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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (109331)	12/7/2001 11:51:05 AM
From: Jordan Levitt	Respond to of 152472

<<the average debt yield throughout telecom today is around 17%. the average at the market peak in 2000 was 8.9%. imo 17% is a business plan destroyer. >> To be sure...But (you knew there had to be a "but"), In downturns, the spread between high yield bonds and treasuries always widens more than it should (see 1990 for example). This time is no exception, if there is any type of recovery (even if doesn't worsen) those spreads will narrow considerably, thus bringing down the cost of borrowing. The 15 year avg. spread of high yield over ten year treasuries is around 450 basis points, currently this spread is around 900 basis points. This effectively prices in default rates higher than have ever occurred in history. So what does this tell us ? Well, nothing about a particular company's plans , other than the obvious fact that 17% money is too expensive for companies to expand. However, it tells me that you can invest in a high yield bond fund and receive 11% coupon after fees and ultimately earn a significant capital gain as those spreads narrow. Interestingly, in high yield (in a diversified pool), the worse it gets, the safer it gets as you can tolerate higher default rates, and your capital is still protected. All this with less risk than holding stock. Seems a reasonable place for a few sheckles to me.