Editor's Note: This interview was recorded the week of October 10th.

Mike Norman, anchor, Hard AssetsInvestor.com (Norman): Hello everybody, and welcome back to the second part of my interview with Martin Fridson. He is CEO of Fridson Investment Advisors and also author of the books "Unwarranted Intrusions" and "How to Be a Billionaire."

I love that title, that's a great one. All right, let's talk about how to be a billionaire. We're seeing probably the worst financial market collapse in history – in recent history for sure. But out of the ashes there's always something; there's always opportunity. You follow very closely … it's your area of expertise, the high-yield bond market.

Now certainly some of those yields now are sky-high, there's no question, but that means potentially lots of risks, but also potentially a lot of rewards. And in the past, historically, in past crises, investors - savvy investors - who were able to pick out the good ones from the bad ones ended up doing very, very well. How do you view the environment right now? Is it too early? Is it a good time to be going in with all this carnage?

Martin Fridson, CEO, Fridson Investment Advisors (Fridson): It's a little bit early in terms of a complete turnaround in the market. I think we still have a long way to go in the default rate, which is a key indicator for a market on the rise, but we're finding at Fridson Investment Advisors … we're finding opportunities selectively, staying in the high end of the capital structure, looking for companies with franchise values that you're not exactly indifferent between whether they default or not, but you can be very confident that if comes to that, there's going to be a value at which your debt and any debt senior to you is well-covered.

Norman: Let me ask you this, because some people say that because there's so much emotion and so much panic now, they're not really looking at this in an objective way. A lot of this debt is cash-flow positive. If held to maturity, the investor will make their rate of return, plus get their principal back. What percentage does this encompass? Is this still a pretty large percentage, because it seems like the way the market is trading that everything is bad.

Fridson: No, I think there's a good portion … there are companies that are going to fail, there's debt that's appropriately priced at a sharp discount to par a lot of the structured finance, the senior tranches, which is not our area, but that area is still well-covered and will come back.

So you definitely have an advantage if you aren't in the position of having to mark portfolio to market and report to someone. If you can ride through the ups and downs for a period of time, there genuinely are some opportunities.

Norman: Let's talk about the mark to market; a lot of criticism about this policy. Do you think it should be suspended now?

Fridson: I don't think it should be eliminated. There is some talk of some modification, trying to refine the definition of what's a security that's held for trading, that's held for investment, and I think there's probably room for some fine-tuning there. I wouldn't take advantage of this situation to throw out the mark-to-market idea altogether.

Norman: But isn't it creating so much turmoil and sort of exacerbating the problem?

Fridson: Well, the institutions that are affected by it certainly want to present it that way. If there genuinely are securities held for investment, they're not affected if they are trading securities. I think they ought to be if you really are living and dying day by day with the value - that should be reflected - and it's hard to argue that more information is a bad thing for the market. But I think there is probably some room for refinement.

Norman: All right. You said earlier that certainly the commercial banking sector has that connection with the Fed. In general you're against intervention. But is there something that you'd like to see right now? You also said it's a little early maybe to step in. Is there something that if you saw it, from a policy level, would say to you, things are about to change?

Fridson: Well, I think that they are going about as far as they're likely to go. The Fed has gotten into the commercial paper market, the Treasury is talking about making substantial investments in the banks. I'm not sure there's a lot beyond that. The only question is how quickly that will have an effect.

There's also even talk about backing deposits and even other obligations of banks. So I think if they restore the confidence through those measures, that probably will start to turn things around.

Norman: All right; quick forecast one year from now: market higher or market lower?

Fridson: I think that we have a good chance of it being a little bit higher. Probably we're not yet at a bottom, but I think we could be starting to look forward to better times about a year from now.

Norman: Some optimism; we're happy to hear it. All right folks, stay tuned for more interviews here at HardAssetsInvestor.com. My thanks to Martin Fridson. We'll see you later; take care.