Remember junk bonds from the days of Michael Milken, big hair and Jacko before his transformation?
BusinessWeek just reported on the hot junk bond market. This was followed up by support from Bloomberg. com, Jeremy Grantham and Merrill Lynch reports – sounds like a critical mass of opinion. Why the rally?
Junk bonds are safer than stocks. Corporate bondholders are ahead of the stockholders to get a piece of the pie, in the event of a liquidation. Corporate earnings have been weak, to say the least, driving down the price of stocks. And interest rates are close to zero. We need returns somewhere!
