Mom’s Buying Munis

My mother (that I love more than anything on the planet) is the near perfect contrarian signal when it comes to investing.  Rarely do we actually talk investing, but when we do it is usually in the form of “should I sell X?” after X has declined by Y.

She has probably way too much US stock exposure for her risk tolerances (although her cost basis on some stocks is quite remarkable), and so we are rotating her out of the expensive (IMO) US stock market into bond opportunities, and balancing out the foreign exposure to over 50% of equity exposure.  Specifically, she will be adding muni ETF and CEFs.  The broad AAA indexes have declined by 7-10%, and historically that is incredibly rare – it only happens about once a decade.  If they continue down another 5% she will buy more, and if they continue down to a 20-25% drawdown I expect there to be some massive opportunities in the CEF space for a great investment.

Chart is through July, so there is a little more DD than you can see on the chart.