March 5, 2008
To quote one of the most overused investment credos of our day: "Be fearful when others are greedy, and greedy when others are fearful." Bond King Bill Gross took Buffett's words to heart last Friday when he bought $1.5 billion in municipal bonds in the midst of chaos. Seventy percent of auctions for muni bonds are failing. And now California, the country's largest issuer, will no longer use bond insurance. No one is sure, including Gross, if the bond insurers will lose their AAA ratings. Nonetheless, Gross says he bought at "very attractive prices," and the bonds have improved "substantially" since then.
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