Warren Buffett: Buy stocks, beware bonds

[A HERETIC I AM]

26. I'm curious where he got the information.

I can't explain it if I don't know the source or context.

Here....allow me to show you but ONE source that supports my contention that junk bonds don't get bid into premium territory;

http://investment-income.net/rates/high-yield-bonds-rate-page


Scroll down toward the bottom for the short list of junk status bonds they provide. If you read that list carefully, you'll note that almost all of them are selling between 61.00 and 95.00. That is percent of par or $1000.00. Note that there are several that are selling for more than par and one is even priced at 107, but it is callable at 105.750 on the 28th of this month AND it has an 11.5% coupon.

If a bond is continuously callable by the issuer AND will call for a premium to par, then it makes perfect sense for it to be priced at or near that call price. But the vast majority of the bonds listed on that page, and I admit, it is but a tiny fraction of all similar securities, are ALL priced at a steep discount to par.

I am quite confident that I would find similar pricing were I to look for a more extensive list.