Not in 2010, because state government budgets will be brutal, the adjustment process for government union ees will be hit or miss state to state, and tax revenues have not stopped falling, but I will invest in municipal bonds.
1. Taxes - Taxes will go up. Will go up. They will go up either through the expiration of the Bush tax cuts, the expiration of some tax credits enacted in the last few years to help with the recession, or altering which rates go up most likely screwing anyone making over 40K annually. Dirty trick increases will be a national sales tax or value added tax like they have in Europe. This will tax consumption, which 'might' curtail spending forcing people to put that money to good use somewhere. Another dirty trick increase would be an increase to the capital gains tax, not to 20% but more like 25%. Forget the fact that people now have to pay medicare taxes on capital gains (WTF???), but the straight CGT rate could jump to 25%. Why bother trying to trade and make money through stock investing at a preferred 'CGT' rate when the passive income of municipal bonds is tax free?
Taxes are a critical thing to consider with every investment. If you can defer when you pay taxes, that is great. If you can avoid taxes on your investments, that is better. I want to hold this investment in a non-retirement fund. I'd like to be able to use it when needed, and too many tax sheltered investments have penalties for withdrawals under age 60. If the worst we have to pay for taxes is Indiana's state incoem tax, I am OK looking at munis.
2. Besides our precious metals investments and the cash we have in money markets accounts, we are heavy on stocks. I'd like to diversify with bonds, but Treasuries look like a poor choice right now, and I do not trust corporates as they have been on a tear the last year.
First, we need to buy furniture.
UPDATE: IRS release shows that rich Americans have dumped muni bonds. If this continues and munis have to clean up their books rather than get Federal bailouts, I would be intrigued by year end 2010.
UPDATE 2: Pension liabilities are still a huge threat to state and muni finances unless the munis and states enact reforms that don't 'grandfather current employees'. They have to affect some of the current ees.