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To: pater tenebrarum who wrote (61367)	1/24/2001 5:21:57 PM
From: Activatecard	Read Replies (1) \| Respond to of 436258

From Bonds Online: Investment Strategy Focus Watch That Basket Question: What do these companies have in common? -Imperial Sugar -Chiquita Bananas -Armstrong Flooring -Owens Fiberglass -TWA -Montgomery Wards -Southern California Edison In addition to being household names they have one other thing in common. They have all recently defaulted on bond payments and in many cases have filed for Chapter 11 bankruptcy. With the advent of electronic trading we have seen a dramatic increase in individuals taking control of their investments and finances. I am sure that after last year many of those investors have come face to face with the reality of market volatility and the uncertainty of what the future will bring in regards to their portfolios. Many investors are at this time wondering about their asset allocation model and its effectiveness. They might be contemplating a shift in asset allocation that would help in insulating them from dramatic equity price swings in the future. Of course this could come at the expense of performance and just might be thing not to do at this time. Changing horses in mid-stream is risky at best. Sure the Internet has offered a previously unimaginable amount of information to investors allowing them gain a sense of confidence and understanding of the markets. But after having put together a portfolio the investor is now responsible for monitoring investments on a full time basis. In the equity markets there are scores of analysts generating hundreds upon thousands of research reports. The SEC requires corporate disclosure of financial information each quarter and additional filings regarding a number of issues such as insider buys and sells. All this information is combined and put forth on the Internet for investors to dissect and act upon making monitoring the portfolio easier than in the past. This is simply not the case in the Municipal Bond markets. Not until 1997 were issuers required to make continuing disclosure of material events that relate the possible performance of the bonds. And even this requirement only applies to bonds issued after 1996. Fortunately we have seen other issuers providing additional disclosure even if not required. I believe this is done not out of the goodness of their hearts but an attempt to ward off any possible litigation. The MSRB (Municipal Securities Rulemaking Board) has recently been contemplating the issue of Electronic Trading in municipal securities. It appears that this is still a long way off due to the lack of an infrastructure that allows for the timely dissemination of all relevant information. One thought brought about by the MSRB was to create a class of investors called sophisticated market professionals and allow this group to trade electronically. The thought being that these investors would have access, knowledge and understanding of all pertinent information. Well the lack of timely information is so inconsistent that even organizations representing these market professionals have opposed the idea of allowing market professionals such as mutual funds, trust departments, and money managers to trade electronically due to their fear they that may not have all the information and would be taking on additional liability for being responsible for knowing all pertinent facts at the time of purchase. Individual investors acting on their own through electronic trading would also be responsible for knowing all the facts at the time of purchase and for monitoring any future developments in their bonds. As investors shift or reallocate funds from equity to fixed income investments they may feel that once the bonds are purchased with the return and maturity known the only thing left to do is cash the checks. This is absolutely not the case. Bonds are active investments with many forces affecting their price and ultimate performance on a daily basis. I see many existing portfolios of bonds and just as many considered portfolios that simply do not address all levels of risk. As investment opportunities become more and more comoditized and sold on the basis of price and commission the only thing setting financial professionals apart are service and a finely focused understanding of a specific niche in the markets. I recently spoke with an investor interested in establishing a corporate bond portfolio that would generate a certain level of cash flow. The level of cash flow desired could not be accomplished given the limited amount of capital by investing in Treasury bonds, Agency bonds or the top two rating levels of corporate bonds. Corporate bonds rated in the A to Baa range would need to be considered. Although I did not put together the portfolio I hope the investor has done so with an advisor who can provide him with the necessary service of reporting and monitoring the portfolio. Bonds are what we know, service is what we offer. These strategies may or may not be suitable for your risk tolerance and investment objectives. Please contact me for a complete discussion of the factors involved, and their impact on your investment program. My e-mail is jhowle@mayfinancial.com.