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So far, 1997 has been anything but a picnic for investors,unless you're rooting for the ants. Volatility in the stock andbond markets and unpredictable interest rate moves have madeinvesting a party you might not want to be invited to. But if everycloud has a silver lining, every investment strategy has a secretweapon, and this one can be found at the bottom of the barrel--junkbonds.
Don't flip that page: Junk bonds have come a long way, baby.The last many investors heard about junk bonds or, as they'recalled in polite society, high-yield corporate bonds, might havebeen in connection with leveraged buyouts, corporate raiders,Drexel Burnham Lambert, the predator's ball and the infamousMichael Milken. The late 1980s and early 1990s saw the unravelingof the high-yield corporate bond market due to aggressive issuingof debt from the lowest ranks of corporate society. While millionsof dollars were lost on those highly speculative issues, thesebonds look as different now as Milken does without his toupee.
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