On this week's Stansberry Investor Hour, Dan and Corey welcome Martin "Marty" Fridson
back to the show. Marty is an author and expert in the field of high-yield bond investing. He
is also a senior analyst at Porter & Co.'s Distressed Investing newsletter.

Marty kicks off the show by discussing the top-down view of the high-yield market. He
comments that right now, there is a very small risk premium. Marty breaks down the factors
that he uses in his model of fair value and concludes that the high-yield market is extremely
overvalued. At the same time, the market is forecasting a higher default rate than credit-
ratings agency Moody's. Marty also gives his opinion on whether we'll see a recession, what
it means that the inverted yield curve has not yet resulted in a recession, and why he's less
critical of the Federal Reserve than other investors. (1:39)

Next, Marty explains that the current situation of the federal-funds rate and the 10-year U.S.
Treasury yield moving in opposite directions is not rare. He says it happens 40% of the time.
This segues to a discussion about what's happening with the junk-bond market... including
companies potentially having to roll over their debt to higher rates... and private credit
lenders now competing with high-yield bond buyers. Marty then names which sectors
present attractive buying opportunities today. (18:03)

Finally, Marty goes further in depth about his quantitative model and what data it draws
upon to find attractively priced distressed debt. He then explains that because high-yield
bonds aren't very liquid, exchange-traded funds centered around these investments tend to
have a lot of variance in performance. This can have serious consequences in times of
extreme market disruption. (34:12)

The Overvalued Junk-Bond Market Still Has Pockets of Opportunity