Research Papers
4th Quarter 2009 Market Review and Outlook
January 29, 2010The municipal market staged a dramatic recovery in 2009, along with equities and most risk sectors in the capital markets. In fact, the riskier the security, the better was the performance, as top quality municipal bonds outperformed US Treasuries and agencies and lower quality municipal bonds outperformed top quality municipal bonds. While Samson was bullish on municipal bonds in the first half of 2009, our view changed to moderately bearish with concerns about rich valuations during the second half of the year. Several key factors contributed to the strong performance of municipal bonds (e.g., Build America Bond issuance coinciding with diminished tax-free bond issuance, strong retail demand and heavy inflows into mutual funds), but most of them were related to supply and demand pressures rather than a fundamental strengthening of the market.
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High Grade Core Intermediate 4th Quarter 2009
January 29, 2010During 2009, Samson’s high grade strategy achieved its goal of delivering a stable market return without exposure to the low quality and volatile sectors that can cause conservative investors concern. Just a casual glance at returns shows that 2009 was truly the mirror image of 2008. The market was certain that the world would collapse in 2008 and Treasuries surged. In 2009, the market was certain that the world had healed and Corporates surged. Is it truly possible that the fundamental economical health of the world’s economy and financial system could truly swing from near collapse to all better in months? Or, is it more likely the truth of the condition of the world is somewhere in between?
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