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Actually, if I can remember correctly, excluding the 2008 financial crisis, the worst 12 months ever since the beginning of the new Milken era of junk bonds in the 1980s. They never ring bells at bottoms so will just keep probing and exiting with tight mental stops when proven wrong. So based on Wednesday's intraday action in all markets went to 5% junk corporate bonds and pared back to 45% junk munis by Friday's close. Don't feel comfortable with so much cash but can change that in a day or two if necessary. Junk munis are but a penny off all time highs (total return) set Thursday.
Don't know about junk corporates; I'm tempted to first buy more shares in the core low-vol, "quality" equity funds I own when it looks like a general turn toward risk assets is happening.
On munis, the last WealthTrack guest, Dimella of Mainstay muni funds, said he expects he'll stay fairly junky in his HY muni fund for the time being. He cited munis' yield as 95% of T's of same maturity now, down from the 100% + of the past several years but still above the long term 80-some-%. So, to him they still look good on a tax-equivalent basis.
That leaves rates, not competition with Treasuries, as the main risk, and rates have taken such a deep dive, seems pretty certain they'll be higher to some degree in the not-too-distant future. Meanwhile, several muni cef's with really overbought signals are still doing fine. There's got to be a momentum swing coming, just a matter of when.
P.S. Dimella's MMHAX looks like a decent fund - prob'ly competitive with and a little less volatile, up and down, than NHMAX.
Andy, Mainstay's MMHIX (no 5 million minimum at Scottrade) have been in numerous times since 2014. And you are right, not as volatile as the others in its category. However, since around mid 2015, the story has all been PYMDX as it has led the pack because of its allocation to tobacco bonds. That's pretty much been where I have had all my junk munis YTD albeit surprised I haven't been banned by them from overtrading. So if I have to ramp back up in the next couple days it will be in ABHYX which has done very well this year too. I like California munis but they have been overbought until Friday. But I worry the whole muni story is merely a tagging along with the Treasuries so far in 2016 as you alluded to. If rates do begin to rise even more reasons to get more involved in the junk corporates as risk assets get a bid. Of course, bottom line it is and always has been the past year and more all about oil. My other forays into corp junk haven't panned out in 2016 especially when I have increased so not overly confident this time around will be any different.
Thanks for the tip on the Am Century fund, Junkster, wasn't aware of it. I'm about equal weight in PYMDX and NHMAX. The Nuveen yield is the main attraction there; Pimco's done especially great considering how much more they've got in investment grade than Nuveen does.
Comments
On munis, the last WealthTrack guest, Dimella of Mainstay muni funds, said he expects he'll stay fairly junky in his HY muni fund for the time being. He cited munis' yield as 95% of T's of same maturity now, down from the 100% + of the past several years but still above the long term 80-some-%. So, to him they still look good on a tax-equivalent basis.
That leaves rates, not competition with Treasuries, as the main risk, and rates have taken such a deep dive, seems pretty certain they'll be higher to some degree in the not-too-distant future. Meanwhile, several muni cef's with really overbought signals are still doing fine. There's got to be a momentum swing coming, just a matter of when.
P.S. Dimella's MMHAX looks like a decent fund - prob'ly competitive with and a little less volatile, up and down, than NHMAX.