I have been talking and writing about the housing bubble for several years. Turns out I was an unwitting investor.

A while back I pulled some money out of securities and put it into ultra-short-term bonds, which I expected to be ultra safe.

SWYPX

Category: Ultrashort Bond YieldPlus seeks to maintain an average portfolio duration of 1 year or less.

You may want to consider this fund if...

You are seeking higher yield than a money fund can offer for your longer-term cash (cash you intend to hold for one year or more) yet can accommodate share price fluctuation.

You are looking for relatively stable monthly income but are unwilling to take on the risks associated with a longer-term security.

Recently I noticed that the value of these ultra-safe bonds had dropped. A LOT. What?!

Look at this graph... 2004. 2005. 2006. 2007........!

Turns out my "ultra-safe" investment was actually investing in CDO's and other housing-related kruft. Despite my own warnings about the housing mess, I am now a victim too. If I had known what they were buying, I would never have bought this fund. And if I had listened to Schwab, I would never have known what happened -- it took this lawsuit and article.

More specifically, the Complaint alleges that, in connection with the Funds' Registration Statement, defendants failed to disclose or indicate the following:

(1) that the Funds' assets were or would be overly-concentrated in the highly risky mortgage industry and that such securities were or would be highly vulnerable to illiquidity;

(2) that there existed no primary market for the majority of the bonds;

(3) that the duration for a majority of the Funds is over two years;

(4) that the values of the Funds' shares were inflated and highly speculative given their composition;

(5) that there were not adequate internal controls; and

(6) that, as a result of the foregoing, the Funds' Registration Statements were false and misleading at all relevant times.

Well isn't that just great. Joke's on me.