How do these Financial PHD Geniuses keep their Jobs?

CNN Money came out with an article around Oct. 3, 2011 saying;

“Investors became so nervous in the past two months that they're not willing to gamble on risky junk bonds anymore -- despite the lucrative promise of high yields.”

“The junk, or high-yield bond market has tumbled along with the stock market, which suffered its worst performance in three years.. Traders say it's eerily reminiscent of the months leading up to Lehman Brothers' bankruptcy in 2008.”

A Bond Investor is not a Bond Trader. The way you invest in bonds for the short-term or the long-term depends on your investment goals and time frames, the amount of risk you are willing to take and your tax status. Individual bonds mature.

A Bond Trader is a person who buys and sells bonds for short term gain. They base their trades on technical analysis and charts. These people are not investors but speculators.

Here is the reason why I have been telling you investors to buy junk bonds below par or $1,000 because they usually mature at $1,000.

The article goes on to say, “Before August, the high-yield market was soaring, and investors were on pace to generate annualized returns of roughly 11%. But shortly after the stock market started gyrating wildly in August, investors sold off even the safest of the junk bonds, which are those rated BB. These BB bonds are down roughly 5%, and the CCC bonds are down 13% for the year.”

The article is correct but if you lock in your yield at 11%, you will get 11%. If you have your money in a mutual fund, you can’t lock in your yield. That is why I tell you to buy individual junk bonds if you want to lock in your yield. A mutual fund is a speculative investment. Personally in this market and this economy, I would only invest in S&P Rated B- to BBB bonds. Your only fear is corporate bankruptcy of the underlying company. My portfolio as of Oct. 26, 2011 is back to my July 1, 2011 levels.

If I had the time and money, I would buy;

Lender Processing Services Inc. 8.125% of 07/01/2016

Recent Price $952.30;
Yielding 9.39% with an S&P Rating of BB+.

Lender Processing Services, Inc. (LPS) is a provider of integrated technology and services to the mortgage lending industry, with mortgage processing and default management services in the United States. The Company operates in two segments: technology, data and analytics and loan transaction services, which produced approximately 31% and 69%, respectively, of its revenues during the year ended December 31, 2010. The Company's technology solutions include its mortgage processing system, which automates all areas of loan servicing, from loan setup and ongoing processing to customer service, accounting and reporting. Its technology solutions also include its desktop system, which is a middleware enterprise workflow management application designed to streamline and automate business processes. Its loan transaction services include its default management services, which are used by mortgage lenders, servicers and other real estate professionals.