Market Commentaries

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 …

Market Review – Fall 2018

November 2018

Below please find the our portfolio management team’s Fall 2018 Municipal Market Review. This provides an overview of current market conditions and information about our total return and goals-based strategies.  If you would like additional information …

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 …

Market Review – Spring 2018

May 2018

Below please find the our portfolio management team’s Spring 2018 Municipal Market Review. This provides an overview of current market conditions and information about our total return and goals-based strategies.  If you would like additional informati …

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.

Market Review – Winter 2018

February 2018

Please find below our portfolio management team’s 2018 Winter Municipal Market Review. This provides an overview of current market conditions.  If you would like additional information about our process or specific strategies, please let us know 2018 W …

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.

Oakley Union Elementary School District

November 2017

General Obligation Bonds, Election of 2016, Series 2017A The Bonds were upgraded to AA- from A+ by S&P in coincident with the issuance.  The Bonds were issued to finance a capital improvement project, and are payable from unlimited ad valorem prope …

Market Review – Fall 2017

November 2017

Bond yields have remained range bound over the past four months. Through the first two months of the third quarter, bonds continued their rally. The 10-year Treasury started the quarter yielding 2.31% and by 8/31 had fallen to 2.15%. Yields reversed co …

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?

Market Review – Summer 2017

July 2017

The second quarter was a wild ride for the 10-year U.S. Treasury note. The 10-year started the quarter yielding 2.35%, rose as high as 2.41% and fell as low as 2.14%. It finished the quarter at 2.31%. The 2-year U.S. Treasury dropped 14 basis points (0 …