Levitation Coming In Junk Bonds

Levitation Coming In Junk Bonds

Junkyard





getty





"It happens that certain material appears in the dream-content which cannot be subsequently recognized, in the waking state, as being part of one's knowledge and experience.“ - Sigmund Freud, The Interpretation of Dreams



Diamonds should no longer be a girl's best friend. I'd exchange rocks, which yield zilch, for BB debentures yielding 5% or more. Basic to the valuation structure for everything in the world is the "cost of carry.“ I remember paying 7.5% for deal money in the eighties. Today I finance high-yield investments for 1% or next to nothing.



Calling a bond junk ain't descriptive enough. Five-year Treasuries now yield 25 basis points, down from 1.4% beginning of year. The spread between BB debentures with five-year duration is at 5%. Anyone owning five-year Treasuries should switch some capital herein.





My experience with junk goes far back, before Mike Milken, late fifties. My brother, George was a major dealer in real junk. Dealers were tied in with teletype machines, but nobody discussed junk. It was mainly about spare parts.



If you wanted a rear bumper for a 1962-model Cadillac sedan, you called the local junk dealer. If he didn't inventory it,