The Wall Street Journal published “Insurer Woes Put Munis in Bargin Bin” today, echoing almost exactly what I said on 12-2 and 12-8 (and continuing the Journal’s own coverage on 12-8). The article starts:
Bad news about bond insurers in recent days sent mutual-fund managers racing into the market - scooping up insured municipal bonds at a steal.
Just as predicted, more bond insurers are getting caught in the ’subprime’ mess and the prices of the munis they backed are dropping. However, since munis rarely default, the lack of background insurance is battering their prices more than is likely justified.
I was excited - but ultimately disappointed - with the last section of the article entitled “Insurance Even Needed?” The WSJ could’ve made the case much more strongly that the insurance is redundant/unnecessary … but of course this is an article, not an editorial.
I’m still not jumping into the market until I feel bottom … and we’re not there yet. None of the returns -at least for Massachusetts municipal bonds - look very appealing right now. Of course some states are better; maybe I should move to Maine or Wyoming or some other less affluent place without a well-off middle-upper class chasing tax-exempt interest on the same local bonds? [That’s for another post…]
and fwiw: that my investment acumen was this accurate probably scares me more than it does you.