August 22, 2014

Love Muni Bonds - hate Social Media

My favored asset class is still closed-end municipal bond funds, even though they are up by over 15% year-to-date. Discounts to net asset values remain in the high-single-digit area,d and after-tax and taxable-equivalent returns remain attractive.

My least favorite asset class is generally many components of the social media sector.

Though I have a number of individual short positions on, only the most facile investors should be short during this anticipated market decline. Index fund plays such as shorting S&P 500 ETF (SPY) or PowerShares QQQ (QQQ) make the most sense. 

Short-selling requires recognition of the asymmetry of the exercise and that certain stocks (with high short interest) should mostly not be shorted because the pain of occasional short squeezes is not pleasant

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