Five Lessons From the Mortgage Meltdown
5. A Fixed-Income Investment
Is Not Risk-Free
. That could not be further from the truth. There were plenty of toxic "pieces of paper
" which were packaged and sold to investors and bond mutual funds
. Several issuers
went into default
. Spreads
between investment grade
corporate paper and government securities widened dramatically. All of those situations caused investors to realize losses or have to mark down fixed-income investments.
The lesson: Fixed-income investments have their own unique risk characteristics, which could cause losses and volatility
greater than that of stocks.
To learn more about the recent mortgage meltdown and its repercussions, check out the following stories on TheStreet.com:
- Real Estate Funds Bounce Back
- Mortgage Giants Aim to Reduce 'Jumbo' Rates
- The Fed's Cut Won't Save Struggling Homeowners
- Credit Crises Nothing New -- 1907 Tells Us So
- Why Mortgages Blew Up
- Notes From the Credit Markets Front Lines
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