It seems to me that high-yield, and particularly long-dated high-yield, will quickly lose 10 to 15% of their principal value as soon as rates start up. It looks like a game of musical chairs and everyone assumes they will not lose a seat in the near future.

But barring default, if one bought bonds at good prices for the long term, this "bubble" bursting doesn't affect your bottom line. Coupons keep coming and principal gets paid back (Again, barring default).

And in fact, the bubble bursting will simply provide more buying oppurtunities for you to reinvest your coupons and returned principal in.

Scott