Now that you mentioned Muni Bonds and their collapse, one of the best Bond Fund Managers, with a great 10 year history of making money for his clients, Bill Gross, is ACCUMULATING them.
Either he knows something or he’s a fool.
See here :
http://www.reuters.com/article/idUSSGE6BD0DJ20101214
Influential bond investor Bill Gross invested $5.5 million of his own money in five municipal bond funds run by his firm, Pacific Investment Management Co, to take advantage of the falling bond prices.
Gross, who helps oversee more than $1.1 trillion in assets at Pimco and runs the $252 billion Total Return Fund (PTTRX.O), bought 560,090 shares of Pimco municipal bond funds between Dec. 9 and Dec. 14, filings with the U.S. Securities and Exchange Commission showed.
U.S. municipal bonds prices have been tumbling for more than a month as investors worried that a flood of new tax-exempt debt sales this month will swamp longer-dated debt as Build America Bonds (BABs) exit the market.
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Pimco warns on US municipal sell off.
The record outflow of $3.1 billion (£2 billion) in the municipal mutual fund sector over the week beginning November 15 has been largely attributed to the effect of QE2 on US treasuries and an oversupply of bonds, according to Pimco.
The majority of this outflow has been concentrated in long duration and high yield municipal funds.
http://www.fundstrategy.co.uk/markets/bonds/pimco-warns-on-us-municipal-sell-off/1023568.article
He probably reckons that the munis will be bailed out by the state and/or federal government and made dollar-good.
Buy at a discount when distressed, then sell after the bailout...its a win.
If one does one's homework and finds the places that still manage a prudent fiscal budget, one can make a killing these days in munis. Gross does his homework (or, at least, his grunts do the homework for him).
Steve Forbes was on Lou Dobbs' radio show this afternoon, and when Dobbs asked him if he thought municipal bonds were a big risk he said not necessarily -- but he recommended buying a diversified portfolio of them, and paying close attention to the financial condition of individual cities rather than just assuming they're all low-risk investments.
“”Gross, who helps oversee more than $1.1 trillion in assets at Pimco and runs the $252 billion Total Return Fund (PTTRX.O), bought 560,090 shares of Pimco municipal bond funds between Dec. 9 and Dec. 14, filings with the U.S. Securities and Exchange Commission showed.””
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This sure looks a lot like the Bernanke buying the bonds issued by the US Treasury.
I am not surprised that PIMPCO would accumulate Muni bonds. PIMPCO is “too big to fail”. He knows that Munis that go tits up will be bought by Obama. PIMPCO has no risk, unlike you and me.