Heyer Capital, LLC

investment management and timely advice from a local CPA (Fox Valley, Wisc.)

Junk Bonds

with 2 comments

My October article on Junk Bonds, or euphamistically “High yield” bonds, has generated a fair bit of readership, so I’ll offer an update:

Bond prices have fallen, and yields and spreads have increased. And I don’t think the trend will reverse soon, as the bond prices of tracking ETFs are hovering right at 52 week lows, and junk bond spreads are at records, if I understand the data correctly. I’m staying clear for now, as a trend in motion tends to stay in motion, and fighting the trend or picking a bottom typically just leads to pain.

Some tickers to watch are JNK, HYG, and Vanguard’s VWEHX.  These are not recommendations for you, but a means for you to learn, observe the market, and to track prices.

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Written by heyercapital

December 5, 2008 at 1:30 pm

Posted in Uncategorized

2 Responses

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  1. Great post in HY bonds. I completely agree that they are the best risk/reward play for a recovery in the US economy. I think there is significant risk in the US equity market given the vol – very hard to have a sense of where things are going to settle out from a valuation perspective. I actually buy HY bonds directly rather than through a fund. I like to have control of the names.

    BearCaseNYC

    December 14, 2008 at 12:55 am

  2. BTW, I have been researching some funds and like STHBX. Looks to have stayed clear of LBO debt and they also buy junk bank debt which I think gives them some more flexibility. Have a 10+ year track record as well.

    BearCaseNYC

    December 14, 2008 at 2:05 am


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