Buy U.S. Agency Bonds

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In September 2008, the government took control of Fannie and Freddie and put them into conservatorship. The move resolved the uncertainty over whether the Treasury would backstop the two government-sponsored enterprises in the event of insolvency. Fannie and Freddie survive and continue to sell bonds, buy mortgages and package home loans into securities. Stockholders got annihilated. In 2007, the combined stock-market value of Fannie and Freddie exceeded $100 billion. Today, the pair are worth $2.4 billion. Their bonds also took a hit but have since recovered. The reason for investing in agency bonds is simply that they yield more than Treasuries. Your decision to invest in agency bonds should not rest on perceptions and semantics. It should be based on value in the marketplace.