Talking Down the Book

Woo hoo!

Ajit Jain is talking about increased defaults in municipal bonds, calling Vallejo, CA and Jefferson County, AL as the "tip of the iceberg" among municipalities. Now, that's true. If defaults across fixed income products are at record lows, then it makes sense that defaults will increase in all of these products - RMBS, CMBS, corporates, high yield, municipals, what have you. Its basic math. However, how great is it that he goes before Congress and says this? I'll have to see what tomorrow's action looks like in the closed end municipal funds. Sounds like an opportunity to accumulate one of my longer term holdings.

(For the unfamiliar, Ajit Jain is one of the top honchos at Berkshire Hathaway on the insurance side. It appears he is now the head of Berkshire Hathaway Assurance Corp., the new municipal bond insurer that BRK built to siphon off business from MBIA, FGIC, and all the other monolines.)

Speaking of accumulating, I picked up a few bucks worth of SPXJX the other day, just in time to see a nice pop. Now, its a Japan value fund so it doesn't make sense to trade it. This is a long term investment, and I didn't want to burn up all of my dry powder on SPXJX. Especially since I'm digging into a new small cap tech stock and I want to be able to pick up a few hundred or even a thousand shares of that one. I'll speak on that investment a little more in the future, after I make the move (or not), because it looks like a really nice opportunity.

I know I've said a few times that I like Japan on a long term basis. It is a really long term investment. So I plan to continue accumulating when opportunities present themselves and there are no other worthwhile investments I can make at the time. We'll see if I fall into a value trap. And if I find a better fund, then I'll trade out of SPXJX into it but so far, I haven't found any other Japanese value funds that I find compelling.

Until next time...