"In this game the market has to keep pitching, but you don't have to swing. You can stand there with the bat on your shoulder for six months until you get a fat pitch." –Warren Buffet
There are two sides to every rational argument. The real problems faced by a number of local governments have caused investors to flee the municipal bond market, as shown in this article. When one considers these issues with Meredith Whitney's view that muni bonds are facing collapse, there is little wonder why there is so much nervousness among investors.
These views should be considered in the context of other opinions, including those of Bill Gross, who believes that the impact of a slower economy will not be as severe. Going one step further, Jeff Gundlach of DoubleLine Capital believes that muni bonds represent a better bet than the high yield sector, since the former has about the same after-tax yield and much less chance of default.
