Hidden Risk In Muni Bonds - Dependency On Stock Market

Allan Roth in his CBS MoneyWatch blog makes a good point about a long-term risk for muni bonds. Many cities and states have a lot of pension liability in the next decade. Their pension investments are heavy in stocks. If the next 10 years are like the last 10 years in stock market performance, many muni bonds may experience massive defaults. So investors will not only have a big loss in stocks but also in their muni bond portfolios.