Bapis Cited On Investment Strategy

Michael N. Bapis

Michael N. Bapis, Chairman of Leadership 100 Partners and a member of the Leadership 100 Board of Directors, was cited in the New York Times column “Wealth Matters” by Paul Sullivan on May 3, 2013 for his views on how taxes influence investment strategy. Bapis, who is Managing Director and Partner with the Bapis Group at HighTower Advisors was queried on the development that with higher taxes some investors are choosing investments as much for their tax rates as for their risks and returns.

Bapis said: “Clients are definitely asking, because it’s a real issue in today’s environment. We try to keep them focused on the goals — preserving what they have, capturing some of the upside, limiting the downside. At the end of the day, we can’t change the tax laws.”
 
When asked about how tax rates would affect an investment, he said his advice was almost always the same. “If it doesn’t make sense for your portfolio, then it doesn’t make sense,” he said, even if there are tax savings. “If it does make sense, regardless of the tax consequences, we’re going to put it in your portfolio.”
 
Queried further as to whether Municipal bonds, which have long been attractive to wealthier investors because the interest they pay is not taxed by the federal government, pose a different sort of risk, Bapis said he was concerned that investors who were not paying attention to the broader economic news were not aware of the current risks of buying an existing municipal bond. He calculated that if the yield on the 10-year bond went to 3 percent, that could translate into a loss of 6 to 10 percent. The exception is if someone were to hold the bond until maturity. “But are you going to be able to stomach watching that bond go down 6 to 10 percent in the short term?” he asked.
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