Now that moral hazard is a firm part of American culture, there seems to be no fear of defaults even at the municipal level. Because Uncle Sam/Uncle Ben won't let it happen ... at least this seems to be the thinking...
If you've looked at any municipal bond ETF you will see what I am talking about - off the charts performance, even as I read about city after city, state after state flailing with their finances.
Moral Hazard anyone? (keep in mind this is not a chinese small cap stock, this is a municipal bond etf)
Anyhow, I am all about moral hazard since I try to keep up with the fashion. Hence our position in Assured Guaranty (AGO) - who insures such offerings (along with some nasty legacy assets). But really do we need insurance when the Bank of Ben is backstopping the entire United States? It's almost like a waste of money to insure debt when the Bernanke Put* is in the back of everyone's head.
*Bernanke Put = like the now infamous Greenspan Put which helped support the markets for years - but taller, stronger, faster, able to leap short sellers in a single bound.
After building a nice base the stock could be beginning a breakout ... we'll see. This has been sort of a slow mover for much of the time I have held it so I've been unable to really get a feel for how it trades since it's been on snooze control. I am adding another 1.2%ish allocation to our current stake, in the $23.50s.
[Nov 25, 2009: Bookkeeping - Beginning Starter Stake in Assured Guaranty]
Long Assured Guaranty in fund; no personal position
Thursday, January 14, 2010
Bookkeeping: Adding to Assured Guaranty (AGO)
Best Of FMMF
- 1: Warren Buffet Piles on Europe
- 2: [Video] Jim Chanos Returns from Europe, Even More Bearish on China
- 3: A Chart to Open Our Eyes - Staggering Changes by Multinationals in Employment Behavior 00s vs 90s
- 4: Futures Blasted on Dexia Woes... and Poor Preliminary China Data
- 5: Market Working to Worst Thanksgiving Since 1932
- 6: Et Tu, German Bonds? Poor Auction Raises Eyebrows