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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Jacob Snyder who wrote (51193)5/1/2002 6:39:19 PM
From: carranza2  Read Replies (1) of 54805
 
You can talk around this issue all you want, but there is an iron-clad, unbreakable connection between risk and return. And, by definition, a junk bond (or a junk bond portfolio, no matter how structured) is not a cash equivalent.

I couldn't agree with you more. The issue is at what level is the risk acceptable to you. With Moody's predicting junk bond default rates to be at 7% by the end of the year, and with enough diversification among the issues Q bought, it seems to me that the risk is acceptable for 10% of Q's cash. You've obviously made up your mind. No problem.

These are ultimately judgment calls. Only the rear-view mirror will tell us if Q invested properly.
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