so you basically want something with no annual losses (in other words, you want ultra low risk), but you want a taxable-equivalent yield in the teens.
ooookay.
let me know when you wake up from your fantasy
You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
CD's are maturing. Looking for steady managed accounts...
- Thread starter DisciplinedHedg
- Start date
so you basically want something with no annual losses (in other words, you want ultra low risk), but you want a taxable-equivalent yield in the teens.
ooookay.
let me know when you wake up from your fantasy
where can i find a list of these securities and how does someone buy them?
Quote from bestfriend:
I have three words: Auction Rate Municipals
As long as they last (prob 4-6 mos) they are the closest thing to free alpha I have seen in many years. You have weekly to monthly liquidity, highly-rated securities, and a 4%-15% tax free return.
ARS have been in the news because of some highly-publicized auction failures. But, if you read the prospectus you can stay away from securities with auction failure interest reset rates that are very low. It's those auctions that have been failing.
I suggest some Washington DC General obligation resets yielding 3.7-4.25%, Connecticut state GO's at 4%, and anything that has been called for redemption or has a final maturity of less than 10 years and a yield of 4.5% or more.
Today i bought $100k in healthcare munis that have been called for a 5/21 redemption at a yield of 5.223%. Last month I was getting 10% on Philly school bonds (which are essentially guaranteed by the state due to state law) and 14% last week on some Detroit airport bonds which reset at 5.23% today.
Most of these things are "A" or better underlying.
Quote from blackjack007:
so you basically want something with no annual losses (in other words, you want ultra low risk), but you want a taxable-equivalent yield in the teens.
ooookay.
let me know when you wake up from your fantasy
Fantasy? It might be.
But Bestfriend did in fact state "4%-15% tax free return" in his original post of auction rate municipals.
I don't know anything about the risk other than reading about several auction rate security blow ups, but the returns seem to be attractive.
Quote from bestfriend:
I have three words: Auction Rate Municipals
As long as they last (prob 4-6 mos) they are the closest thing to free alpha I have seen in many years. You have weekly to monthly liquidity, highly-rated securities, and a 4%-15% tax free return.
ARS have been in the news because of some highly-publicized auction failures. But, if you read the prospectus you can stay away from securities with auction failure interest reset rates that are very low. It's those auctions that have been failing.
I suggest some Washington DC General obligation resets yielding 3.7-4.25%, Connecticut state GO's at 4%, and anything that has been called for redemption or has a final maturity of less than 10 years and a yield of 4.5% or more.
Today i bought $100k in healthcare munis that have been called for a 5/21 redemption at a yield of 5.223%. Last month I was getting 10% on Philly school bonds (which are essentially guaranteed by the state due to state law) and 14% last week on some Detroit airport bonds which reset at 5.23% today.
Most of these things are "A" or better underlying.
how to buy them
Try Fidelity, but any full service broker has 'em. Commish is paid by the issuer.
My point is these things used to yield slightly more than MMF's but now they are (on a taxable equivalent basis ) paying a lot more than a long-term CD--with weekly liquidity
My point is these things used to yield slightly more than MMF's but now they are (on a taxable equivalent basis ) paying a lot more than a long-term CD--with weekly liquidity
Quote from bestfriend:
I have three words: Auction Rate Municipals
You have weekly to monthly liquidity
NOT true
ARS have been in the news because of some highly-publicized auction failures. But, if you read the prospectus you can stay away from securities with auction failure interest reset rates that are very low. It's those auctions that have been failing.
NOT true...i"m not going to comment further -- but MOST auctions have been failing
[/B]
Stereo,
You are misinterpreting my comments and are simply incorrect. I will bet you have never read a prospectus on an ARS.
I did not say auctions are not failing. I said you can stay away from those that WILL fail because those are auctions that have low reset rates.
I do not have a security that has had an auction failure in more than a month. I wish ALL of my securites had auction failures because I would get rates between 6 and 15%. I'd happily wait that out.
Once again, you just need to read the prospectus and understand what you are buying. Apparently, many CFO's didn't.
Muni prospectuses (prospectii?) may be found at www. emma.msrb.org.
PLEASE FAIL ME AGAIN, ARS !!
btw, rates on these things have dropped significantly since my last post. The highest rate I have is 7.33%. The lowest is in the high 2's but that bond fully matures 6/1
You are misinterpreting my comments and are simply incorrect. I will bet you have never read a prospectus on an ARS.
I did not say auctions are not failing. I said you can stay away from those that WILL fail because those are auctions that have low reset rates.
I do not have a security that has had an auction failure in more than a month. I wish ALL of my securites had auction failures because I would get rates between 6 and 15%. I'd happily wait that out.
Once again, you just need to read the prospectus and understand what you are buying. Apparently, many CFO's didn't.
Muni prospectuses (prospectii?) may be found at www. emma.msrb.org.
PLEASE FAIL ME AGAIN, ARS !!
btw, rates on these things have dropped significantly since my last post. The highest rate I have is 7.33%. The lowest is in the high 2's but that bond fully matures 6/1
Quote from bestfriend:
Stereo,
You are misinterpreting my comments and are simply incorrect. I will bet you have never read a prospectus on an ARS.
btw, rates on these things have dropped significantly since my last post. The highest rate I have is 7.33%. The lowest is in the high 2's but that bond fully matures 6/1
You would lose that bet. I have my own Bloomberg terminal at work and could list contacts at every major firm. I don't question that there were a few opportunities...but those disappeared quickly. No harm meant to you, just wanted to be a bit of a voice of reason. Liquidity is STILL a problem unless auction debt was refinanced to fixed rate like most of CA muni debt. This market will never exist like it once did -- maybe VRDN's -- but not 7-28 day auction rate ARP/ARS/ARM.