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I don't subscribe to the apocalyptic view of the muni market that's popular right now, but yields are too low for this to outperform.
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MUB may be down quite a bit already, but it's got a long way to fall, and nothing much to catch it. Just a few major states with really big problems--Calif., Ill., & NJ--are poised to take big chunks off this fund.
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I'm shorting all the municipal bond ETFs I can find. All the pension debts from the public sector unions (police, firefighter, teacher) are driving too many cities into default. It's a disaster waiting to happen.
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The top tax brackets rates are expected to rest on January 1 2010. Unless something changes individuals in the top tax brackets will pay 3 to 4.6% more tax. Long-term capital gains rates will expire January 1, 2011.
Expect a higher demand for tax-free income and lower demand for growth stocks through the end of next year.
Disclosure: I own municipal bonds and intend to purchase more through the end of 2009.
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Still think this is a bear market Rally!!
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U.S. stock bull 3/17/2008.
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Municipal Bonds will bounce forward.........tax exempt/ clip coupons never went out.......has held steady since the 30's
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