In Chasing Yield, Investors Plow Into Riskier Bonds, Tom Lauricella and Katy Burne of The Wall Street Journal highlight the dangers of the current investing environment in one succinct opening paragraph. To wit:
“Large investors are rushing into the riskiest corporate bonds, frustrated by low interest rates on safer investments and convinced that even companies with shaky finances are in little danger of default.”
At Young Research we regularly council investors to keep emotions out of their investment decisions, never to reach for yield, and to demand a margin of safety. If this Wall Street Journal article is correct, it would seem that large investors are doing the exact opposite. They are making investment decisions out of frustration that entail reaching for yield in securities lacking a clear margin of safety. Probably not the best way to achieve long-term investment success.
You can read the full article here.