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Oct 24, 2008 5:25 am

Put… you make some interesting points here and other places on the forum. A couple of questions, instead of the fee based aum model most of us here now work under, what do you think the new model should look like? How would you be doing business today if you were in production? Where would you do it?

  Seems to me the big firms do represent a safe port in the storm to some clients- yet, we all see reports daily of large teams leaving the major firms and going RIA or to a firm that has not had the conflicts of interest (Raymond James is a recent example).   If the large wires are the place to be for now, do the management teams want to do what it will take to keep top advisors around? I know choices are more limited now but top producers can and have left. Lots of media opinions are that the real strength of Merrill is the brokers, I would think that would be especially true today after the subprime meltdown, ARS etc. if that's the case, wouldn't Mr. Lewis at BofA want to keep the brokers, and especially keep the top FA's around and happy?   Not flaming here at all just some thoughts and questions.
Oct 24, 2008 12:11 pm

The interesting thing about 401k redemptions is that people use the “Stable Value” bucket which historically is the last bastion of safety (4-5% ror with no market adjustment). I am being told that even those are seeing hits. Today will test people’s mettle being limit down but I still think if you have ridden it this far down (the market that is), why get out now?

Oct 24, 2008 3:24 pm

I'm seeing, what is that fancy wall street term, oh yeah- net cash inflows right now. But I'm tax free bond heavy. It's party time for muni buyers! For my buy and hold income muni buyers it is my sincerest wish that the dumb assses who run our markets crash the muni market at least once a year giving buyers unbelievable entry points and then holding those suckers until they mature. For bond buyers right now it's BUY BABY BUY!!!!!!!!!

 
Oct 24, 2008 3:27 pm

[quote=BondGuy]

I'm seeing, what is that fancy wall street term, oh yeah- net cash inflows right now. But I'm tax free bond heavy. It's party time for muni buyers! For my buy and hold income muni buyers it is my sincerest wish that the dumb assses who run our markets crash the muni market at least once a year giving buyers unbelievable entry points and then holding those suckers until they mature. For bond buyers right now it's BUY BABY BUY!!!!!!!!!

 [/quote]     You do not see an incoming Obama administration as being Carter all over again?  You don't see rising rates?
Oct 24, 2008 3:34 pm

Past performance is not indicative of future results.

Oct 24, 2008 4:29 pm

[quote=Provocative Put][quote=BondGuy]

I'm seeing, what is that fancy wall street term, oh yeah- net cash inflows right now. But I'm tax free bond heavy. It's party time for muni buyers! For my buy and hold income muni buyers it is my sincerest wish that the dumb assses who run our markets crash the muni market at least once a year giving buyers unbelievable entry points and then holding those suckers until they mature. For bond buyers right now it's BUY BABY BUY!!!!!!!!!

 [/quote]     You do not see an incoming Obama administration as being Carter all over again?  You don't see rising rates?[/quote]   It is the best of times for muni buyers. It is the worst of times for muni holders.   The printing of what was it- over a trillion new dollars, was to say the least- inflationary - which in normal times is a huge sell signal for the bond market. So staying short would be the normal course to follow in that situation. BUTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT the muni market fell off a cliff. That credit lock up thing that everyone was talking about, well that was the muni market. A sea of institutional sellers looking to liquidate high quality assets in a world void of buyers. I mean NO BUYERS! A buy and hold retail buyer's dream. Yields through the roof. For example Harvard Univ AAA bonds selling at a 6.50 level tax free versus the thirty tres at 4% taxable? The world is upside down. That's what a liquidity crisis will do to prices. Way out of whack! As the market recovers, unfreezes, as we've started to see this week, yields will drop. I think on weds alone we had a 100bp move down in some munis.   As for Obama becoming Carter reincarnated: Ok, could happen but the future is unknowable. I'm not smart enough to predict future markets so my view is that the best time to buy munis is when the client has cash.  We can vary maturies case by case for those who are concerned and ladder portfolios for those looking to commit a one time lump sum investment. For income buyers it's go long and collect those coupon payments. All on a case by case basis. The way I see it, if the worst investment I ever make for a client is a 6% tax free bond, well, we're going to have a long successful relationship.   BUY MUNIS NOW!   And remember, munis, unlike some men, ultimately mature!  
Oct 24, 2008 4:48 pm

[quote=BondGuy] 

BUY MUNIS NOW!   And remember, munis, unlike some men, ultimately mature!  [/quote]   A compelling argument, sir. It's clear that you are not one of the punks who don't even understand the concept of not belonging.
Oct 24, 2008 4:56 pm

De minimis is disclosed but not overly discussed. That, like the LT cap gains on discounted and OID bonds is a question for their accountant.

  The reason we don't spend a lot of time are these: There are way too many varibles to count. Situations arise where the client might accrete 4/5s of the gains on a straight line daily accrual, and realize 1/5 of the gain as a cap gain. All depends on buy price/sell price/holding period. And is a job for the CPA. Additionally, de minimis, on high quality bonds, really only comes into play on LT bonds. Anyone here want to take a guess as to what the tax code will be 25 years from now? Ok, we can take a guess that a year or two from now, if Obama gets in, as to what it will be, but we can't even go much beyond that.  And by the way- Obama getting in- another reason to buy tax frees now!   De mininimis has been around for a long time and is not a factor.
Oct 24, 2008 5:12 pm

[quote=BondGuy]

  <>De mininimis has been around for a long time and is not a factor.

[/quote]

I'd wager that less than 10% of those who should become involved with obscure things like the De mininimus tax rule ever pay any attention to it.  Declaring a gain and paying taxes on it will be sufficient unless you're encountering a ball buster audit.

Ferris Bueller doesn't even know what it is.  He looked up "Muncipal Bond" in an investor dictionary and saw something to the effect that investors might want to be concerned about the De Mininimus tax rule and thought it would add gravitas to his diminutive status on this forum if he asked one of the respected members about it so he did.

Then he SCREAMED it out from the back of the room--way back in the corner with the other retards.

Oct 24, 2008 5:21 pm

I’m glad you smart guys  explained wha DA mininimus tax rule was…

  I've never heard of da thing & I have sold allot of municipals.
Oct 24, 2008 5:22 pm

[quote=Provocative Put]
Ferris Bueller doesn’t even know what it is.  He looked up
"Muncipal Bond" in an investor dictionary and saw something to the
effect that investors might want to be concerned about the De Mininimus
tax rule and thought it would add gravitas to his diminutive status on
this forum if he asked one of the respected members about it so he did.

[/quote]
More silly guesses, with nothing to back them up but your empty words, Putsy.  How about this: you never heard the term “bond” before looking it up today.  There - I wrote it so it is true!! 

Now I get your approach!!  Thanks!  Simply make something up and it is true!  That is so much easier than the hard work of actually coming up with supportable arguments!  What a hassle that is!  What was I thinking?!

Oh, and really nice job with your pathetic attempt to suck up to BondGuy in the hopes of trying to find someone - anyone - to be your friend.  Hope that works out well for you.


Oct 24, 2008 10:28 pm

Actually Put is right in that it rarely comes up. Active bond buyers are fully aware because the rule has been around for a long time. When i say we disclose it we don’t dwell on it. And we never bring the term De minimis into the conversation first. That’s a deal killer for sure on the average muni bond sale. We tell the client that at maturity the gain will be treated as ordinary income. The KISS rule applies.