No. of Recommendations: 1
howardgt,

You wrote, I tell myself, I gotta stop buying this garbage and I should just wait for the next recession to accumulate more...

I'm not sure a recession is always highly correlated to junk bond yields. Do you have any data on this? True, a recession may provoke a sell-off of some junk holdings as institutions try to limit their default risk, but 2008 / 2009 was a special case.

The last recession was caused by a freeze in credit markets driving up yields in a way not seen in generations. The subsequent inability to borrow (at any reasonable rate) probably caused the ensuing recession.

In most recessions, you can expect the Fed to actually try to push yields down. I don't know what the historical data says here, but I'd imagine junk bonds would just respond by allowing the spreads to widen and actual yields wouldn't rise all that much.

Of course today the Fed hasn't much room to push yield down further, so I suppose a recession tomorrow is likely to have the result you're hoping for...

- Joel
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