Cedar Rapids Gazette (Newspaper) - June 19, 1974, Cedar Rapids, Iowa V hey! i ' ' NOMINATE ASSON PANTS CHAIRMAN Of TNE HOOSE .COMMITTEE! All THOSE IN FAVOR? OKAY ANSON! / PERFECT > MAN FOR THE 'SOB! NOBODY IN HIS RIGHT MINO WOOIP v TAKE IT! y MMK*!, 150 W.44* ST, mew York , ny- Regularly 12.00 to 24.00 • Joyce • Red Cross • Personality • Socialite • Beverly • Cobbles It's a grand slam sale of shoes! A great selection of patent or calf styles. Variety of colors in sizes 5'/j-lO. Cedar Rapids! Downtown Third Floor and Lindale Plata Iowa City: Mall Shopping Center on Sin at Sycamore They'll Do It Every Time Th* RICHT MAN FOR THE THANKLESS CLUB POST-- "^he Investors Quide Flattering swimwear at tremendous savings! Famous Make Swimsuits 10.99 VALUfS TO 30.00 First Quality swimsuits in an exciting assortment of prints and solids. Choose from bikinis, waistriders, maillots, sheaths and tunics. Nylon, Antron" nylon and Lycra * nylon combos. 8 thru 20. All from famous makers. Tremendous savings!! Cedar Rapids: Downtown Second Floor and Lindale Plata Iowa City: Mall Shopping Center on Six at Sycamore Cedar Rapids: Downstairs Budget Store and Lindale Iowa City: Mall Shopping Center on Six at Sycamore Womens Famous Brand Shoes 6.90 10.90 14.90 By Sam Shulsky Q — Why don’t you like municipal bonds? You refer to yields of “about 5 l /z percent” when you know that yields are considerably higher. A — I) Right off the hat, let me say that I do like municipal blinds and consider them an excellent investment for, firstly, those in a high (30-35 percent and above) income tax bracket and, secondly, for ‘.hose who don’t want to put money, or more money, into the equity market. 2) The column you refer to appeared about a month ago and I think you’ll admit that money rates have climbed materially, in the interim. And so have tax-exempt yields. Example: I’ve dug out a leading dealer’s offering sheet as of the time of that column, and find that current yields of “A” grade bonds selling around par at that time were either side of the percent level. Discount bonds yielded more to maturity. In the most recent list, I find these equivalent yields up to 53/4, 5.8, etc., etc. It is always dangerous to say that “a municipal bond yields 5.65 or 5.72 percent” because someone can always find another which yields 5.85 or 5.9 percent. 3) But perhaps the most important reason for assuming a conservative stance on tax-exempt yields — if, in fact, I have done so — is simply this: Municipal bonds — once the investment preserve of the ultra-wealthy — a r e now being widely offered — across the board, you might say — to the general public. And the general public, angry at the rising cost of living and heavy taxes, seems more than ready to thumb its collective nose at the tax collector whether the municipal bond makes financial sense in any particular case or not. Bart of this broad promotion of municipal bonds (and a small part, I’m happy to say) seems to imply that you can get just about as good a return from tax-exempts as you can from taxable Treasuries and corporates. Every sophisticated investor knows that is malarkey — there is no free lunch. But I continue to get letters. in alarmingly increasing amounts, from clearly unsophisticated investors, often living in areas where they can’t check it out, telling me that they have been offered tax-exempts yielding 7*£, 8 percent and even more and are inclined to buy them (or have already bought them) because, they say, “after all, tax-exempts are the safest” and why take 8Mi percent taxable when you can get that much tax-free? So, if I should happen to understate the yield on tax-exempts (and how can you not understate yields when interest rates climb day by day?) it is because I want a red warning flag to go up in the mind of any would-be investor reading this column. When he is offered a tax-exempt yielding 8Vi percent he is being offered a “bargain” which may contain a degree of risk so high that he can’t live with it. I know this may seem like boring repetition to sophisticated investors. But I cannot stress enough 1) All tax-exempts do not enjoy the same safety. Their ratings go from tripie-A down, just as do corporate bonds. 2) The tax-exempt market is constantly watched by traders and dealers with some of the sharpest pencils in Wall Street. If one bond yields 5 47 percent and the other 5 98, there is u reason. 3) All tax-exempts do not have the same hacking, Some Expects U. S. Speculators To Feel Sting in Gold Mart ii; Sam Shulsky are endorsed by the full faith and credit and taxing power of a state or city or town. Others are hacked only by the money taken from motorists crossing the bridge built by the proceeds of the bond issue. And still others are hacked only by the earning power of a private corporation for which a plant was built with money raised through a city or town’s tax-exempt bond issue. 4) Tax-exempt issues backed only by specific project revenues can default and have defaulted. (Although, I admit, the over-all record is good.) 5) There is always a differential between yields of taxable and tax-exempt bonds of the same quality. No one in his right mind pays taxes if he doesn’t have to — unless, of course, he has more left, net, after paying a tax on corporate bond income than he would have from accepting a lower tax-free return. 