I've read suggestions now and then that it can make sense to hold muni bond funds in a taxable account and put higher-yielding stock investments in a tax-sheltered account instead. See, for instance:
I've been trying to imagine scenarios where something Really Bad happens to Massachusetts, that wouldn't also impact the rest of the US and the global economy as well. If terrorists nuke Boston, for instance, what happens to my MA muni bond fund is sure to be the least of my worries. :-P
-Sandra the cynic