Are they going to blow or not? Meredith Whitney says yes, Alexandra Lebenthal says no. I’m not a bond market expert, so I have no real opinion of whether defaults are likely or not. But I can see what is happening to the price of munis, and that makes them an unattractive asset to me–because there are other assets that are currently performing better.
Click to enlarge. Source: YahooFinance
That’s the essence of tactical asset allocation driven by relative strength. Buy what is strong and hold it as long as it stays strong; avoid what is weak.
