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Strategies & Market Trends : Bonds & Bond Funds

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From: peter michaelson	12/14/2008 11:03:02 PM
	of 161

Here's an interesting quote I saw today regarding high yield bonds. Don't know if it's true, but Garfin is a BlackRock director and fixed income portfolio manager. "Using simple present value math, Garfin calculates that today's yield spreads discount the most dire economic possibilities. His figures that if an investor put $1,000 into a junk bond fund today and if that fund suffered 20 percent defaults -- each year -- for five straight years, and if only 25 percent of the principal value of the defaulted bonds are recovered through bankruptcy court, the fund value would still be worth $1,000 at the end of those five years." madison.com You can buy junk bond closed end funds at significant discounts to those depressed values.

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