Risk - In The Eye Of The Beholder

In this recent Bloomberg opinion piece, we're offered a look at the possible fallout from all the drama surrounding auction-rate securities.  It's an interesting article, but here's the quote that jumped off the page at me (my emphasis):

It is passing strange that this disaster occurred not with stocks or bonds, but with something called auction-rate securities, that were touted -- securities professionals hate the word, which connotes a gamble -- as safe cash-equivalents.

Or, as Merrill Lynch & Co. put it in December 2007, ``We remain convinced that auction market preferreds of closed-end funds are a conservatives' conservative security with respect to credit risk.''

Risk is admittedly a very subjective matter whether regarding dot com stocks, mortgages, or auction-rate securities.  Will Wall St. ever learn from it's own mistakes?