The complexities of the investment process can be intimidating. Many of my clients do not understand the intricacies of the various investments; that is why they come to me. The information below is geared for the more sophisticated investor who wants to fully understand my investment philosophy.

Fixed Income – My fixed income style emanates from two basic tenets

  1. Interest rates will not remain the same.
  2. No one is very good at predicting their direction.

Accordingly, I try to design portfolios that will minimize the risks of interest rate movement rather than take a stand on which way rates are likely to go. Interestingly, many investors take a stand on interest rates without realizing that they are doing it; short-term CD buyers, for example, are betting the interest rates will go up. In general, my approach is to stagger the maturities of the bonds in the portfolio in an attempt to minimize interest rate fluctuations.

Bond selection Process – Select a Laddered Portfolio/Interest Rate Neutrality; I prefer to create bond portfolios that are interest rate "neutral." In other words, I evaluate the yield curve to look for the best risk/reward opportunities. I want portfolios that are subject to as little risk as possible when interest rates change.

Buy only bonds of the highest quality – Preference is given to AAA to A-rated municipal bonds. It is not enough to look solely at ratings, however. Municipal bonds whose AAA to A ratings are due to insurance require additional research. This is because the insurance for municipal bonds is private insurance, and not all insurers are of the same strength. Also, it is important to examine the underlying credit worthiness of the bond issuer in order to determine what the bond's rating would be without the insurance.

Additional Factors

  • It is important to carefully analyze call features, particularly on premium bonds.
  • For clients who wish to check their monthly statements to verify that they have been credited with the proper amount of interest, we will prepare, on request, a municipal bond income chart.*
  • As an extra service, I recommend that clients have their municipal bond portfolios evaluated by our municipal bond specialist at least annually since the monthly statement values are computer-generated estimates, not actual bids.

To read more about my Personal Philosophy click here.

* Municipal bond interest is not subject to federal income tax but may be subject to state, AMT or local taxes.

Diversification and asset allocation do not ensure a profit or protect against a loss.Investing involves risk and you may incur a profit or loss regardless of strategy selected.