Janet Yellen on high levels of corporate debt

You had investors that were reaching for yield and wanted to hold securities that they thought were safe, but that had reasonably high yields. There are a lot of investors in this low interest rate environment who are reaching for yield...  If the economy experiences any kind of negative shock where rates go up more than expected there will be a lot of corporate bankruptcies, a lot of distressed credit crunch a lot of downgrading of loans, a lot of investor losses.

~ Janet Yellen, Q&A after speech at Women in Housing and Finance holiday event, "Janet Yellen is worried about the next financial crisis," MarketWatch.com, December 13, 2018

Raymond DeVoe on reaching for yield

Keeping score on investments is tough. For instance, it can push you to seek out the highest yield you can find on an income-producing investment, rather than balancing yield against risk. More money has been lost reaching for yield than at the point of a gun.

~ Raymond F. DeVoe, Jr., Legg Mason Wood Walker analyst, February 22, 1995

RBS Securities analyst on the return of synthetic CDOs

Synthetic CDOs are sort of the natural evolution, and in many respects the final frontier, of investors’ search for yield against a backdrop of historically low interest rates. I think the big takeaway here is, ironically, the Fed and regulators are forcing investors to the darkest corners of the structured finance market and the structured credit market to find yield.

~ Richard Hill, RBS Securities analyst, "Behold the Ghosts of Bubbles Past," Bloomberg Businessweek, April 1, 2013

Jack Bogle on stocks vs. bonds in early 2011

This is a very difficult time to invest because the alternatives to stock are not all that attractive. Money market funds, to be candid, are really kind of a bad joke. With bonds, I worry about rising interest rates; it’s highly likely, but I don’t think anything is a certainty. I would confine my bond position to intermediate term bonds or limited-term bonds. So be careful, but you’ve gotta put the money somewhere or it’s not gonna earn anything

~Jack Bogle, founder, Vanguard, FOX Business interview, March 30, 2011

Michael S. Rozeff on reaching for yield

Investors who over-reached for yield and over-reached for yield spreads are learning the hard way that this was a risky policy. When yields on short-term money market funds fell drastically, the number of ultra-short bond funds doubled. These bring in extra current yield by, among other things, investing in mortgage and other asset-backed securities. Although they seem like money-market funds, they are not. A fund like Fidelity’s Ultra-Short Bond Fund maintained a $10 value for over 4 years, only suddenly to drop to $8.61.

~ Michael S. Rozeff, "Let the Bankruptcies Roll," LewRockwell.com, March 8, 2008