ROFLMAO. Perhaps you, Malkoda and Dick Fuld can buy the dip. Better yet you can team with Vic Neiderhoffer and short puts on muni's. After all municipals are "guarenteed"......
Well, then post your book. I'm not too proud to borrow (or steal) ideas if they make sense. Don't tell me you're looking for entry points in hard commodities...
Consumer spending is going to be dead for several quarters. Earnings are going to evaporate further. Unemployment is going to test double digits. More companies will be heading for bankruptcy. Markets will make new lows.
Speaking of which, it is expected that credit card issuers will slash 2 trillion in available plastic credit in the near future. And the hits just keep on comin'...
Maybe because he likes to consider evidence before forming an opinion? Buylo made the point that earnings will (probably) tumble, so Makloda just pointed out that falling earnings don't *necessarily* mean a falling market. That's all. It doesn't mean he is bullish, it just means he would not stay bearish just because of falling earnings alone.
Remember real estate nationally never went down for 75 years - that "precedent" didn't work out too well. The "risk" you are talking about is not risk at all. It is backward looking results. National US real estate (if you could buy a basket) until 2007 was a decent investment. In 2007, looking back, it was low risk. In 2007, looking forward, it was catastrophically risky. What makes you think munis aren't the same? You need to look forward not just back. Looking forward, the risks are huge - you could have a 2-3 year recession/depression, with deflation and more credit contraction. Taxes may rise as incomes fall, socialism is on the rise, social unrest may follow, trade wars or even real ones. In that environment, the taxable base is going to collapse. At the same time, municipal authorities have huge debts, and have seen their investments collapse in value. Property values have collapsed, reducing the take from property taxes. The fundamentals of munis are the worst since at least the 1970s and arguably since the 1930s. They are "cheap" for a good reason IMO, and could well get much cheaper.
'Full Faith & Credit.' Sure, it may not be akin to a federal guarantee, but the tax appropriation of local government units is nothing to sneer at. That doesn't mean default rates won't double or even triple, but the % default rate would still be negligible at that point. Besides, if banks can get bailout money, you can bet chances are cities will, too.
If that's your view, you should be long US government bonds, because if you are right then we will see deflation and a humdinger recession. Stocks, commodities, and real estate may well get hit for another 25-50% fall even from these depressed levels under that scenario. Munis are totally contradictory to your view. In a deflation/depression, you want to own only the most low-risk secure paper i.e. US Treasuries. Treasuries are expensive, but then powerful bull markets usually look expensive during their momentum phase. Japanese bonds looked expensive in the 1990s and 2000s, but eventually reached the 145 handle. You should be looking at US govt bonds, Japanese Yen, T-bills, and maybe a bit in physical gold as a disaster hedge. Gold could easily fall to $500 though in a deflation. Personally I am having similar views to your own right now, which is kind of different to what I thought only a few months ago. But when I look at the fundamentals, sentiment, and most importantly the price action, it is saying one thing - deflation & prolonged recession. Bonds and Yen (and to a lesser extent dollars) are the only long positions that are really working. Of course the other option is to trade. My long/short book has done quite well in the last 2 months of meltdown - long stuff that is low-cost, bargain basement, necessary, attractive to retrenching consumers e.g. WMT, MCD; short stuff that is luxury, or a discretionary purchase (e.g. TIF, short anything reliant on finance (e.g. autos, domestic white goods), short anything at an aspirational price point or market segment. That "long bargains, short luxury" has been a home run so far, and I think it could go further.
Why take the risk? You are not being compensated for the chance of appropriation, default, rescheduling the debt etc. You are in a political realm with munis. It's not default *rates* you have to worry about, it's a further rise in yields that even 1 or 2 defaults would trigger, which will give you a nasty capital loss. What will happen to your munis after some municipalities default, then S&P and Moody's start a swathe of downgrades so they don't look stupid like they did with CDOs and the banks? Do you know how many forced sellers there will be when munis start going below investment grade? It could become a bloodbath. Treasuries are different because a default would lock the USA out of international capital markets, and massacre the dollar. Munis have no such protection. Treasuries are trending up, munis down. The market is telling you something. In this environment, you should look to preserve capital first. Chasing yield is the best way to lose money.
There are only two risks you're taking AFAIK, not that they're completely harmless: 1) Default (addressed previously; statistically FAR less likely than corporate bonds, or anything but treasuries - maybe 1% in the worse case scenario, maybe 2% [that's got to be a stretch given taxation powers]); 2) Inflation, but I hardly see that any time soon, as money just pours into treasuries given the desire to simply preserve capital. Treasuries are basically cash, now. There's risk, there, too. The tax exempt status of munis hedges against even this risk. There's going to be risk in anything - even treasuries, right?