched-industrys-role----
Side note: I'm reading the column online at home courtesy of the library at a university in which I'm registered as a student. Registering and not sitting in on classes is actually less expensive than subscribing (not that this is why I sign up for classes - free access is just an added benefit.)
For Charles: IOFIX "...The information contained herein is not represented or warranted to be accurate, correct, complete, or timely." ...Pretty effing useless, then. All these outfits and people depend on us. But we don't care to actually be conscientious.
All financial sites have legal disclaimers of one sort or another. That doesn't impute a lack of diligence.
Pear Tree Funds says this pretty well on their site:
https://peartreefunds.com/legal
ALL INFORMATION AND CONTENT ON THE PEAR TREE WEBSITE ARE SUBJECT TO APPLICABLE STATUTES AND REGULATIONS, FURNISHED “AS IS,” WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER RELATING TO THIS SERVICE, INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT.
Pear Tree and its affiliates intend that the information contained in this service be accurate and reliable; however, errors sometimes occur. Pear Tree does not warrant that the functions contained in the materials will be uninterrupted or error-free, that defects will be corrected, or that this site and the servers that make it available are free from viruses or other harmful components
In essence: we strive to be accurate, but in case of error, don't sue us. Literally.
Why post links to subscription only articles? “did you perform your job for free?”@Mark pretty much echos my thoughts. So, personally, for my own consumption, I make minimal, if any, effort to go around a publisher’s paywall. I want our free independent press to profit and flourish. I subscribe to the WP through Amazon’s Kindle services. But it doesn’t allow me access to their (identical) online stories.
There’s a gray area with the NYT and WP. Both use cookies that enable users to access a
set number of articles monthly for free (typically 5 per month). So, when I come across a good story from one of them somewhere else, I’ll link the
original from NYT or WP - thinking most might still be able to access it even if I’ve reached the limit. But I’ll often link a decent (possibly inferior)
secondary source along side with a note telling readers they might not be able to access the original.
I don’t even attempt to link directly from those publications that allow no free access (
WSJ, Barrons, Financial Times). It’s pretty clear they don’t want non-subscribers accessing their articles. However, I can usually find a decent substitute somewhere else (perhaps
CNBC) which characterizes the original article and link it.
That approach seems fair to mfo readers and still complies with the wishes of the publisher. As far as simply directing (frustrated) mfo readers to
“... Go do a Google search” - WTF?
Protect Your Portfolio From a Market Crash @JohnN - Thanks. :)
@Catch22, You’re not rambling - just a little too complex perhaps for the
intellectually challenged.
What I gleaned from your response to my question is that you’re not so much opposed to
@John’s article’s focus on
market crash as you are bothered by the often
unsupported assertions that pop-up (usually in links) on the board from time to time. Good point. I agree. In fact, by performing a
Google Search most any dimwit could dig up whatever predictive scenario they want to. Search for
market crash and you’ll dig up half dozen or more compelling articles to that effect.
An equally compelling number of articles can be found making absurd
pie-in-the-sky predictions to the contrary. S&P 3000 by the end of last year comes to mind. (We all know how that went.) Same goes for predictions about gold, bonds - or even rare whiskey (something for everyone here). :)
https://www.forbes.com/sites/felipeschrieberg/2017/03/24/the-latest-hot-investment-rare-whiskies-hit-a-new-record/Catch - I think you’re saying (in a nice way) that links are cheap. The internet is filthy with different financial scenarios. But
selectivity and
objectivity in regards to those links are precious and in short supply. We stand as testament. Thank you.
Protect Your Portfolio From a Market Crash Must be time to sell, sell, sell the equity side, eh? Catch the equity top right now !
@Catch22 - I assume that’s meant sarcastically?
Rather than trying to get in and out every other week, may I suggest everyone have a well thought out plan? Risk should, as always, be appropriate for age and circumstances. Sure - if you desire to “play” around the edges in an attempt to mitigate losses or take advantage of some opportunity you see, go ahead. But this idea of rushing in or out - particularly based on something aired on TV or published by a financial pundit - strikes me as ill conceived and downright dangerous to your long term financial well-being.
@JohnN - There’s a convenient
edit button if you care to correct the spelling of
crash. Sometimes appearance matters.
Why Investors Shouldn't Watch Business TV I don't have the finporn on anymore -- it's just a distraction and 'infotainment' at best.
But between the leading finporn channels - CNBC, FBN, and Bloomberg - I prefer Bloomberg any day of the week, as it tends to be far less sensational, 'quiet' and fact/data-driven than the other two. CNBC can become a screamfest with 8 commentators on the screen at the same time. When it comes to financial news on TV and radio, I like it nice and boring ... not too many annoying sound effects, visual effects, or screaming.
Not to mention, Bloomberg really treated me right (ie, respectfully in all ways) when I did truly interactive/well-paced interviews. With CNBC I felt like I was on the conveyor belt and brought on just as a two-sentence prop to fill the other side of the screen from their 'popular' pundit of the time. I'd still think long and hard before doing another one with them.
But when I trade futures I still like having the CME squawk going in the background just as noise. Voice inflections from floor observers, once you get to know them and their style, can be helpful .... not to mention funny. But for me it's just background noise mainly.
