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Making Cents: Roach Bait for Thought

November 03, 1996

Tempted to buy bonds on bad news? Many fund managers subscribe to the "cockroach theory." When you see news of one company problem, said Jerry Paul of Invesco Trust, "you can suspect that a few more will crawl out too." The rule applies to the smaller, riskier companies that raise money in the junk bond market. Some investors and managers say heeding this principle has saved them a bundle.

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