In many communities across the country there are local branches of the Service Corps of Retired Executives (SCORE). This organization is a completely free mentoring program that is made up of retired executives who succeeded in their careers and who are now willing to share their knowledge and expertise, absolutely free of charge, with those who are attempting to follow in their footsteps. Each SCORE office is as different as the individuals who make it up. You may find the exact person who can answer your questions, give you direction and save you from making costly mistakes. Utilize their generosity. To locate your nearest SCORE facility, go into a search engine such as Google, and type SCORE. This will bring up a number of links to guide you to your local office.

The rating agencies provide the most accurate data on historical default rates. Based on their data, empirical studies by Wilson  Saunders  and others suggest that default rates tend to be higher in recessionary periods. As might be expected, default rates usually peak at the end of recessions and fall when the economy is expanding. A closer look at history shows that default rates reached their highest levels in the 1930s, peaking at 9 percent in 1932. Since then they have never come close to that level. From 1940 to 1970 they were extremely low, hardly ever exceeding 1 percent. Moody’s themselves note that in the 1973 recession, the default rate was close to zero because only the best issuers had been able to access the capital markets in the previous years. In the early 1990s and at the beginning of the new millennium default rates rose significantly, reaching their peak at about 4 percent. Thus, the default cycle has mirrored the business cycle very well in the past 15 years. Yet one difference is not reflected in this figure. On a dollar-weighted basis, the 2002 default rate for speculative grade issuers was nearly twice as high as in 1991, causing painful losses for many investors.

Furthermore the 2002 default rate for US investment grade issuers reached more than 1 percent on an issuer-weighted basis and almost 3 percent on a dollar-weighted basis. This is substantially above the 30-year average of the investment grade default rate, which is about 25 basis points. Clearly, investment grade defaults are supposed to happen very infrequently.