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Municipal bonds: An Obama bet? |
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| Jul 29, 2008 01:32 PM UTC |
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Tracked Blogger
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Via BloggingStocks:
Filed under: Newsletters, Politics, Stocks to Buy "We're taking a hard look at municipal bonds," says Keith Fitz-Gerald. In The Money Map Report, he adds, "Our favorite play is Nuveen Quality Income Municipal Fund (NYSE: NQU). "If you have been thinking about putting some new cash to work, now's a great time to do so. In general, municipal bonds are about as cheap as they've been in decades. "Munis are really very simple instruments. When most states, cities or even counties engage in large-scale construction projects, they typically issue debt in exchange for the money they need in the form of a municipal bond. "Because the Fed considers them tax-free instruments, munis with lower rates can actually equal far higher taxable yields. For instance, a 3%-to-5% tax-free note can be equal to a taxable one of 5% to 7% under normal circumstances, particularly for investors in higher tax brackets. "But these are hardly 'normal' times. Especially when you consider that many munis are actually paying more than taxable treasuries at the moment. "Our favorite play is the Nuveen Quality Income Municipal Fund, which is paying a juicy 5.60% tax free at a time when 10-year treasuries are offer a taxable 4.10%. Put another way, in order to equalize the two, we'd have to find a taxable yield of 7.82%. Continue reading Municipal bonds: An Obama bet? Permalink | Email this | Comments<map name="google_ad_map_145-1268868"><area href="http://imageads.googleadservices.com/pagead/imgclick/145-1268868?pos=0" shape="rect" coords="1,2,367,28" /><area href="http://services.google.com/feedback/abg" shape="rect" coords="384,10,453,23" /></map> 
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