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emma.msrb.org is for municipal bonds the equivalent of what sec.gov is for stocks - most importantly a repository for all the filings.
msrb.org has online training topics available which are good for gaining an understanding of municipal bonds and the market.
https://www.msrb.org/Education-Center
Right - so general obligation bonds are usually best, because the municipality is pledging full faith and credit, meaning they will pay the bonds by whatever means necessary which they have at their disposal - pulling from any accounts they have, and including raising fees, general/sales taxes and property taxes. So, aside from the risk of bankruptcy, the general obligation bonds are going to be paid. Although nobody can predict the future, it is rare that bankruptcy will come in to play. And, in general you can get a good feel for the financial strength simply by reviewing the financial statements - income, balance, cash flow which they are required to have audited and report annually, and made available through emma.msrb.org. Weak municipalities are going to have a weak balance sheet and weak cash flow.
Revenue bonds can be higher quality or lower quality depending on what the security is backing them. Available in the offering statement, again, loaded at emma.msrb.org. If you've never reviewed an offering statement, just look up any municipal bond currently offered at your brokerage, jump over to emma.msrb.org, plug in the CUSIP, download and review the offering statement. In general, they all follow the same format. Which is nice, because after you've reviewed a few, you immediately know where to go in the document for the important information when doing your research.
As far as 6%-7% taxable munis - do you have an account with Fidelity? If so, copy/paste this in to your address bar and it will run a query I do daily:
https://tinyurl.com/2wpmbp5r
It uses min yield=5.7%. If you don't put some kind of bound on it, it will return over 3000 bonds, which is Fidelity's display limit.
Obviously the highest yielding are going to be lower quality. As I mentioned in prior comment, if you stick to A-rated or better, as shown in the Moody's report, the chances of default is well below 1%. So, in the list scroll down until you begin to start seeing A's. I have no problem taking BBB+, sometimes a BBB, and once or twice even a BBB-. To me, at the lower ratings, it boils down to if I believe Moody's/S&P are rating them correctly. Since I'm reviewing the financial documents, I'm gathering my own readings. If something is BBB-, but there is a backstop in case they run in to trouble, that is a benefit which the rating agencies may not be giving enough weight to. Or, maybe the finances have strengthened but they just haven't re-rated in a while?
Anyhow, water/sewer/electric revenue bonds are generally very strong - right up there close behind the GO bonds. They have very strong cashflow, as folks/businesses need/want their utilities. Additionally, if you read through a few of the offering statements, you'll see additional "covenants" that they are usually agreeing to - like their debt coverage will remain at/above some minimum, maybe something in the 1.1x to 1.25x range. They generally also stipulate that they will charge rates sufficient to maintain those debt coverage ratios. Most school district bonds are GO, so in general, they are also very safe. Those that are insured come with that extra level of safety, but at the same time should alert you that the issuer may be so strong - requiring them to get the insurance to allow them to issue the bonds at the original rate.
Chicago bonds are problematic. It's a very public issue how bad their finances are. Find the CUSIP for a Chicago bond, again go to emma.msrb.org and pull up the latest audited financial statements. You can see how terrible the balance sheet looks.
Now, the majority of folks will avoid Chicago bonds. But, there are always exceptions. Many smaller municipalities around Chicago get lumped together with it, some simply because they are in Illinois, but have strong financials. So, you'll see very weak pricing in the secondary market for the bonds - and this creates opportunity. However, it does take time to do the research, so if you don't want to get your hands dirty, it is easier to avoid it, and again, stick to A-rated or better.
I can go on and on if you like - just keep asking, I'm more than happy to share.
Again, happy that funds work for you. For me, they are not an option, except for the case where funds are the only option available - like DW's 401k. When I invest, I am the fund manager. I don't delegate that to anyone. Funds have different objectives than I do. (Bond) Funds will sacrifice quality in exchange for yield to boost their reported yields - I will not. I can go on and on. We're not going to come to agreement on this.
I'm quite familiar with every flavor of fund you want to discuss - mutual, index, ETF, closed-end, and so on. I will not trust my investments to a fund manager or the whims of an irrational market. I like certainty, just as everyone else does. I have the ability to create certainty, and so I do.
Hey there.
