Warren Buffett’s annual letter is one of the best insights into the mind of perhaps the greatest stock picker in history. His letters offer a great window into how he built a $500 billion conglomerate of businesses from a mere, mid-size textile manufacturing company.
Specific to the municipal market, issuers who relied on easy money through low rates will be tested making credit analysis even more valuable to investors than in the past. Underfunded pension issues will continue to burden certain issuers. Without pension reform, certain states/municipalities will remain in unstable situations and potentially witness further credit deterioration. On the whole, however, municipal credits are improving and the majority has prudently managed their fiscal balances. We expect headline risk to remain, resulting in increased price volatility. This should lead to long-term buying opportunities.
Tax reform largely left the municipal bond market intact, though a bit squeezed, and it remains an attractive space for individual investors. We are satisfied with the outcome and are also grateful as American citizens and taxpayers that Congress largely left the market unhindered in its ability to fund the bulk (~75%) of our nation’s infrastructure.
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City of Kalamazoo, MI Wastewater System
South Bend, IN Park District
LaSalle-Peru Township High School District #120
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