I thought that the recent increase in treasury yields would have punished junk bonds quite a bit...if an ultra safe note goes from 4.75 to 5.25 then why would you still be willing to take on the extra credit risk of junk for an even smaller spread over Ts? Yet when I compare how the price of VWEHX (vanguard high-yield) has changed over the last three months compared to VBMFX (Vanguard overall bond market) there is not a whole lot of difference and it even appears that the junk fund held up better than the overal bond index.
All I hear is that junk is overpriced and that spreads over like term T's are at all time lows but even with the recent volatility in the bond market this doesn't seem to be correcting itself. What gives? Is junk going to have to start defaulting before anything will change?
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Join Date: Dec 2003
Location: Losing my whump
vanguards fund is only yielding 2% over current 5 year cds...and 1% over what you could get last year.
Not too encouraging.
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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