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May 2015 Perspective: Hi Yield Opportunity of a Lifetime?

May 01, 2015

This month we are hearing from Steve Blumenthal about what he thinks may be “an outstanding investment opportunity.”  Steve is the CEO of CMG Capital Management Group and writes to advisors on a regular basis.  Steve gave us permission to share with you an article he recently wrote for Forbes called, Junk Bonds Are The Investment Opportunity Of A Lifetime, Just Not Yet. To introduce the article, here is Steve himself:    

I circle back to the high yield bond market frequently because I believe it will signal a coming recession. While I provide no guarantees, of course, it has historically done a good job as a leading indicator. Equity markets decline approximately 40% in recession.

I wrote a piece for Forbes this week about how the investors' chase for yield will end badly. The quality of new issuance is - simply junk. A default wave is ahead. That's actually good news as I see one of the greatest buying opportunities of a lifetime in the not too distant future. Remember the 20% yields on high yield bonds in 2008. My two cents is that the coming opportunity will be even better. We'll see.

In the piece, I share a simple trend following strategy you can use to help identify the change in cyclical trend. I hope you find it helpful. For now, the high yield bond trend is positive.


Hold Control on your Keyboard and click to read: Junk Bonds The Investment Opportunity of a Lifetime, Just Not Yet