To save on taxes, consider `tax-swapping' bonds

The Ticker

October 15, 1999|By Julius Westheimer

IF YOU WANT to save on taxes, consider "tax-swapping" your bonds.

"Since January, interest rates have moved up," says Robert Reeves, a municipal bond specialist. "This decline sent bond prices lower, but you can turn that decline to your advantage.

"Sell bonds with losses and `swap' them for bonds of comparable quality. You establish a tax loss, preserve your principal and maintain or increase your income. Municipal bonds are well-suited for tax swapping."

"Depressed drug stocks are good buying opportunities," says S&P Outlook, Oct. 6. "These companies' strong patent- protected drug portfolios and new pipelines enable them to withstand near-term uncertainties: Abbott Laboratories, Bristol-Myers Squibb Co., Forest Labs Inc., Pfizer Inc., Pharmacia & Upjohn Inc., SmithKline Beecham PLC and Warner Lambert Co."

"Beware of small-cap index funds," warns Sheldon Jacobs, editor of No-Load Fund Investor. "Large-cap index funds track well-known indexes such as the S&P 500 and Wilshire 5000. But small-cap index funds may track at least six different benchmarks or design their own indexes."

WALL STREET WATCH: "Long-term Treasury bonds will soon outperform stocks. Treasuries are extremely undervalued while stocks are extremely overvalued. Long Treasuries could earn a `total return' [gain plus income] of 15 percent next year." (Klein-Wolman Letter)

"We're headed into a bear market because big corporations are failing to meet earnings projections, inflation is heating up and we face mammoth Y2K computer problems." (Margaret Welch, financial planner)

"The alarming rise of the euro and yen against the dollar is a major negative for stocks. A lower dollar spurs inflationary pressures, a Wall Street danger signal." (Michael Metz, Oppenheimer Corp.)

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