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Some Muni Bonds Appear Screaming Buys Here

When investing in any market there will be certain securities to avoid. California munis with poor underlying ratings would be one. Here in Texas real estate values are holding up very well. The same is true for many other areas as well. California is a unique market that seems to have always had it's own unique financial problems. You have to be selective but there are still some great values in the muni market.

Some Muni Bonds Appear Screaming Buys Here

The fact that some investors are concerned about falling property values when discussing the municipal bond market is exactly why we still see good value in this market. Is there a fear that municipal bond defaults could dramaticly increase to over 1%? Is that any reason to avoid bonds with the full faith and credit of the issuer, in the case of GO bonds, that have an 'A' or better underlying rating and some insurance or guarantee on top. If you are truly concerned about buying municipal bonds at these prices due to credit concerns you better bury your gold in the backyard and start hoarding food and water. If there is a concern about 8%-10% inflation then I hope you bought CIPs, corporate inflation protected bonds, when they were trading at a 400bps real rate of return. The municipal bond market does not offer big price dislocatons but about once every decade.