There is very little concern in the markets right now in regards to risk, which should be a huge warning sign for investors. One example of this is the fact that 2013 has actually now surpassed 2008 in terms of junk bond issuance. Rates on those bonds are extremely low, meaning that lower quality companies have been able to issue and refinance debt at really attractive levels, bolstered by the Fed’s low interest rate policy. I don’t see junk bonds as being very attractive at current prices, as there are two ways that you can lose. First, if the economy worsens, defaults can rise and investors can take losses, as companies go bankrupt. Secondly, if the economy improves significantly, interest rates and inflation expectations can rise, so the currently low interest rates will expose investors to interest rate risks in that scenario. To be clear, I don’t see huge losses on junk bonds and would probably rather take my chances with them in comparison to treasuries or investment grade corporate bonds, but I see very few that I would actually invest in.