I have been redeeming my I-Bonds as they pass the 1 year mark and are resetting to the lower 3.38%. I did my first redemption on Oct 1 and will do another on Nov 1. I think I may leave $10k or $20k with Treasury Direct to be an emergency savings fund of sorts. My bank is one that only pays 0.01% on savings, so I don't want to keep it there. I don't have the restraint to simply leave the funds in a money market account at the brokerage - I've tried that, and it's just too close and easy to access and buy more things. Treasury Direct took care of my redemption very quickly, so I'm comfortable with my ability to access the funds should I need to in an emergency situation. At the same time, it's out of sight in that I don't see the cash sitting in my brokerage account daily, begging me to invest it.
All that being said, I have continued purchasing municipal bonds and CDs as the maturities, interest payments, and redemptions/calls take place. I have focused on longer maturities with the municipal bonds, 7, 10 years and more is certainly the case. I regularly scan the secondary market for CDs and it's almost like a game. I have gotten some incredible deals for 6 months to 5 years depending how lucky I get.
Most things I have maturing over the coming 14 months is in the 2% to 3% range so locking in 6% to 8% for up to 20 to 30 years is really something else - upping our future retirement income in real time. It is extremely easy to purchase high quality taxable municipal bonds right now in the 6% to 7% range with very little research. Yesterday I noted over 400 available. I pray that things stay like this over the next year to give me the opportunity to continue raising our future income/returns.
Yes, nursing homes and enterprises that are really not "municipalities" but can issue municipal bonds are things to stay away from. Key is always what is the security, and what do the financial statements look like? All of the information is readily available at emma.msrb.org.
Puerto Rico was a disaster that most everyone saw coming, even those who were speculating.
The problem with the funds is that there are no guarantees. No guarantees of income, no guarantees of when you'll be able to sell and get your original principal back - these are things which are all guaranteed when you buy the individual bond. You are paying Vanguard more than the 0.09% for research and paperwork, because you are likely sacrificing yield and performance. I can appreciate that most folks have a fear of purchasing municipal bonds directly, especially since minimum purchase is 5 bonds and it takes a decent size portfolio to purchase enough municipal bonds to be meaningful. But history and the data speaks for itself.
Anyhow, if it works for you, that's all that matters in the end.
I do not believe in mutual funds, especially when it comes to municipal bonds. If you are interested in investing in equities, but do not want to take the risks associated with individual stocks, I can appreciate gravitating towards those mutual funds.
However, when it comes to municipal bonds, a mutual fund offers almost no benefits in my view. Municipal bonds are extremely safe. Those that default are extremely rare, though the detractors can always point to their favorite headline-grabbing muni default. Out of the tens of thousands of municipal bond issues over the past 50 years, they can point to the 2 or 3 they know of. Warren Buffett is such a proponent of the safety of municipal bonds that he once proclaimed that the municipal bond insurers were really not necessary, because the defaults were so rare. He loved the business model so much, Berkshire began offering muni bond insurance, because Buffett claimed it was basically free money.
Moody's puts out a bi-annual report on defaults in the muni bond sector. Here is the latest version:
https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/fixed-income/moodys-investors-service-data-report-us-municipal-bond.pdf
The most important information is Exhibit 7, Page 11. Basically, if you stick to A-rated or better, the total historical default rate is on the order of 5 in 10,000. It's practically impossible to invest in one that will default.
I can write a novel on why folks with significant holdings should opt for individual municipal bonds over municipal bond mutual funds. The reasons are numerous, the mutual fund isn't really doing anything for you. The number of bonds/issues they hold is not beneficial - it hurts performance.
Let me know if you want me to lay out some of the points.
Yeah, it's pretty lonely in my world. I've run across 2 or 3 other folks in one forum that share my passion for purchasing individual municipal bonds.
Right now is a really great time to be purchasing. Lock in long-term very high yields today, kick back and relax. When interest rates eventually go back down, those bonds will jump higher in value and can either keep holding to collect the original high yield, or sell and take profits. It's really a no lose situation at this point. As my maturities, interest, and redemption payments come in, I just roll them out to new long term higher yielding bonds.
Personally, I prefer purchasing the individual bonds versus going with a fund for numerous reasons. The past two years has solidified my thinking as my portfolio has far outpaced the muni bond fund benchmark indexes.
I have mostly all taxable munis as the majority are inside of my tax-deferred retirement accounts. Even for my taxable accounts, I primarily have taxable munis because they were yielding better than the tax free on an after tax basis at the time of purchase.
Best regards.
