MiddleOfRoader

Why It's Time for Muni Bonds

Follow-up to last week's comment. I am selling muni bond funds and moving to muni money-market funds. For the rest of you, that means BUY muni bond funds, since I usually sell within one or two days of the bottom.

Muni money markets are sporting 5%+ SEC 7 day yields, which is enough for me in this environment.

Why It's Time for Muni Bonds

I purchased the biggest fund group's intermediate muni fund in the spring during the bond insurer and auction-rate blow-ups and got some nice appreciation. Lost all of that and more in the last two weeks with a virtually unbroken string of daily losses. Who cares if you are getting tax-free cash monthly if depreciating more than a month's dividend each day? I suggest waiting at least until there is a positive tone and trend before buying.

Thinly traded closed-ends of the thinly traded muni market are probably sporting some huge yields and discounts now, but I haven't checked that out yet since I'm not buying until there is some stability. That is a good place to look if you have money you can afford to lose.