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Investors fleeing to bonds for safety and our next guest says the amount of money in bonds is what -- equities during the dot com them and remember what happened there.
But our bonds on the brink of a similar bursting of the bubble Thomas -- is municipal market either CEO joining us from Newton Massachusetts.
Tom is Beverly a fair analogy because that was a lot of money going into a very small number of stocks that many of which more profitable.
This is money it is really well diversified and spread far and -- -- well diversified but it still is a tremendous amount of assets that have moved very quickly.
Into into one particular segment of the market and so we're looking you know in our area of the municipal bond that.
It's just -- a significant amount of assets chasing if you could do we know too little product.
And that's driven these yields down to you know incredibly low levels of that of the 1960s.
Does that make a difference that you're betting on something different this time around a -- war.
In the stock market bubble when the -- was essentially on on growth when it wasn't there are digging alluding to these companies that had no profits mean you were betting on.
Future growth for companies as opposed to now.
You know theoretically you're scared you're running away from something does that different mindset make a difference in terms of a bubble and whether it's more likely to burst.
I think anytime you see eight a herd mentality in -- market.
Where you have it get too many assets pursuing too little product and starts driving levels in this case yields down to.
You don't get two to get levels and rates that we just haven't seen in so long.
I think you have to say -- is there are some type of risk I think the big difference here were -- -- interesting to us in the market is that so many of the participants investors and traders.
Are are always fearful of TV you know could be in the 19791980.
Inflation you know is that somewhere in the in the in the future.
Probably not but still investors who come in now do bear some risk in -- you know.
If we had some interest rate rise but.
How much risk are we talking about are we talking about just tepid returns for a long time -- losing 25 to 50% -- your money.
Well BM investors who were buying bonds he we're gonna hold them to maturity.
-- -- C is just their bitter but it -- statements so it shows some change in some volatility.
If there is someone is in and the package product like a fund and then wants to get out of batter liquidate that money beforehand and they might bear some risk of interest rates were to rise.
But I think there's the big thing is -- you're not looking at someone getting wiped out in state sector type of investments.
You know when they get -- municipal market -- general obligation essential services when they ask you really don't look at the same room.
But I ask you about the municipal market a little bit in the context.
Looking at the finances of many states and municipalities around the country Justin in just a dire straits terrible situation but it's California -- -- or number of other places what should investor make of that someone who's looking for a safe investments says my goodness these places Michael bankrupt.
Well what's amazing is that with all the headline risk that we've seen is -- investors haven't.
Accident -- out in those areas where there's been problems.
And I think what most investors are seeing is that that most of their investments are protected by law.
And there's very if there isn't the same type of risk that the headlines might suggest these -- estates are not corporations.
So the bondholders have a bit more protection then is is is being give championed by some people out there.
Do you like we're we're much worsen quickly -- your enlightened general obligation bonds and more than revenue bonds right now it is one safer than other.
I figures we are very safe in the GO dad.
Also you have to.
I -- the essential service water -- those types of things revenue bonds are very good you know stay away from the casinos and it is either that those type of financing so those are those of the risky ones Tom that's kind of good advice -- five broadly speaking -- -- here.
Top cap carbon casinos are looking for safety and yes got a theme of the -- to -- -- of the casinos try to.
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