I believe that where interest rates are today is closer to an anomaly rather than the norm. Over time, the US economy will likely have difficulty growing if we are going to be living in a 5% world. The mouthpiece clearly chooses his words carefully as to not to commit to his view. As much as I dislike both of the likely 2024 presidential candidates, if one of them gets back in office, he is clearly going to put pressure to lower interest rates immediately and by a lot. He wanted negative interest rates. The best he could pressure the Fed into was zero.
What I've been reading about the current attempt at de-dollarization is that it is failing and problems are arising.
I am locking in quality long-term municipal bonds above 5%, many even above 6%, 10 to 30+ years out. I have not seen yields like these ever since I began favoring municipal bonds. As long as those yields keep rising, I will keep buying.
I really do not believe the Fed has things under control. They will go too far and bring on a market crash of sorts, a recession, and have its hands forced to lower interest rates...unless incoming president forces it sooner. We've had an inverted yield curve for quite some time now. I am sure that there are some crash indicators out there in the red zone.
"This climate offers an “almost generational” opportunity in fixed income, Akullian says. The potential for total return is greater now than it will be as the Fed starts to loosen. Rate cuts will boost bond prices and decrease yields, eating away at future total returns."
So the point is to buy duration. If you don't really need the money intermediate term, then don't buy it - go for the 20, 30, 50, 100 year bonds as these will see the greatest price appreciation when rates go lower. Nothing says you have to hold to maturity. There's nothing wrong with selling bonds when the appreciation is great and the forward yield is low. Profit is profit - sell and move into something better.
I've been like a kid in a candy shop the past couple months. As my maturities, redemptions, and interest payments roll in, I redeploy into new (municipal) bonds. Similar for new investment dollars.
As much as I hate mutual funds, DW's retirement plan basically requires it. We had been socking everything into their money market fund. This year, we began putting 10% into PTTRX. It's been great...though the price has continued lower, yield is now up at 5%. So, we've been accumulating more shares as it goes lower, pick up the great yield, and when rates do come down, it's going to go up about 25% to 30% to where it normally trades under more normal rates.
This is a wonderful time for fixed income investors. Stay the course. Don't get diverted to other things.
I hear you on the growth front and am well aware. However, once we had "enough", the objective migrated to capital preservation. I am extremely comfortable with the muni-heavy portfolio - it is extremely strong and historical data backs the fact that muni defaults are very rare in investment grade issues ... we're talking a default rate on the order of 1 in 10,000 issues over the past 50 years. What's the likelihood that you could even try to pick one to default with those kind of odds? Of course, when there is a muni default, it grabs the headlines and folks will point to it as the example of why munis are doomed. I currently hold somewhere around 300 muni issues - researched every last one of them before purchase. There were only two over the past 10 years where I was concerned of a potential default, and then they both were called.
As far as solvency of munis - state and local municipalities are generally stronger today than they have been in years. A number of big states are running fairly large surpluses the past two years as revenues came in stronger than anticipated/budgeted. As for treasuries, I don't agree that there are risks - they are 100% safe in my view. If there is a default in the treasury market, then there are much, much larger problems and most everything will have collapsed at that time.
As for Buffett and stocks - different strokes for different folks. I'm very happy with the predictable cash flow of my portfolio and knowing that in my old age it will provide what we need to maintain our lifestyle. The other benefit of having most of it locked up in municipal bonds (and CDs/treasuries/I Bonds/etc) is that it keeps me out of trouble and from doing something stupid. If I don't have (access to) the cash, then I can't do something stupid. I also like sleeping stress free. I remember when I did have a more balanced portfolio, I would stress over the gyrations of the equity portion. Haven't experienced that in many years since bulking up on the fixed income.
Anyhow, I've rambled enough. Thanks for all the replies. Good discussion!
LOL! I have not looked at LTNC in ages...and my only attraction to it was uncovering that it was a scam from the very start. It was a very wild board, corrupt CEO was posting/pumping/lying on the message board.
If they now have something real (4 or 5 corrupt CEOs later), good for them. However, if I were betting, chances are it's just another pump/scam to attract more naive investors.
Thanks for the reply.
My portfolio is 99% fixed income and 1% play. The bulk of that 99% is municipal bonds and I most always hold to maturity unless called. Over the past 2 years, before rates went up, I would often sell the munis here and there when I was able to make ridiculous profit as folks bid them up. As you said - who would believe there would be such a turnaround and escalation in rates so quickly?
