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Investing in the High Yield Municipal Market: How to Profit from the Current Municipal Credit Crisis and Earn Attractive Tax-Exempt Interest Income by Triet Nguyen

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Monitoring Your Holdings

Once you have exposure in high yield bonds, you should continually monitor your holdings to make sure there are no material changes that would affect their value. Clearly, the primary concern is credit surveillance. Besides reading the general business press, you can check EMMA for new disclosures on the particular securities you own. You should also look to any other sources of information you may have such as the Bond Buyer® (a muni trade newspaper) and/or the Distressed Debt Securities publication at http://www.distresseddebtsecurities.com/. Bondsonline.com is another good web site that specializes in aggregating various sources of information that might be of interest to the retail investor.

In conclusion, an investor needs to understand his or her own capabilities and time constraints very carefully before transacting directly in individual high yield municipal bonds. There is great potential for abuses on the part of dealers. The higher absolute yields may give them more room to mark up bonds. Having said that, the industry’s self-regulatory bodies have made great progress in recent years in instituting measures to protect retail investors. In most cases, unless you are a full-time individual investor who is ready to commit the necessary time and resources to the trading sector, it might make more sense to seek the help of a financial advisor who is well versed in the intricacies of this arcane market.

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