Tuesday, April 01, 2008

Best Buys in High Yield

Above are some credits trading well above what is implied by their actual default probabilities. If happy days are here again, these are good buys. But know that since 1950, if you look at the 20 days closest to the 3.6% jump we had yesterday, the future 12 month return on the index was only slightly greater than its average over the period. In other word's, one datapoint, a big day, doesn't say so much.

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