That depends a lot on what two- to three-year period you measure. Over the last couple of years, junk bonds -- or to use the fund industry's euphemism, "high yield bonds" -- have stunk up the joint, returning an annualized minus 2.3 percent over the past three years.

Junk funds have performed well in other periods, however. Over the three years to January 1994, for example, they returned an annualized 24.2 percent, roughly double the return on safe long-term government bonds. And even over longer stretches junk has outperformed high-quality corporate issues. For the 10 years to April 1, 1992, junk funds earned 13.3 percent, beating most domestic bond-fund categories.

Remember, junk bonds often are issued by new and untested ventures, or at the very least, companies not on firm financial footing. To entice investors to lend them money, these weak companies must offer above average interest rates. If the economy and business stay strong and the companies can meet the payments, you'll come out ahead. But with the higher rates comes higher risk.

This suggests to me that there are two ways of playing the junk bond market. The first, which I endorse, is to invest in junk bond funds and hold them for a long time, say, 10 years or more, so that the gains during up-cycles make up for the lousy performance when the economy and junk market are weak.

The second strategy, which I don't endorse, is to buy junk when the high-yield market is in shambles and junk prices are down, and then sell into the recovery. The problem with this approach is timing. The junk market looked battered last year, but it's even more beaten up this year.

I think most investors can get along just fine without junk bonds. But if you do want to reach for loftier yields and higher returns, I recommend that you put no more than a third of your overall bond portfolio into junk.