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Shorting municipal bonds



February 19, 2008 – Comments (1)

Tonight I'm shorting about 60 different closed funds that invest in municipal bonds.  The advantage to municipal bonds is that the interest they earn is not taxed.  The securities investments in my caps account are not taxed either so that advantage is neutralized.

 Taking this huge bet against muni-bonds means three things:


1) I don't think the US economy is going to tank that much further

2) Bonds outperform the stock market in the long run so even if the US economy tanks a few years from now I'll be out of the red

3) Muni-bonds will underperform other bonds because I get no tax benefits in caps


COLES NOTES:  Shorting closed-funds that invest in muni-bonds = free caps points

1 Comments – Post Your Own

#1) On February 20, 2008 at 1:43 PM, Bupp (27.92) wrote:

Seems to have worked as I have pole-vaulted into the top-1000 for the first time.

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