So, now as my maturities and redemptions come in, I just grab the best muni I can find to reinvest. It's most all IRA funds, so taxable munis of medium to long trerm work great for that - 6% to 7% is very easy to get right now. I also have some nice bank preferreds and a really good baby bond with 2026 maturity that has a yield to maturity of something ridiculous around 27%!
Labor of love...
gfp927z, you are something else maintaining this with absolutely no participants - great job.
I really wish there were a good/active fixed income message board somewhere. If there is, I have not found it yet. If you know of one, please post it.
Now is an incredible time to be picking up nice yielding fixed income. Ironically, all I see are folks getting scared and tossing all their bonds when they should be buying more. They somehow justified buying when rates were hovering near zero, now that they can easily get 5%, 6%, and higher they are running away.
And then there's the I Bond - still another 10 days or so to lock in that 9.62% risk free interest for 6 months followed by 6 months at no less than 6.48%.
"not sure how anyone can't see the value"?
How about looking at the liabilities for a start?
You think that you are one of the very few who sees this incredible value that others aren't? Maybe you've made some kind of mistake in your valuation? Is that at all possible?
CEO owns 35M shares? Big deal
How much of his own money did he spend purchasing them?
How is this the best pick on OTCBB? It's lost more percentagewise than probably any other listed/trading OTCBB stock in the past 12 months.
The other way you don't recover is if more shares are issued, devaluing the shares you own. What you hold today, which is worth significantly less than when you purchased, can be devalued another 90% by issuing 6 billion shares. And guess what? There's a good chance it will happen. If there are another 6 billion shares outstanding, do you think the shares will trade higher than where they are today? Even that the shares stay at the current price, valuing it at 10 times more than it does today? Of course not - shares will be lower.
Just remember - tomorrow is 8K Wednesday.
They don't care
because they are issued their shares at a fixed rate below the lowest share price over past couple weeks.
You are correct
Bid at 0.0003 was moved down to 0.0001
Only 1M waiting at 0.0003 now
Of course it's going lower
1M 0.0004 x 28M 0.0005
Nobody is willing to put up a measely $14,000 to buy at 0.0005.
Folks are waiting now at 0.0003.
The question is, from where does your 10, 20, or 100 bagger begin?
If it's from 0.0004, how does that make the loser feel who paid 20 cents in August when CEO stated that market was significantly undervaluing the shares? He's never going to see breakeven. Or how about the person who paid 5 cents in October? He has to pray for the 100 bagger and that won't even get him back to breakeven...he's looking at more than a 99% loss today.
So, is it your contention that people should be investing now? That things are better today than in October? That people should pull money out of their pockets to essentially pay the creditors directly because company does not have the money to do it? You do understand that when the shares tick from 0.0004 to 0.0003 you will see the value of what you own instantly drop 25%?
Sorry, I'm not buying it - the market is valuing the shares appropriately and the note holders converting every day are very happy that there are still gullible folks willing to pay them.
"Statistically insignificant"
85,000,000 * .0004 is a measely $34,000
There's no interest, don't fool yourself.
You do not know how many shares will be outstanding at the time the debt is gone - do you?
If another 15 billion shares are issued and the price goes down another 90% or more from now to the day the debt is gone, do you think the value of what you own today will dramatically increase? The odds are really quite small.
If you have the belief you do, then it would seem the time to start accumulating would be just prior to when the debt is gone - maybe wait for a week of two to pass where you do not see an 8K issuing another 100+ million shares. Purchasing before then practically assures that you will watch as share price goes lower.
You cannot dilute the shares by 25% or more a week and think they will rise - it's a simple fact, they won't.
Understand that what they choose to pay in stock instead of cash is equivalent to it being paid directly from investor pockets. It is an admission that they are unable to fund the company from operations, or if they could, they believe the company is worth no more than 0.00035. This is not refutable - it's one of the other. Companies do not wildly issue shares like this unless they are being forced to. LTNC could use cash but doesn't, no assumptions necessary as to what it means or any additional information required.
I'm not sure why any investor would make such an outlandish statement that he prefers the company to be issuing shares instead of using cash. Have you not yet figured out what happens as a result of what has taken place over the past 6 weeks?
You cannot value this company because you have absolutely no idea how many shares will be issued this week, next week, or in the next month or two.
As at least one person noted, there doesn't need to be a reverse split for you to be diluted to nothing in a very short period. How many shares you own is meaningless, the value of what you have is all that matters.
