And the beat goes on - junk bonds at all time highs once again

Hiyield007

This evening will see the proxy and benchmark for the junk bond market - the Merrill Lynch High Yield Master II Index - once again at all time historic highs. I wish I could post a chart but my technical expertise is zilch. This index, which is a total return index (includes daily dividends) has been making a series of all time highs on a regular basis since early August 2009 and is now some 45% above it pre 2008 highs. That's impressive considering the various stock indexes - Dow and S&P - still labor below their pre 2008 highs. This bull in junk has been running since December 2008 and shows no signs of abatement with defaults still low and spreads between Treasuries of similar maturities still historically high. Then again, can't argue with those who say junk could be in the initial stages of a bubble. That's because a lot of weak hands recently have migrated to junk desperately seeking yield and we have also seen a host of new junk bond ETF offerings and the closing of several large open end junk bond funds. In the meantime, it remains the same mantra as the 90s with tech and small cap growth - enjoy the ride and exploit it for as long as you can and with as much as you can.

catch22

Howdy HY007,

Just below this graph are a few tools one may use to also adjust or add some other data, time points. Also a text write for those who choose to learn more about the index.

Merrill Lynch High Yield Master II Index

Regards,
Catch

Hiyield007

Thanks Catch, I like your link because it shows a chart from 96. I get my data and chart (it only goes back two years there) from the BoA/Merrill site at the link below. In the top box where it reads Index/Bond ID the symbol to use for the Merrill junk bond Index is h0a0. Note the 0 is the numeral 0 not the letter O. I actually have data on this index back to 1988 and have a chart since that time that updates daily. The data and updating chart was given to me as a birthday present and one of my best presents ever.
Bonds, especially junk bonds, and much more so than the more volatile stock indexes, are so much more amenable to simple trading methodologies.

http://www.mlindex.ml.com/gispublic/bin/MLIndex.asp

catch22

HY007,
Thank you for the link. I will consider registration at the site.
I have attempted to place H0A0 into various chart sites over the past few years; but apparently BA/ML doesn't not allow this.
Also, I do follow Martin Fridson, when he has any public blips about the HY area. He was a Merrill HY stategist in years past, and is responsible for the rework of the index as it stands today.
If you choose to note; how many HY/HI funds are in your mix today, versus 2009 or2010 and which ones are your preferences?
Lastly, although HYG and JNK are slightly different in composition from one another, and are not active managed; I do watch these too for potential clues.
A note from last week regarding HY....HY money inflows
Thank you again for your time.
Regards,
Catch

Hiyield007

Catch, if when you clicked on the link, it required a registration you can put in any e-mail address, valid or not. As for my junk mix, I pretty much stick with whichever one has the most momentum but I combine that with a volatilty scan as I don't like excessive volatility. So I spend a lot of time looking at the top 40 junk funds at Morningstar (Fund Quickrank) and then the past month, three months, and YTD performance. I also eliminate any that have loads or short term redemption fees beyond five days. I mention the five days because the one I have been in the most the past few years has been WHIYX (Ivy) which does have a five day short term redemption fee. Presently for reasons I won't get into, besides WHIYX, I also have PHYDX, STHTX, and MNHYX) I try to ride the trends up for as long as possible and exit after any 1% to 1.25% decline from any highs since my entries. As for entries, after being sidelined in cash, I look for a particular momentum pattern on the NYSE with the last junk bond buy being triggered on the close of June 6 and the one before that at the end of November 2011 (and then a sell in May 2012) I love junk bonds because of their trend persistency combined with their low volatility. That's probably the reason I wouldn't get near a junk bond ETF with a ten foot pole as they don't have that same trend persistency and low volatility.

Investor

@HiYield007, are you Junkster from old Fund Alarm board?

fundalarm

Reply to @Investor: called him before, but to no reply. if not junkster, then his identical twin!

Hiyield007

Yes, Junkster from old board. Believe it or not, I couldn't recall that handle (or I would have taken it) when I signed up for this board recently. Won't be here too long, kind of my last gasp on discussion boards as I fade into the sunset. Not much to offer as I am 100% about the open end junk bond funds. They have really outperformed the stock indexes since the pre 2008 crash highs with junk some 47% higher while stocks have yet to even take out their old highs. I keep thinking some day in the not too distant future this huge divergence since late 2007 (and the massive inflows to all sorts of bond funds versus outflows from domestic equity funds) will revert back in favor of stocks. But who knows, maybe the demographic trends will be too much to overcome.

Investor

Reply to @Hiyield007: Hey welcome back and I hope you stay around. You make good discussion and I am sure there would be others wishing you stick around and bounce ideas every now and then. I am sure David can arrange you to get your old FA handle as well.

Even if you cannot post or read regularly, you can probably show up every now and then to say hello and exchange a post or two.

fundalarm

Reply to @Hiyield007: don't forget that while junk is correlated to stocks, it is also being priced as spread to treasuries. the yield on those collapsed since late 2007 thus making HY movements more pronounced.

johnN

related - bond investing 101
https://www.edwardjones.com/groups/ejw_content/@ejw/@us/@graphics/documents/web_content/web231124.pdf

ron

I'm new to junk bonds and only couple months ago bought FEHIX First Eagle High Yield. I like the family alot and own the global SGENX. Perhaps I should consider adding $$$.