The investment world has changed a great deal in the last three years. Back in 2002, credit spreads on corporate bonds - the premium over risk-free US Treasury bonds - reached their widest levels ever. Bond market vigilantes started morphing into a more virulent strain that sought out vulnerable companies and used credit derivatives to bankrupt them. Traditional methods of credit analysis could not keep pace with how fast companies failed, so investors were forced to adopt market-based measures of creditworthiness.

Those new vigilantes have been cryogenically frozen ever since, as the Fed's unprecedented easing has rewarded risk takers with capital gains. But with the Fed tightening policy now, it is smart to revisit what happened three years ago.