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Lesson 4: Timing

The Money Game People Love To Play

• Table of Contents
  • Introduction: Building a Portfolio in Municipal Bonds
  • Lesson 1 - Suitability
  • Lesson 2 - Tax-Free-To-Taxable Yield Ratio
  • Lesson 3 - Fluctuation
  • Lesson 4 - Timing
  • Lesson 5 - Ladder & Barbell Strategies
  • Lesson 6 - More on Long Bonds
  • Lesson 7 - Ratings
  • Lesson 8 - Sincerity of Commitment to Pay
  • Lesson 9 - Municipal Bond Arithmetic
  • Lesson 10 - Choices! Choices!
  • Lesson 11 - Decisions! Decisions!
  • Lesson 12 - Opting For Professional Management

There is no escaping the fact of life: the price you pay for a bond today is going to engrave its yield to maturity on your books for however many years that bond has to run. So one of the money games people love to play is waiting for interest rates to go up.  The wish being father of the thought, lenders always think interest rates are going up. And they’re right.  Of course, interest rates are going up, then down, then up, up down, down up.

Speculating on interest rates is irresistible, because, at some point you’ll be right, if you play the waiting game long enough.  The worst thing that could happen is to be right the first time and be fooled by intimations of infallibility.  

The advice of this expert: take any investment advice based on foretelling the future of interest rates, including ours, with a grain of salt.  If I say, "Wait!  I think interest rates are going up," stuff wax in your ears and tie yourself to the mast. I may be right, but I have no way of knowing.

NEXT: Lesson 5 - Ladders and Barbells