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Old 01-18-2011, 09:30 AM   #21
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Originally Posted by floatingdoc View Post
look under "price and performance" and "historical returns". There is a table of capital return vs. income return from 2000 to present. That is what i am using
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Also capital loss over last 10 y is 1.5% total
Allow me to repeat myself:
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Originally Posted by ERD50 View Post
Please show your math, I get a different answer. - ERD50
If you really want answers, you are going to have to do a little work. I've lost interest in taking any unreferenced number you throw out, and trying to reverse-engineer where you got it from. I have no idea where you get your 1.5% number over ten years. I'm getting the impression that is the number you want to believe, so you look until you find it.

I finally found the table here (I had to click through to get to it), copied it to a spreadsheet and added a cumulative capital return calculation. I think you'll see their numbers match the NAV change. A drop of about 15% over ten years.

If you want to challenge this, please show your work and where you got your numbers from.



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Old 01-18-2011, 01:03 PM   #22
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erd50 thanks for this chart.

i don't know what the columns are except for the total return and looking at that it seems that 2003, 2009 and 2010 were the only really good years for hycb fund, the others were so so to lousy. but even those good years are NOT THAT good because these were years the equity markets were up huge.

my point is the risk in hy does not look to be well compensated - being in equities is risky too but the returns are better. i bought this fund in the mid $4 range so i'm not doing too bad but this is making me really rethink this allocation to hy in my roth ira! i think we may be fooling ourselves about the wisdom of holding this fund.
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Old 01-18-2011, 03:12 PM   #23
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erd50 thanks for this chart.

i don't know what the columns are except for the total return and looking at that it seems that 2003, 2009 and 2010 were the only really good years for hycb fund, the others were so so to lousy. but even those good years are NOT THAT good because these were years the equity markets were up huge.

my point is the risk in hy does not look to be well compensated - being in equities is risky too but the returns are better. i bought this fund in the mid $4 range so i'm not doing too bad but this is making me really rethink this allocation to hy in my roth ira! i think we may be fooling ourselves about the wisdom of holding this fund.

The thing is that it is still a bond fund... and is not as 'risky' as a stock fund.... the income component is there year in and year out...

I think you are compensated well for the risk... look at the charts comparing it to the S&P (or your favorite stock index) and you will see that even though it might appear to be in lockstep with stocks... its movements are muted because of the income...

Soooo, I think the income componet of it still puts it in the bond category for me...
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Old 01-18-2011, 05:00 PM   #24
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But all of this illustrates what I have been saying: there are times to buy junk and sell junk, but just blindly holding it is not a great idea.

The junk market is starting to get really frothy. Realogy just inked a refi deal. This is an overlevered pig that I am amazed managed to stay out of bankruptcy. It is likely just a matter of time before this thing ends up in BK court.

Ditto same for Univision and Freescale, both of which seem to have the junk market approaching them. Foolish, IMO, and a sign to watch junk (especially the more dubious names) from afar.
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Old 01-18-2011, 05:44 PM   #25
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But all of this illustrates what I have been saying: there are times to buy junk and sell junk, but just blindly holding it is not a great idea.
While I don't disagree that someone with your expertise may be able to opportunistically time the high-yield market; according to ERD50's table, someone who "blindly held" VWEHX for the past 10 years had a CPAR of 6.4%, considerably better than the S&P 500, which had a CPAR of about 1.5% over the same time period. As you know, there have been successful fixed income managers who strategically carry about a 10% allocation to high yield (BEA Associates comes to mind) in the belief that one is being more than compensated for the risk of default by yield-pickup.
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Old 01-18-2011, 09:06 PM   #26
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But all of this illustrates what I have been saying: there are times to buy junk and sell junk, but just blindly holding it is not a great idea.
To put this in context, the OP wants to retire with a 100% junk portfolio. Last year he wanted to draw 100% of the income. Now it seems he wants to draw 60% of the income. The first plan was a disaster, the second plan might work. But whatever the outcome, that is the context of this thread.
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Old 01-18-2011, 11:25 PM   #27
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The thing is that it is still a bond fund... and is not as 'risky' as a stock fund.... the income component is there year in and year out...

I think you are compensated well for the risk... look at the charts comparing it to the S&P (or your favorite stock index) and you will see that even though it might appear to be in lockstep with stocks... its movements are muted because of the income...

Soooo, I think the income componet of it still puts it in the bond category for me...
yes it is a bond fund but if you hold it for return not stability (which what a bond fund is supposed to do in your portfolio) then the risk/return imo is not as good as equity funds. so with that in mind that is why i said what i said. and i still think that for the return it is not a good buy and hold fund. i would rather b&h (and rebalance) tsmi and tismi for growth and stick with bond funds that offer stability to your portfolio like itt or tips and not take the risk and get about 1/2 the reward of an equity fund. ymmv.
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Old 01-19-2011, 07:21 AM   #28
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To put this in context, the OP wants to retire with a 100% junk portfolio. Last year he wanted to draw 100% of the income. Now it seems he wants to draw 60% of the income. The first plan was a disaster, the second plan might work. But whatever the outcome, that is the context of this thread.
OP appears to be smoking crack.

100% Venezuelan Beaver Cheese futures (leveraged) would be a far superior portfolio.
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Old 01-19-2011, 07:53 AM   #29
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hey brewer, when you ask a question on an internet forum you expect reasonable answers to a question.
Last time I looked, crack smokers Dont:

1. Have a 500k house paid for
2. Have a 650k yacht paid for
3. Have a 1.1 M after tax portfolio
4. Have a paid for office building

at age 45....have a nice life.
I will go back to lurking here and glean what I can from some of the people (the few) with some grey matter on this forum
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Old 01-19-2011, 08:24 AM   #30
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Doc,
Thanks for the question. I have 150k in VWEHX and appreciate the thread. I've been lurking here for under a year and always seem to have more to learn than contribute. I didn't realize though, that if someone thought you knew the answer to a question they were required to answer it. But anyway, thanks.
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Old 01-19-2011, 04:58 PM   #31
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hey brewer, when you ask a question on an internet forum you expect reasonable answers to a question.
Last time I looked, crack smokers Dont:

1. Have a 500k house paid for
2. Have a 650k yacht paid for
3. Have a 1.1 M after tax portfolio
4. Have a paid for office building

at age 45....have a nice life.
I will go back to lurking here and glean what I can from some of the people (the few) with some grey matter on this forum
Most crack smokers don't, but plenty of crack dealers do. Perhaps you just like to sample the product?

You seem to have a large chip on your shoulder, but a bit of friendly advice: don't put all your chips on junk. I've done a deep dive on literally hundreds of junk bond issuers. These are not the cream of the crop and the market periodically actually looks at what is under the hood and runs away from them. If these periods last long enough, junk issuers start blowing up even if their businesses do not deteriorate because they are dependent on the market to roll their bonds at maturity. It can get ugly. If their businesses deteriorate at the same time, it can get REALLY ugly (see 2008 through 2010).

I like junk at a price, but we are nowhere near the price level I personally find attractive. Be careful.
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