When credit locks up, junk bond prices fall rapidly, and you see more defaults. The opportunity to make money with junk is to buy a diversified collection of them when the market declines.

Look at the charts from some of the mutual funds or ETFs like PIMCO High Yield Instl (PHIYX), or Northeast Investors (NTHEX). Very volatile stuff.

Keep in mind that junk bonds are not representative of the economy as a whole -- they cluster in certain industries. Retail and financials are big industry segments for junk.

Also keep in mind that the market for these things is not nearly as liquid as the stock market. If your investment choice is really a sector investment, you might be better served by investing in sector funds with stocks that trade every day versus bonds whose market price may be difficult to determine.

When credit locks up, junk bond prices fall rapidly, and you see more defaults. The opportunity to make money with junk is to buy a diversified collection of them when the market declines.

Look at the charts from some of the mutual funds or ETFs like PIMCO High Yield Instl (PHIYX), or Northeast Investors (NTHEX). Very volatile stuff.

Keep in mind that junk bonds are not representative of the economy as a whole -- they cluster in certain industries. Retail and financials are big industry segments for junk.

Also keep in mind that the market for these things is not as liquid as the stock market. If your investment choice is really a sector investment, you might be better served by investing in sector funds with stocks that trade every day versus bonds whose market price may be difficult to determine.