High-Yield Bonds "Extremely Overvalued" For Longest Period Ever

Tyler Durden's picture

The high-yield bond market has been "extremely overvalued" for a record nine consecutive months, according to Martin Fridson, a money manager at Lehmann, Livian, Fridson Advisors LLC. As Bloomberg Brief's Matt Robinson notes, the streak breaks the previous record of eight months set in October 2006 to May 2007. As Fridson notes, "overvaluation (whether extreme or non-extreme) has put together an unbroken streak of 25 months, nearly double the previous record."


It appears Yellen was right about something as Frisdon warns "the pressure to find yield is causing investors to rationalize investing in paper that is subject to major price risk... this has to be a concern to those who believe, as I do, that the market distortions of 2007 aggravated the subsequent dislocations experienced in 2008."


Source: Bloomberg Briefs

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Al Huxley's picture

Stop looking to the past for references.  Don't you understand that this time it's different?

Pladizow's picture

Isn't this Gundluach's play?

disabledvet's picture

"This time is diffident!"

NotApplicable's picture

Overvalued? What is this value of which you speak?

Pladizow's picture

“I conceive that the great part of the miseries of mankind are brought upon them by false estimates they have made of the value of things.” - Benjamin Franklin

ShorTed's picture

Lehmann, Livian, Fridson Advisors LLC said so, obviously it must be true.

Bill of Rights's picture
Obama administration sending military advisers to Ukraine within weeks



ShrNfr's picture

Putin sending military "advisers" to Donetsk within the week I suspect. Just a bunch of peacekeepers to maintain a cease fire, you know. Nothing to see, move on.

disabledvet's picture

Or maybe "this time is indifferent!" (Perhaps downright caustic?)

buzzsaw99's picture

even calling them "bonds" is a misnomer. no collateral behind most. penny stocks minus the potential upside is what a lot of them are.

disabledvet's picture

Really? Wow!

"And now for a reading of Green Eggs and Ham I Am"!

ShrNfr's picture

What happened? Did they put that on Obama's teleprompter and he gave the whole thing as a speech before somebody caught him and made him stop??

ShrNfr's picture

Markets can remain insane longer than you can meet margin calls.

juggalo1's picture

If the price didn't go down they weren't overvalued.

NOTaREALmerican's picture

As the guy this morning posted (a link) and the guy yesterday (with a article) said:   The price NOW is only reflecting the expected future performance of the political entities that set the prices.    So,  the longer the Fed (and other CB) work their magic the higher the prices should go. 

If Japan's CB can keep the ball-in-the-air for 24 years, surely our CB can do better.

q99x2's picture

Time for the banks to invest in WB7 art.

Ratscam's picture

shorting high yield bonds?
Any suggestions on instruments?