In light of the recent stock market turmoil, investors are turning to bonds as a safe haven.  Financial planners, playing to the fear, recommend that an individual's bond allocation should approximate their age; i.e a forty year old should have about 40% of their assets in bonds.

This is interesting, because most money managers consider long treasuries to be the last remaining bubble.  Interest rates have fallen so low in anticipation of a recession, that any hint of inflation, or the market's demand for higher yields in the face of default risk, will send rates skyward.  Not everyone understands that as interest rates rise, bond prices fall.  And not everyone knows that the Federal Reserve has no control over long rates.  On the contrary; recent central bank policy will eventually guarantee vastly higher long rates.  So unless you are prepared to hold your bond to maturity (and honestly, who plans to hold a 4% bond for thirty years?), the probability of loss is virtually assured.

 The little homilies like "bonds for safety", "buy and hold", etc., were developed over the past twenty five years.  If such tactics were used during the inflation-ridden seventies, a period in which we seem to be repeating, you would have been crushed.