Word: yielded
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...cultivating the leadership only, Bush was trying to create a wartime executive committee that could dictate its will to Congress. Where Clinton had, as a governing tool, courted conflict with Newt Gingrich, Bob Dole and even Democrats, Bush thought charming the congressional leadership would yield better results. Like his father, Bush puts politicians into two breeds: on the one hand, "good men" (and women) who can get things done, and on the other hand, obstructionist poseurs. And good men can hail from either party. It's why Bush gives out his highest praise to liberal archenemy Ted Kennedy...
...course, not all junk-bond funds are created equal. Those heavily concentrated in telecommunications bonds have been beaten up the worst. Examples include the 26% slide so far this year in the Morgan Stanley High Yield Fund and the 19% drop in the Invesco High Yield Fund--at a time when the junk-fund benchmark is up modestly. Scott Berry, an analyst at Morningstar, advises staying away from such funds because most telecom bonds will remain depressed. Two of his favorite funds are Northeast Investors Trust and Pimco High Yield, which have shied away from telecom bonds and, in Pimco...
Junk bonds, on the other hand, have rarely been so cheap. They carry an average yield of about 12.25%, vs. about 5% for the benchmark 10-year Treasury bond. The difference between those yields, known as the spread, represents a hefty premium of 7.25 percentage points. The long-run average spread of junk over T-bonds is just...
...reason for the higher spread is that we're in a recession and junk-bond default rates have been rising well beyond the average 3.5% a year. Nearly 1 in 10 junk-bond issues has stopped paying interest, and Martin Fridson, chief high-yield strategist at Merrill Lynch, predicts the rate will rise further next year--probably narrowly topping the record default rate of 10.3%, in 1991. But that will be the worst of it, he says, and he notes that "the last time we had record default rates, we had record returns...
This pattern makes sense. Investors look ahead to recovery, when the default rate will drop and make the lush yields on junk bonds more secure. That leads investors to bid up junk-bond prices, resulting in a capital gain. "We've already seen some junk bonds rally," says John Fenn, head of high-yield investments at J.P. Morgan Fleming Asset Management. Next year, he believes, junk bonds will deliver on their eye-popping 12% yields and produce a capital-gain kicker worth an additional 5% to 10%--for a total return of about...