For some investors, a four-and-a-half percent tax-free return on triple tax-free municipal bonds [which are free of federal, state and local income tax] can be equivalent to a 7 percent return on a taxable instrument," said Bill Walsh, president of the Parsippanybased investment advisory firm Hennion & Walsh Inc. "But you still have to consider the underlying bond, and look at the source of the revenue. Concerns about the overall economy weigh heavily on business owners, and at this point, many appear to still be leery about a sustained recovery, said Jason Pride, director of investment strategy at Glenmede, an investment and wealth management firm with offices in Princeton and elsewhere.
sPOtLiGHt: BankinG & FinanCE Business owners retreating from risk while waiting for recovery By Martin C. Daks get deficit and the specter of inflation are driv- when people get burned, as many did into money market funds.” BUsIness owneRs who have seen their ing many business owners to wonder where during the last year or two, they tend to shy Despite that, he still sees an opportunity personal finances battered by the roller- they should be investing their free cash. away from risk, said Darin P. Pope, chief invest- in equities. coaster economy may be feeling a little less The best bets appear to be a move — ment officer at United Advisors, in secaucus. “Right now, U.s. equities are undervalued, shaky, now that some signs are pointing to a though not a flight — toward safety, experts “A couple of years ago, many business because of the near-collapse of the finance modest recovery. said. many are counseling investors to reduce owners were putting their money in equities,” system,” he said. “The european debt and euro But it may be too soon to put away the air- their equity exposure and instead look to he said. “But now their risk tolerance has crisis is scaring many people away from inter- municipal or corporate bonds sickness bags, say some wealth management 3/29/10 11:56 AM Page 1 that may not be BED6905 Car Ad NJBiz.doc:Layout 1 decreased, and many are moving into bonds national stocks, but you have to remember experts. higher taxes, a swelling national bud- as volatile. — although I see very risk-averse clients going that the U.s. crisis was driven largely by bank troubles — not by the underlying domestic economic system. many people tend to invest through a rear-view mirror, and they can easily forget how quickly the U.s. economy can stage a recovery.” Then again, not everyone’s shying away from international investments. “Depending on individual clients’ overall objectives, we’re looking to overweight invest- ments in Asia, exclusive of Japan,” said Ann D. Borowiec, managing director of J.P. Morgan’s Private Bank division. “we’re also shorting the euro.” For business owners, Borowiec recom- mends a “barbell” approach, with conservative ann D. Borowiec
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