Pride and Profits from Public Stocks (Part 1)
Some investors are proud of the companies in which they own stocks. This is especially true of stocks held for the long-term. Investors become emotionally tied to stocks which help to pay for homes, higher education, and cornerstone social events. All this is possible with tax free municipal bonds when funds are used by administrators of integrity for prestigious projects. Tax free municipal bonds may be seen as a modern form of public service, though the cash returns may be significant as well. It is a convention for local bodies to seek insurance to cover their financial commitments, but there are recent signs that the insurers can be worse at financial controls than city officials!
Management Misconceptions by Lovers of Stocks
Proponents of free enterprise make out cases that they are the sole repositories of business management knowledge. Indeed the vast majorities of graduates from top business schools head for privately owned corporations that work for profits. However, city administration has also emerged from a cocoon of indifference, and some urban centers have begun to make impressive marks around the world.
Well administered hospitals, educational institutions, and infrastructure projects such as airports, may deliver essential services efficiently, while adhering to budgets at the same level. Citizens have tolerated profligacy, populism, and political interference for decades, but they are also increasingly appreciative of responsible governance.
Trained and empowered bureaucrats can manage resources at least as well as executives in companies. Most if not all management principles apply to public projects, just as they do for profits and investments in the world of business. Tax free municipal bonds can lend stability to portfolios in ways beyond the normal patterns of stocks. Set backs in unrelated transactions may put insurers on the defensive, but discerning investors should not allow these errors to cloud judgments about the abilities of local self government bodies to service their debts.
Pride and Profits from Public Stocks (Part 2)