As we begin to celebrate our 30th anniversary, I have been asked to give you a review of our firm’s history, guiding principles and some of the changes I have seen in the municipal bond market. I have been in this business for over 55 years, and I have seen some dramatic changes during that time — from the use of ticker tape as a communication device to using today’s modern technology. I have seen municipal bond volume surge. Our client base has broadened. What hasn’t changed is our firm belief that we can outperform our competition — and earn the trust of our client — by concentrating our efforts, talents and expertise solely on the municipal bond market. Here are a few observations from an 84-year-old municipal bond professional.
Municipal bond specialists first and foremost
From the onset, our single interest was to run a sound investment firm specializing in municipal bonds. We wanted no part of the equity market and its volatility. While there is absolute importance in owning an equity or real estate portfolio, we wanted to specialize in an asset that allowed you to sleep well during the night. Our mission has been consistent for more than 30 years — specialize in the municipal bond market to deliver superior performance for clients. We are municipal bond specialists first and foremost, and will continue to be specialists solely in the municipal market.
Independent credit research
Our original business plan was to focus solely on the municipal bond industry by doing our own research. We wanted to develop in-house credit research, rather than depending on some outside source to tell us how a bond was rated, how good the bond was or was not. We wanted to have our own take. We wanted to make our own decisions as to the viability of a particular credit. The firm’s ongoing investment in our research efforts provides us with added confidence in the credits we place with clients and offers opportunities to find solid credits at good prices for our clients. This approach continues to this day.
50 years ago we received news and offerings via snail mail and ticker tape. Today, the information is delivered in fractions of a second. I guess progress is progress, but I’d rather take my time and do my homework rather than being rushed into the decision making process. Again, a good research department allows us to make those quick decisions without the inherent risks of decisions without thought.
Better regulation & investor protection
In the early days of my career the municipal market was free of “government interference.” As a result, a number of rogue firms took advantage and hurt communities and investors. Today, the market is regulated by a number of federal and industry-funded agencies, which have brought the interests of the municipal bond market more in line with the clients it serves.
Municipal bond tax exemption repeal threats
The question of municipalities retaining their right to issue debt whose interest payments are tax-free from federal income taxes comes up again and again over time. About 30 years ago, certain politicians attempted to do away with the exemption. Governors, mayors and school superintendents throughout the country vigorously objected. The matter was dropped.
Today the question is being raised again and it is a bad idea. Repealing or capping tax-exemption will make it more expensive for communities to borrow. Communities will still need to invest in their infrastructure. They will issue taxable bonds instead forcing local taxes and fees to increase.
More than a half-century of changes — and gratitude
Yes, it has been quite a run. My life has been devoted to this industry for more than a half-century — the last 30 years to Bernardi Securities. It is impossible for me to adequately describe the sense of profound joy and pride I feel for the Bernardi team on this, our 30th anniversary. Nor is it possible for me to sufficiently thank our clientele — from those who allowed us to serve their investment needs in the early years to the younger generations who have helped to drive our growth.
A special thanks to the municipal bond specialists of Bernardi Securities. Their honesty, care, dedication and service to our clients built the foundation of our success. Each and every one of our specialists is a credit to the firm.
Lastly, with great pride I salute my son, Ron Bernardi, who met the new challenges of this day and age — and built a firm which is now one of the most respected in the industry.
The success of the firm will forever represent the singular reward of my business life.
I thank you all.
Bernardi Securities, Inc.
November 5, 2014