So consider this a buying opportunity for municipals right now, with a couple of caveats.
The Treasury market has its own dynamics quite unrelated to municipals that affect the ratio.
FORBES: Muni Bond Manager's Journal: Seasonal Affective Disorder
Remember municipals bonds have always had a very high ownership among individual investors both directly and via mutual funds.
When the ratio is higher than historical norms, usually 100% or more, many investors believe municipals bonds offer relative value.
FORBES: Muni Bond Manager's Journal: Seasonal Affective Disorder
There are no headlines, but the municipals market is in a funk.
Swiss francs, gold and 10-year Treasuries put away all other investment categories inclusive of corporate bonds, municipals and of course, equities, worldwide.
As a sidelight, the market in municipals is up 9 percent, giving long maturing Treasuries a run for the outstanding asset class of 2011.
Had they stuck to insuring municipals, there would be no problem.
While municipals have undergone significant changes, with some added risks, since the financial meltdown of 2008, massive defaults on quality bonds are not going to happen.
FORBES: Liquidity - The Muni Risk That Meredith Didn't Mention
As for the bond market, the biggest surprise and disappointment is my portfolio of high yield paper stands upstaged by 10-year Treasuries and AA municipals which require no serious due diligence.
Marilyn recommends staying short on municipals, under 7 years.
For large scale financing urban infrastructure which is assuming critical importance in the context of rapid urbanization, conventional fiscal transfers to the urban local bodies or municipals from governments are no longer considered sufficient.
FORBES: Infrastructure Investment in India Falls Off a Cliff
The bankruptcy timeline is murkier with municipals.
FORBES: Yankee Stadium Parking Garage Bonds Are Among Shaky Muni Bonds
For more detailed advice on how to get the most value out of municipals and other tax exempt investments, solicit the services of a professional financial adviser that can determine if these investments are appropriate for achieving your unique financial objectives.
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