Larry House

Take a Look at Junk - Barron's

I have owned HIX but don't now. I agree with the comment that it is just too soon because junk bonds will mirror the economy and act much as stocks will. I prefer to take a chance on Bill Gross and have put money in PTTDX, which is over 80% in cash, and HABDX, which is almost 60% in cash. I trust (and hope) if anyone can find value in fixed income right now he can. I prefer, rightly or wrongly, to have money in a managed fund right now that has the cash to buy discounted securities as they become available. With such a flight to safety, junk bonds are the last place I want to be. Months ago I bought some A-rated bonds, investment grade, short maturities. I bought them for safety and secure income with stocks looking so bad. Guess what? They became junk bonds (Lehman Brothers), and none of the rating agencies gave any warning that they were so risky. What really concerns me are the many, many companies with BBB and A-rated bonds that may become junk in the next couple of years. Buy quality, accept the lower yield and protect your capital.