Assuming one is looking for a fairly high-risk, high-reward investment, what are the advantages and disadvantages of a diversified stock portfolio (e.g. an S&P 500 index fund) vs. a diversifed high-yield (junk) bond portfolio? The most important questions I'm interested in are:
Historically and theoretically, how much more/less risky and potentially rewarding are junk bonds compared to stocks? Qualitatively, how do the risks differ? For example, is one asset class more vulnerable to infrequent but large losses while the other is more vulnerable to more frequent but less severe volatility?
How strongly is the return in the junk bond market correlated with the return in the stock market over medium and long time horizons? Do stocks and junk bonds have much value in terms of diversifying each other's risks or are they mostly vulnerable to the same risks?
Are there any major tax considerations that favor one of these over the other?