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No. of Recommendations: 2
" The history of the junk market suggests that there are 3 states of the junk market:

· “Shooting fish in a barrel:” Spreads are at historically high levels and have priced in Armageddon, so one can blindly buy the whole market with a high probability of earning excess returns as the market normalizes and spreads decline within a year or two

· “Run away:” Spreads are at excessively low levels, investors have gotten stupid with junk, and you will probably be sorry if you buy now

· “Hunt and peck:” Spreads are neither historically high or foolishly low. A modest allocation to junk is probably OK, but the best results will probably be achieved by owning the relatively “clean” credits in this market (BB rated) or by picking specific bonds so as to avoid the clunkers"
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