This Junk Is Trash By Tim Melvin About this article: Last week junk bond mutual funds saw net inflows of $534 million, the 11th week in a row that money came into junk. Since December the ML High-Yield Index has risen about 12%. In a world of low-single-digit interest rates on government bonds and certificates of deposit, investors find the 15% spread over comparable maturity treasuries too attractive to ignore. This is plain old yield-reaching on the part of retail investors. I have seen other cycles in which this happened and it always has the same ending. Yield-reaching is somewhat akin to skydiving with no parachute: It initially may be exhilarating but the ending is brutal. Junk bonds are one of my favorite playgrounds. In 2001 and 2002, I was buying junk with both hands, finding bonds trading at half my bankruptcy appraisal, which was still current on coupons. Everyone thought I was insane. No one... Or, call us at 1-866-321-TSCM (8726) Monday-Friday, 8 a.m.-6 p.m. ET. Outside the U.S. and in Canada, call 1-212-321-5200.

If you choose a 14-day free trial of RealMoney and you do NOT call to cancel within those 14 days, you will pay $129.95 — a $100 savings off the regular annual subscription price of $229.95. Unless you cancel before the end of that year, your subscription will automatically renew for another year at the then-current subscription price.

Offer applies only to new annual subscriptions, and is subject to change at any time. Void where prohibited.

If you choose a monthly subscription, you pay $34.95 per month. You will be notified if the current monthly rate of $34.95 changes at any time in the future.

TheStreet.com is a publisher. None of the contributors or their affiliates will provide you with personally tailored advice concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. From time to time, any or all of the contributors or their affiliates may hold positions in securities mentioned and they may trade for their own accounts. In cases where the position is held at the time of publication, appropriate disclosure is made.

© TheStreet.com, Inc., 14 Wall Street, 15th Floor, New York, NY 10005.