2016 Was a Good Year for Junk Bonds

The video discusses the exceptional returns of 2016, driven by a rebound in the energy sector. It explores the challenges of replicating such returns in 2017, especially with rising interest rates affecting high yield bonds. The discussion includes the potential impact of economic growth under the Trump administration on different bond categories. Tax reform and its implications for bond issuance are analyzed, highlighting the complexities of Paul Ryan's proposal. The video concludes with a focus on energy as a strong investment for 2017, while expressing caution towards healthcare.

What was a key factor in the strong returns of 2016?

• A surge in technology stocks

• A rebound in the energy sector

• Increased consumer spending

• Government stimulus packages

Which type of bond is most sensitive to interest rate changes?

• Triple A bonds

• Double B bonds

• Triple C bonds

• Single B bonds

Under what economic condition might triple C bonds perform well?

• Stagnant GDP

• Rising unemployment

• Strong economic growth

• High inflation

What is a potential impact of tax reform on high yield bonds?

• Reduced bond issuance

• Lower corporate tax rates

• Higher interest deductibility

• Increased overseas cash holdings

Which sector is favored for investment in 2017 according to the conviction trade?

• Healthcare

• Technology

• Energy

• Finance