Outside the Box

Tabasco and Variable Rate Munis

John Mauldin

February 18, 2008

As everyone by now knows, there is chaos in the municipal bond market. This week's Outside the Box is from good friend and Maine fishing buddy David Kotok of Cumberland Advisors (www.cumber.com).

Briefly, he outlines the problems we are seeing in munis, but then he goes on to warn of the possible next shoe to drop in closed end municipal bond funds. David is one of the smarter advisors I know, and when he points out a problem, I would suggest taking action.

Also, as things are getting more dicey in the markets, I may send out more than one issue of Outside the Box in a week when I see something that is worthy of your attention. And remember, we have been through tough markets before, and we always get through them. The key is to make sure you get through them with your capital as intact as possible.

John Mauldin, Editor
Outside the Box

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Tabasco and Variable Rate Munis

By David Kotok

The Muni world has been shocked by two types of variable rate dysfunctions. A third one is coming so we will save that until the end of this missive.

Auction Shock.

The first shock came in the auctions of variable rate high grade tax-free municipal bonds. Most notable was the recent auction of the Port of NY & NJ which ultimately cleared at an interest rate…

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