Fear mongers have grabbed most of the headlines, but as we point out in our latest message in The Wall Street Journal, the real news is being made by prominent investors, who see a tremendous buying opportunity and are quietly pouring money into the muni market.
Yields on quality 30-year municipal bonds have risen to near two-year highs, with some offering more than 9.00% in tax-equivalent returns. Even institutions that traditionally invest in taxable bonds are crossing over and buying tax-frees. These investors understand that the recent decline in prices is primarily due to supply and demand factors, not the ability of state and local governments to pay their bills.
Of course, all investments have risk, but as even one well-known doomsayer says, there is opportunity if you do your homework. This advice is being heeded by experienced investors who ignore the media glare.
To see the full message, click on the image below: