JNK has dropped over $3 in last month. At current yield (9.7%), which is about the same as the interest you will earn in the next 10 to 12 months.
Even if the price does not drop further, you will have to wait a year to earn back the money you lost during last month.
This ETF has lost over 2.5% since 2 years ago (interested included). You simply not getting paid enough interest for the risk. If you want a real bond ETF, buy SHY.
Only a fool will hold this thing.
Do you want to loan money to the public sector which is sinking in debt with spineless pols frozen with fear or to businesses flush with cash and managements erring on the side of caution? And by the way the corps are giving you a much much better return!
The average price per share I paid for this $36.43, and I've been in since last June. Just to get a clear picture of where I'm at factoring in divs paid, I created a spreadsheet to account for share price appreciation + divs paid. At this moment, I'm up 5.5% in PPS; adding in accrued divs paid I'm up 10%. I certainly can't complain, and I would challenge anyone to find a better income generator right now. That said, I do adjust my stops to protect the income I've earned in case this thing plunges.
Why don't you buy EURO bonds or PIIGS bonds ....When you look around the world and rate country bonds including U.S. company bonds are a steal at these levels..You will see more money moving to CORP. bonds as the world debt troubles increase over the next few months..
PIIGS= Porgugal Italy Ireland Greece Spain
Although most here have made a valid comment, the truth is that the returns on this fund are essential random. So those that think they are smart because they got in lower really have just been randomly fortunate.
I say essentially random because I do think that interest rate and economic forecasting does help slightly, but not dramatically.
If you want high return, you HAVE to take high volatility risk, end of story.
The original poster clearly doesn't understand how to measure risk or compare to an appropriate benchmark.
Using weekly returns over the past two years I compared the S&P500 with JNK.
Avg return per week was -.08% for SPY, and was 0.13% for JNK.
Standard dev was 4.22% per week for SPY and 3.84% for JNK.
So we see the Sharpe ratio is -.02 for spy and +.03 for JNK, even on a weekly basis.
Essentially, less risk and more reward, even weekly, and for an extended period of time.
nice work Dr Drys
and I might add the S&P looks fully valued and the economy is out of recession but not overheating, no inflation will keep interest "low for extended period of time" makes JNK look terrific right now
Over the last year i've been in and out a couple of times with nice cap gains along with nice income.
Using the same argument, you should go all in to SHY. Because during the same period, the Sharpe ratio of SHY blow everything out of water.
Since inception of JNK, it has a -2% return, SHY has 8% return during the same period of time, and much much less volatility risk, and I am not telling anyone to buy SHY.
SPY was a terrible investment. JNK being better than terrible doesn't make it good.
You are the one who clearly doesn't understand how to measure risk or compare to an appropriate benchmark.
I haven't lost anything because I haven't sold. And I'm not going to sell because of some silly assed internet troll.
You go right on playing Chicken Little, I'll go right on reinvesting my dividends until I retire 5 years from now. Then I'll start drawing a monthly check off my investment.