Thu 22 Mar 2007
Just found this annecdotal quote from Mish’s blog (not sure if it is true, but it could be):
Earlier this year I received a note saying the Core Bond Fund in my 401k was changing to a new bond fund this year. They nicely transferred the old holdings to the new fund without any cause for action on my part.
…The new fund is almost 37% invested in mortgage securities. The old was only a tad over 1%.
Imagine my surprise when the value of the [new] fund had dropped almost 13% from Friday to today! [3/2/2007 -3/5/2007]
Here’s a quick, alarming picture of who buys mortgage backed securities:
Notice anything unusual? Money market funds are included as buyers!