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Munis: Sale of the Century?

Some analyst on CNBC had this to say today:

_____________________ You really have to start to put some money to work," Dan Genter, of RNC Genter Capital Management in St. Louis, told CNBC. He advises putting a third of your money in now, a third in December and a third in January. "That starts to put you in a big position," Genter said. He advises investing in high-dividend stocks and says that municipal bonds are "the sale of the century."

_____________________

I'm not sure I follow his rationale re: munis, and I wonder if someone would explain why he might be thinking this way?

Thanks

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Reply to
JBradshaw
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yield on 30 year treasury 4.05%

yield on 30 year municipal AAA GO 5.89% (taxable equivalent 8.18%, in 28% bracket)

Muni's are historically very cheap, but can get cheaper. Weak economy does not bode well budgetwise for state, city and local governments. There will be a year end scramble for cash, so the best deals for muni buyers may be available in the weeks up to Dec 31st.

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Reply to
catalpa

Before buying, make sure to get a prospectus for any bond, and read it.

Recent government money into the economy may be sopped up into the vacuum left by the bursting credit bubble, and so may not be inflationary. "Bailout" funding is an investment, not gov't consumption. The impact of the huge wealth erosion in the stock market is not inflationary.

Still, 30 years is a long way out, and inflation is very "big-sticker- specific" - college cost inflation and health-care inflation is much higher than CPI, for example. Bond holdings are for shorter-term time frames of retirees IMO.

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Reply to
dapperdobbs

What are some of the preferred methods of buying these types of muni's? I'm thinking/hoping for an ETF or low cost MF. Thanks.

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Reply to
Mike

Vanguard has some first rate muni funds.

-- Doug

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Reply to
Douglas Johnson

Muni's are attractive because the interest is not taxed. Don't buy them in your IRA or 401k. You won't get the tax benefit.

Frank

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Reply to
FranksPlace2

While individual munis are doing great, some muni FUNDS have been losing money. Becasue that constained some bad eggs of cities that have been playing loose with their investments. I expect many "problem munis" to appear after the current crash.

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Reply to
rick++

It should be obvious that if some muni funds are losing money, so are some individual munis. I think if investors buy muni bonds directly they should give preference to general obligation bonds of their state. Otherwise they may be taking too much credit risk.

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Reply to
beliavsky

Has nothing to do with "some bad eggs of cities". The prices of even AAA individual munis have been crushed, that is why the yields are so high.

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Reply to
catalpa

Check the prospectus and look for at least: a) does the State back the bond issue, b) are financial statements readily available, c) is their times interest covered above 4.

Some revenue bonds secure their ratings by bank letter of credit, and their financials are not easy to come by. Funds invest in these, excusing themselves on a 'portfolio diversification' rationale.

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Reply to
dapperdobbs

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