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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Wed, 07/23/2014 - 15:28 | 4994548 Al Huxley
Al Huxley's picture

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

Wed, 07/23/2014 - 15:28 | 4994558 Pladizow
Pladizow's picture

Isn't this Gundluach's play?

Wed, 07/23/2014 - 15:30 | 4994566 disabledvet
disabledvet's picture

"This time is diffident!"

Wed, 07/23/2014 - 15:45 | 4994640 NotApplicable
NotApplicable's picture

Overvalued? What is this value of which you speak?

Wed, 07/23/2014 - 15:48 | 4994649 Pladizow
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

Wed, 07/23/2014 - 15:42 | 4994625 ShorTed
ShorTed's picture

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

Wed, 07/23/2014 - 15:27 | 4994550 Bill of Rights
Bill of Rights's picture
Obama administration sending military advisers to Ukraine within weeks



Wed, 07/23/2014 - 15:31 | 4994569 ShrNfr
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.

Wed, 07/23/2014 - 15:31 | 4994577 disabledvet
disabledvet's picture

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

Wed, 07/23/2014 - 15:28 | 4994553 buzzsaw99
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.

Wed, 07/23/2014 - 15:28 | 4994556 disabledvet
disabledvet's picture

Really? Wow!

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

Wed, 07/23/2014 - 15:33 | 4994582 ShrNfr
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??

Wed, 07/23/2014 - 15:33 | 4994588 ShrNfr
ShrNfr's picture

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

Wed, 07/23/2014 - 15:35 | 4994592 juggalo1
juggalo1's picture

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

Wed, 07/23/2014 - 15:43 | 4994627 NOTaREALmerican
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.

Wed, 07/23/2014 - 15:53 | 4994674 q99x2
q99x2's picture

Time for the banks to invest in WB7 art.

Wed, 07/23/2014 - 17:56 | 4995248 Ratscam
Ratscam's picture

shorting high yield bonds?
Any suggestions on instruments?

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