6) Finally — your tax bracket, only, can determine whether you are a customer for tax-exempt bonds. And if it does indicate tax-free bonds, keep firmly in mind that there are millions of other, perhaps more expert, investors shopping the same market. Be wary of “bargains.” * ♦ * NEW ISSUE: Shares or bonds sold by a corporation for the first time. Proceeds may be used to start up a new company, or added to the funds of a company already in operation, to retire outstanding securities, acquire new plant or equipment, or be added to working capital. By leonard tarry WASHINGTON (UPI) - lf American citizens get the right to own gold bullion for the first time in 40 years, gold speculation probably will become as glamorous as frozen pork bellies, iced broilers and orange juice. ‘‘The average guy who rushes into the gold market when — and I emphasize when because ifs a certainty — the government approves it, will have his pocket picked,” says Charles Stahl, Princeton, N. J., publisher of Green’s Commodity Market Comments. Simon Spur Treasury Secretary Simon, who has spurred the gold fever in speeches to foreign finance ministers and congressional committees in the past few weeks, says Americans should be allowed to ‘‘trade in gold the same as lead. ” Simon says he will recommend to President Nixon that he exercise his authority to end the ban on private ownership of bullion by American citizens. Stahl says the ‘‘shrewd buyers” are already in the market, either legally or illegally, waiting to sell when the American surge sends prices up. After the gold rush, prices will fall again and the shrewd buyers will bargain hunt hack into the market. Thomas Wolfe, director of the treasury department's Office of Domestic Gold and Silver Operations, also predicts “a little flurry in gold markets. But it will end quickly.” Will legalizing gold send Americans rushing west to pan streams and dig in mountains for the precious metal 0 “Deepest Holes” “Hardly,” laughs Wolfe. “The deepest holes in the world now are gold mines. There just isn’t enough gold loft to mine.” Americans actually can own gold now in the form of jewelry, coins and placer gold — the nuggets that starter! the California gold rush in 1849 and Most in Texas Speed, but Not By Much: AAA HOUSTON (API - A state survey by the American Automobile Assn reveals most Texas motorists were Speeding, but still came close to obeying the 55 mile per hour speed limit imposed to save gasoline Using a radar unit, the AAA checked 1,466 ears on four-lane U. S. highway 59 Monday. The AAA found 62 percent of the vehicles clocked were exceeding 55 mph. But the average of the speeding vehicles was 60 mph Texas highway patrolmen seldom issue speeding tickets unless motorists exceed the limit by more than 5 mph The AAA found more passenger cars than trucks going faster than the speed limit and women more likely to speed than men. Of the 1,171 males checked, 58 percent were speeding. But of the 295 females, 76 percent were going faster than the limit. The survey revealed 70 percent of all passenger ears were speeding, compared with 58 percent of pickup trucks and 43 percent of large commercial trucks. still arc found in limited quantity in some western streams. The change would be to allow Americans to hold gold bullion, a brick that usually weighs IOO ounces or more The U. S. banned bullion ownership in 1934 to prevent holders from reaping windfall profits when the dollar was devalued by President Roosevelt to stimulate the economy from depression Roosevelt lowered the value ol the dollar from the equivalent of $21 for one ounce of gold !< $35 per ounce, a pre rn mn which remained until President Nixon reduced it ti the current $42.22 in 1971. Wolfe says the major com modify exchanges such as thi Chicago Board of Trade ane the New York Mercantile arc ready now to trade futures contracts in gold in the same way that silver, lead, copper, orange juice, frozen pork bellies (bacon) and iced broilers are traded. Brokerage Houses Don Bass, a commodity trader for Merrill Lynch, Pierce, Penner & Smith, says it is “no secret” that the big brokerage houses have been preparing for gold sales for the past six to 18 months. "Ifs a commodity, like any other. It was only a matter of time before the federal government allowed trading,” says Bass. Stahl, who is considered an expert on gold arid silver, says there is no financially secure future for Americans who buy gold whether in the form of bullion or coins. “A lot of people think they can hedge against inflation by buying gold,” says Stahl, “hut it’s no better hedge than soybeans or any other commodity, The investor must watch the market and know when to move.” Stahl says the real losers in the gold market will he Americans who have bought gold coins for speculation The price of the coin already exceeds the value of the gold content by about IO percent Legalizing gold bullion ownership would drop coin values another 5 percent. ON THIS DATE in 1754, a congress of seven American colonies was held in Albany, N Y., to discuss union for defense. Special Selling! Women's Wedge Sandal by differ 7.88 Regularly 11 .OO KILMAN HOMS? A WI CULY Slims or SINS4 TION AL VAlUfcS PLANNED I COOPf RAI ION WITH ONLY TH • IST OF MANUFACTURE EACH IONUS HIM MIC TS OU RIGID STANDARDS OF QUAD! 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