In the aftermath of the financial crisis, pension fund investors have spent time and money suing credit rating agencies for the favorable ratings they stamped on very troubled mortgage securities. Today, the same pension funds and state officials who have accused Moody’s and Standard & Poor’s of poor due diligence, flawed methods and conflicts of interest still rely heavily on those same agencies that they are claiming lost them money. Sound like a paradox? We think so. Case in point, the California Public Employees’ Retirement System, or CALPERS, stated in a lawsuit filed by the retirement system in 2009 that it lost $800 million on mortgage securities it bought based on strong ratings issued by credit agencies. And yet, CALPERS’ investment policy still only allows investment in fixed income securities that are rated investment grade by a “nationally recognized statistical rating organization." At SNWAM we do not rely on rating agencies and have consistently conducted our own credit research since the inception of our firm. The disconnect highlighted here, and in the New York Times last week, acts as a friendly reminder to “know what you own” and conduct your own credit research.