I just received a confidential fund manager report from a fund manager explaining why they bought the Lehman Brothers' Bond (not MiniBond, it is a plain vanlia bond) and now as a result has to cut-lost by selling it in the open market. The fund manager said that when the purchased was made on 26 March 2008, Lehman Brothers were rated by S&P A1/A+. Rating outlook were stable by Moody's and S&P. On 12 Sep 2008, the bond were still rated as A2/A by Moody's and S&P. On 15 Sep 2008, Lehman Brother filed for bankruptcy. Fortunately the fund only drop by -1.26% on 15 Sept because the fund only holds a small portion of the bond. Here are my comments:

1. Don't trust the rating agencies. Just as do not trust the "Stars", do not trust the alphabets of the rating agencies. Even an investment grade company can go bankrupt overnight.
2. Due to broad diversification, the fund only dip by -1.26%. This is no big deal. It shows how important diversification is. Thus, people who has put all their money into a single product is really silly because they are not diversifying risk. The risk I am talking about is non-systematic risk which can be diversified away.