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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: yard_man who wrote (87681)	12/29/2000 11:54:32 AM
From: Knighty Tin	Read Replies (3) \| Respond to of 132070

Tip, I've never seen the place for junk bonds in my cap app portfolios. If I have confidence in the recovery of a down and out co., I am much more likely to buy the stock. The upside is hugely greater for the risk involved. Both the junk and the equity have a downside of going to zero, but the stock can far outpace the bond on the upside. As far as income goes, you know I am an option dude. Why would I buy junk for income when I can make as high a yield or even higher by using option techniques to enhance Treasuries? When I managed the govt. securities funds that used options and futures, we typically outyielded junk funds and were safer by a factor that cannot even be calculated. Both have interest rate risk, but only junk has credit risk.

To: yard_man who wrote (87681)	12/30/2000 10:26:29 AM
From: Freedom Fighter	Read Replies (2) \| Respond to of 132070

TIA, I understand Warren's thinking fairly well. I think within any group that washes out you can usually find something good. Investors tend to throw everything out the window. I read that some of the junk he is picking up is selling for .60 on a dollar, but that in a bankruptcy you could recover .80. So there's almost no downside and a lot of upside. I think he is isolating some very special situations, but I can't vouch for the details above. Wayne