Comments on: Bad Year For Muni Bonds http://www.fundmasteryblog.com/2007/12/19/bad-year-for-muni-bonds/ Mutual Funds, Investing, Retirement, Economy, Personal Finance Wed, 07 Jan 2009 04:43:25 +0000 http://wordpress.org/?v=2.3.1 By: Penelope http://www.fundmasteryblog.com/2007/12/19/bad-year-for-muni-bonds/#comment-416 Penelope Sun, 23 Dec 2007 17:57:32 +0000 http://www.fundmasteryblog.com/2007/12/19/bad-year-for-muni-bonds/#comment-416 There are some interesting articles regarding munis in the Wall St. Journal (12/22) and Barron's (12/24) that support your argument. It'll be entertaining to watch how it all unfolds. There are some interesting articles regarding munis in the Wall St. Journal (12/22) and Barron’s (12/24) that support your argument. It’ll be entertaining to watch how it all unfolds.

]]> By: Kurt Brouwer http://www.fundmasteryblog.com/2007/12/19/bad-year-for-muni-bonds/#comment-415 Kurt Brouwer Sun, 23 Dec 2007 03:25:55 +0000 http://www.fundmasteryblog.com/2007/12/19/bad-year-for-muni-bonds/#comment-415 Not sure what Bill Miller has to do with muni bonds Penelope. Problems with municipal bond insurers stem, not from their muni bond insurance products, but from other insurance products they offer, for example insurance on mortgage securities. It's unlikely that MBIA would fail, but if it did, I do not think it will result in big problems for munis, except for a short-term blip. Not sure what Bill Miller has to do with muni bonds Penelope. Problems with municipal bond insurers stem, not from their muni bond insurance products, but from other insurance products they offer, for example insurance on mortgage securities. It’s unlikely that MBIA would fail, but if it did, I do not think it will result in big problems for munis, except for a short-term blip.

]]> By: Penelope http://www.fundmasteryblog.com/2007/12/19/bad-year-for-muni-bonds/#comment-414 Penelope Sun, 23 Dec 2007 00:22:21 +0000 http://www.fundmasteryblog.com/2007/12/19/bad-year-for-muni-bonds/#comment-414 "the muni market has already priced in serious problems with ratings" Did the financial stocks have the bad news "already priced in" when Bill Miller bought all those stocks? Or how about the homebuilders before it was completely obvious there was a bubble? Lots of folks can't see the writing on the wall until they read about it in the morning paper. Munis will be no different (plus there's the additional issue of poor liquidity that will also weigh on prices). “the muni market has already priced in serious problems with ratings”

Did the financial stocks have the bad news “already priced in” when Bill Miller bought all those stocks? Or how about the homebuilders before it was completely obvious there was a bubble?

Lots of folks can’t see the writing on the wall until they read about it in the morning paper. Munis will be no different (plus there’s the additional issue of poor liquidity that will also weigh on prices).

]]> By: Kurt Brouwer http://www.fundmasteryblog.com/2007/12/19/bad-year-for-muni-bonds/#comment-409 Kurt Brouwer Fri, 21 Dec 2007 18:39:14 +0000 http://www.fundmasteryblog.com/2007/12/19/bad-year-for-muni-bonds/#comment-409 Penelope -- As this post indicates, it has been a tough year for munis. I think the muni market has already priced in serious problems with ratings. Penelope — As this post indicates, it has been a tough year for munis. I think the muni market has already priced in serious problems with ratings.

]]> By: Penelope http://www.fundmasteryblog.com/2007/12/19/bad-year-for-muni-bonds/#comment-408 Penelope Fri, 21 Dec 2007 18:28:52 +0000 http://www.fundmasteryblog.com/2007/12/19/bad-year-for-muni-bonds/#comment-408 "bond insurance companies that guarantee about half of all U.S. municipal debt" What happens to the value of those Munis if the bond insurers go belly up? Look at charts for MBI, ABK & ACAH to see what the market is saying about them (and that's after MBI got a $1 billion cash infusion recently.) Just the inevitable debt downgrades for the insurers will send Munis in a tailspin. It's too ugly to think about what the collapse of one of the big insurers will do (which is a real possibility)... “bond insurance companies that guarantee about half of all U.S. municipal debt”

What happens to the value of those Munis if the bond insurers go belly up? Look at charts for MBI, ABK & ACAH to see what the market is saying about them (and that’s after MBI got a $1 billion cash infusion recently.) Just the inevitable debt downgrades for the insurers will send Munis in a tailspin. It’s too ugly to think about what the collapse of one of the big insurers will do (which is a real possibility)…

]]> By: Kurt Brouwer http://www.fundmasteryblog.com/2007/12/19/bad-year-for-muni-bonds/#comment-406 Kurt Brouwer Thu, 20 Dec 2007 05:01:03 +0000 http://www.fundmasteryblog.com/2007/12/19/bad-year-for-muni-bonds/#comment-406 Excellent point Joe. As I mentioned in the last paragraph, bad years have been buying opportunities in the past. Excellent point Joe. As I mentioned in the last paragraph, bad years have been buying opportunities in the past.

]]> By: Joe http://www.fundmasteryblog.com/2007/12/19/bad-year-for-muni-bonds/#comment-405 Joe Thu, 20 Dec 2007 00:34:34 +0000 http://www.fundmasteryblog.com/2007/12/19/bad-year-for-muni-bonds/#comment-405 Considering that most people who buy Munis adopt a buy and hold strategy, the bad year for muni's sounds like good news. When you can reinvest dividends and put new money to work at lower prices and higher yields that seems to be a good thing. Considering that most people who buy Munis adopt a buy and hold strategy, the bad year for muni’s sounds like good news. When you can reinvest dividends and put new money to work at lower prices and higher yields that seems to be a good thing.

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