Puerto Rico:The Paradise Illusion

Puerto Rico might be a nice place to visit, but I wouldn’t want to invest there. If you think it might be a good idea to diversify and include some high yield junk bonds in your portfolio, Puerto Rico’s governor might give you reason to think again. In June 2014, Puerto Rican Gov. Alejandro Garcia Padilla […]

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“Welcome 2 Detroit” – A Case Study of Corruption and Its Consequences

The financial situation in Detroit has gotten so dire that the Governor of the State of Michigan, Rick Snyder, appointed appointed Kevyn Orr, a bankruptcy attorney, as the emergency manager of Detroit in early 2013.  Mr. Orr has proposed some drastic measures, the results of which are captured in the cartoon dialogue in a comic strip called […]

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Reporter Interview: Who Should Buy Individual Bonds?

I recently had an e-mail exchange with a reporter about who should buy bonds and for what reason. In the transcript, I refer to Stan Richelson, who is a Founder of the Scarsdale Investment Group, and Peter Blake, who is the Director of Operations. They were both being interviewed by a reporter about why a […]

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Sometimes Clients Say It Best: An Investor’s Own Experience

Sometimes the readers of our articles say it better than we can.  Here is one letter we received in response to  articles that we wrote for the Journal of the American Association for Individual Investors (AAII): Dear Richelsons, Thank you so much for your AAII Journal articles October 2012 and May 2013. I agree – […]

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Electronic Traded Funds (ETFs) in Sell-Off

In the 2011 edition of our book BONDS: The Unbeaten Path to Secure Investment Growth Bloomberg Press, we stated that ETFs were really closed end funds in disguise, and that investor could expect that they might sell at significant discounts. According to The Financial Times, the latest sell-off in bonds has caused a wave of selling in […]

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529 Rebels: Alternative ways to save for college

Stan Richelson, co-founder of the Scarsdale Investment Group, was quoted in “529 Rebels:  Alternative ways to save for college,” Reuters Business and Financial News (Kayrn McCormack, May 28, 2013) concerning the advantages of high quality municipal bonds in lieu of 529 plans to save for children’s college. There are a number of reasons given for […]

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What is Your Personal Inflation Rate?

Though inflation is rising very slowly – 1.4 percent in May of this year – and there are hints of possible deflation, we still worry what will happen if inflation takes off. However, a better look at the Consumer Price Index (CPI) tells us that the wealthy are not affected by its measurements in the same way […]

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Paying Taxes on Municipal Bonds: Acquisition Premium

You may not know that there might be a way to reduce the amount of taxes you pay on interest payments you receive from bonds purchased at a premium to face value, and from imputed interest on zero coupon bonds. When you pay an acquisition premium for a bond, the interest payments you receive actually […]

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Premium or Discount Bonds? That is the Question

KEY POINTS: Premium Bonds: Hold value better Partial return of premium with interest payments Can be sold at a profit More likely to be called before the maturity date Reinvestment risk in low interest rate scenario Discount Bonds Preferred by retail clients, along with par bonds. Lower cash flow, but interest payments may be only interest due. […]

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Pricing TIPS is a Chess Game

Question: If the big reason for the appreciation in TIPS is that they are institutionalized and that buyers-have bid up the price based on general U.S. T-bond levels (rather than inflation alone, then it might be wise to sell them. Is this the whole story? What are the factors in pricing TIPS? Answer: There are at least […]

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