Gyroscopic Investing

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The graph pattern looks like a big dipper full of rainbow sherbert.

I find yield curves and spreads to be extremely interesting.  Seems to tell a bit of a story if you ask me.

And, yes, that's a pretty chart.

Clive,

Do you ever look at yeild spreads between treasuries (ultra-safe in terms of bonds) between their municipal, corporate, junk, etc counterparts?  It seems to me that with every visible spread between equal-duration bonds treasury vs. "xxx" one could infer a "default %," or a rate of default that would make its payout equal to treasury.  This spread, of course, changes over time to maybe give us a picture of assumed economic health over time, and can maybe paint us an interesting picture if you could put together one of your lovely charts going back a ways.

If you have any insights on yield curves or, more interestingly, yield spreads, and what they mean, whether they're efficiently priced, etc, I'd love to hear them.

I suppose if you had a large enough portfolio you could spread risk across the entire Fortune 500 corporate bonds or pick the top 100 munis to put your money into, and you'd do fine, although you still need to worry about systemic risk - if the entire economy crashes you're still screwed.  But at least you would be fairly immune from the odd corporate bankruptcy or default.