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Non-Tech : Money Managers after the Perfect Storm
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To: Skeeter Bug who wrote (32)2/27/2002 11:30:05 PM
From: Tom D  Read Replies (1) of 46
 
Medium quality corporate bonds should offset the decline in the principle in muni bonds

Bonds in companies that have a negligible probability of going bankrupt are yielding 10 to 11% annual interest now. If the economy recovers, my financial consultant expects them to appreciate in value by 30 to 40%. He says this is the historical behavior in this sort of economic climate.

My bonds were 100% munis. Last April we moved to 60% munis, 40% corporates, anticipating a gradual economic recovery, with the expected decline in the principle of the munis to be offset by an increase in the principle of the coporates.

My bond portfolio lost 7% last year for two reasons. First, the impact of the Bush 10 year tax cut on long-term interest rates and second, the September 11 tragedy delayed the economic recovery be a few quarters.

But if you are completely in munis, I'd suggest taking a look at some corporates. Not junk bonds.

Tom
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