Noted Bond Investor Says Meredith Whitney Missed the Target on Munis
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Meredith Whitney made a great call in Citigroup (NYSE: C) in 2008, but has made lots of bad calls since then. According to one "Bond Queen," she was completely wrong about her municipal bond expectations.
Earlier Wednesday, CNBC had Alexandra Lebenthal, President and CEO of Lebenthal & Co., on to talk about bonds. One thing she hinted at was lack of knowledge by Whitney about the bond market. In particular, Lebenthal said she's come up with a new measure of risk called "knowledge risk." Under this model, Lebenthal asks, "Is the person who is talking about municipal bonds, corporate bonds, equities, what have you, knowledgeable and should people be listening to them?"
Lebenthal said she's been in the bonds business for 20 years -- her father James is one of the more notable investors -- and grew up with bonds for 20 years prior.
In 2010, Whitney said the muni bond market would suffer an implosion "of a thousand suns" [we're paraphrasing] and losses would amount to $100 billion or more. However, in 2011, muni bonds ended up rebounding and finishing up 10 percent on the year.
CNBC noted munis have sold off over the last two months, dropping 4 percent over the period. Still, the segment continues to see a net inflow of money amid the drop.
Whitney did not issue a comment on the story.
Earlier Wednesday, CNBC had Alexandra Lebenthal, President and CEO of Lebenthal & Co., on to talk about bonds. One thing she hinted at was lack of knowledge by Whitney about the bond market. In particular, Lebenthal said she's come up with a new measure of risk called "knowledge risk." Under this model, Lebenthal asks, "Is the person who is talking about municipal bonds, corporate bonds, equities, what have you, knowledgeable and should people be listening to them?"
Lebenthal said she's been in the bonds business for 20 years -- her father James is one of the more notable investors -- and grew up with bonds for 20 years prior.
In 2010, Whitney said the muni bond market would suffer an implosion "of a thousand suns" [we're paraphrasing] and losses would amount to $100 billion or more. However, in 2011, muni bonds ended up rebounding and finishing up 10 percent on the year.
CNBC noted munis have sold off over the last two months, dropping 4 percent over the period. Still, the segment continues to see a net inflow of money amid the drop.
Whitney did not issue a comment on the story.
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