Government Will Usually Protect Bond Holders

One of the more important things that investors can learn from the financial crisis of 2008/2009 is that, in times of distress, it is much better to be a bond holder than a shareholder. Even if both made the same mistakes while evaluating a company as an investment opportunity, the government doctrine seems to be that bond holders (especially the holders of senior debt) will almost always be made whole to the tune of 100 cents to the dollar while the equity holders will be wiped out.