Market Commentaries

RE: Wall Street Journal’s “Your Stock Trades Go Free but Your Cash Is in Chains”

October 2019

Jason Zweig’s October 4th article underscores that transactions costs should not be the only metric investors use to evaluate investment platforms. Additionally – and as importantly – they need to consider opportunity costs, the portfolio management pr …

Bond Portfolio Strategy in a Booming Market

September 2019

“Negative nominal interest rates are contradictory in an expectations-driven liquidity trap, unless they are able to eliminate deflationary expectations altogether…This paper has shown that negative interest rates are likely to make things worse in an …

Stranger Things & Global Central Banks

August 2019

The hit Netflix sci-fi series Stranger Things takes place in the fictional 1980’s town of Hawkins, Indiana. The show follows a group of middle school kids fending off other-dimensional monsters and Russian conspiracy plots. The threats are significant, …

Perspective for Advisors: Best Execution

April 2019

Registered investment advisors (RIA) who purchase fixed income securities for clients, should have best execution in the forefront of their minds. In July 2018, the SEC Office of Compliance Inspections and Examinations (OCIE) issued a risk alert detail …


April 2019

A FOUNDATIONAL PILLAR: INVESTOR FAITH AND TRUST The municipal bond market provides our economy with a deep pool of investment capital.  Simply stated, Municipal Bonds Build America. Investor participation is high as both individual and institutional in …

Beware of the Average Benchmark

January 2019

January 18, 2019 By: Matthew P. Bernardi There are many facets and varieties of our active management approach to municipal bond portfolios. Credit analysis, ladder positioning, strategies offered, and tax-loss harvesting to name a few. Another importa …

Happy New Year and Thank You

January 2019

We wish everyone a happy New Year. October 1st marked the first day of our 35th year at Bernardi Securities.  In the fall of 1984 my father, Ed Bernardi, and several others opened the doors of Bernardi Securities for the first time. Our office was loca …

The Yield Curve: Where we have been and possibly going

October 2018

October 10, 2018 By Matthew P. Bernardi The U.S. economy is firing on all cylinders right now. Small business confidence has reached all-time highs, jobless claims are near 49 year lows, while household net worth continues to climb into record territor …

The Accumulation of Debt

July 2018

July 5, 2018 By Matthew P. Bernardi  “[Avoid] likewise the accumulation of debt”. – George Washington Since the financial crisis, municipal bonded debt outstanding has increased at a snail’s pace of 0.51% per year.[1] With corporate debt growing at an …

The Cost of Owning Municipal Bonds

May 2018

There are two possible ways an investor pays to access the municipal bond market and portfolio management services for a separately managed account: One-time transaction cost model (markup/down) Annual fee model As a hybrid-firm (broker-dealer & re …

Why Warren’s Advice May Be Wrong for You

March 2018

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. Today, Berkshire Hathaway intersects with our lives in myriad ways from auto insurance to underpants to home brokerage services. The man, however, is not without his biases as it pertains to financial markets and asset allocation, including a distaste for active stock management, investment bankers, and bonds.

The Magic of 34

January 2018

The “Magic Square of 34” appears in the upper right side of Albrecht Durer’s 1514 copper plated masterpiece, “Melancholia.” The allegorical work is the subject of many interpretations. One interpretation asserts the scene depicts the age of Humanism, both its creative successes and unsolved frustrations.

Tax Reform and Its Impact

December 2017

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.

Natural Disaster: Event Risk in Today’s Municipal Market

October 2017

The tragic storms over the past months highlight the concept of “event risk” investors face while investing in the municipal bond market. Event risk is a term more closely associated with the stock or corporate bond markets, where an underlying credit can be significantly impacted on a short term basis by an unforeseen event. Substantial credit deterioration in the municipal market traditionally resembles a slow moving train wreck (e.g. Detroit, Puerto Rico, Hartford).  That said, events like Irma, Harvey, and Maria can create massive shocks to the system, potentially impairing fiscal balances enough to create distressed credits from an otherwise healthy or stable state. What can we learn from such events and their impact on the municipal market? Also, how does sound credit analysis account for such risk?

Throwing the Baby Out with the Bath Water?

July 2017

As of this writing, the State of Illinois began its fiscal year (July 1) without a budget for an unprecedented third year in a row. Sunday evening the Illinois House of Representatives approved a $36 billion spending plan that increases personal income taxes to 4.95% from the current 3.75% level and the corporate levy to 7% from 5.25%. If the Senate, which approved a tax hike last month, concurs on the House bill it will be presented to the governor for consideration. He has stated he will veto both the House and Senate spending bills as currently written.