New shares given out at 0.00035
With 175 million more, it was upper end of my range.
Next week will be 200 million more. 1 billion outstanding will happen during February...and likely 2 billion in March.
No surprise - any shareholders since September have been wiped out and diluted to nothing. Expect the same to continue.
That PR has been posted here at least 10 times in the past few days and guess what? When that was released the share price was .02, today the shares are .0007 and they will go lower. So, that was a really great proactive maneuver - wasn't it? It really protected shareholders - didn't it? It protected shareholders from massive dilution that would occur if company didn't properly reserve - right? Unfortunately it did not protect you from the company massively diluting even when properly reserving.
Those who do not learn from history are doomed to repeat it.
How does that saying go..."doing the same thing over and over and expecting a different outcome is called ..."?
That is not "short volume"
There are many sites which are driven off of this information from the Reg SHO report on the FINRA website. However, what the overwhelming majority of people do not understand is that what is being indicated in the report are not "short sales", but rather "fail to deliver". There is a difference and with penny stocks it is extremely common that a transaction would be flagged as a fail to deliver but not be a short sale - it is a matter of timing of the transaction.
If you google, you can find the letter that the developer of the report wrote and sent to FINRA advising that the report was being misused and that novice investors were making the mistake of interpreting it as a short sale report. By the sheer number of people who simply use it thinking it is an indication of short sales, shows just how widespread the misunderstanding has become. I don't have the link to that original letter any longer, but could probably find it with some effort.
Here is an article which discusses some of the points:
http://www.securitieslawyer101.com/2014/short-seller-regulation-sho/
I believe the "huge influx of cash" is simply referring to what Ryan previously stated, which my belief is no more than the additional $2 million on the line of credit against the receivables.
As I previously theorized, until there are profits, it's just a financial shell game moving money around to stay afloat.
Ok, understood, so the end point is that the only way this downward spiral of negative shareholder equity and tangible book value ends is with the company beginning to turn in profits. Until that happens, everything taking place is just a financial shell game moving "debt" around whether we are talking about the convertible notes, or borrowing against receivables, issuing new shares, or some other way to get cash which the company does not have in the bank at this time.
Would you agree with that?
The figure that you referred to was simply the Total Assets number off the balance sheet. No consideration was given for liabilities (which are in excess of the total assets), or that the Total Asset number also includes about $435k intangibles for "Client Relationships".
I'm not sure why anyone would make such a big deal out of the Total Asset number while at the same time ignore liabilities.
Net tangible assets are negative $2.8 million
and going more negative each quarter.
They are not shorting a stock trading at .001
The technical aspects of being able to short is not an indication that it is taking place. The reality is that nobody is shorting below 1 cent. Have you ever shorted a stock below 1 cent? Yes, you can and it is possible, however, you would be hard pressed to find anyone who actually does.
I guarantee you that the convertible holders simply sell what they are given immediately for their 40% to 60% profit and walk away very happy with it.
Nobody is shorting
There are no "big outfits" interested in this - big outfits do not waste their time on sub-penny stocks. Maybe you could name one or two who are shorting?
janeyH - I agree
You cannot create something out of nothing when you have added no value. CEO was very forthright in all of his prior statements/videos about how they were picking up locations for minimal amounts. To fund these company used the convertibles which has cost them. Additionally, we do not see profits, and we see underperformance in many locations. My belief is that assets are worth no more than market cap, if even that.
What "assets" does the company have?
The convertible holders sell immediately not shorting
I disagree with your logic here.
Again, nobody is shorting below .01
1. I don't care whether it's folks holding convertibles or not. They can't short unless there is a broker who will make it possible for them to short below .01 and I doubt that the convertible holders are hardcore investors who are into that.
2. The convertible holders do not have any necessity to short, because the price they are being issued their shares is below current market price. They get their guaranteed profit simply by selling at the current market price. They are simply looking to get the money back that they loaned. That they can make a profit so quickly is icing on the cake for them.
But two to three months ago there were 95% fewer shares outstanding.
Nobody shorts a stock trading at .001
I seriously doubt you'd find any/many people who have the guts (or stupidity) to do it. Surely at .80, .50, .25, and even .10. However below .01 I really do not think so.
Probabilities for new shares to be issued this week
None 15%
50 million 15%
100 million 25%
150 million 30%
200 million 10%
over 200 million 5%