I'm not missing the point at all. I understand that you believe bonds can go higher in a flight the safety. I'm telling you the opposite. They can't go any higher unless you believe the Fed is going to pull out negative interest rates. I believe this year has proven my point beyond a doubt. Stocks are down. The flight to safety happened. And yet...bond funds at best matched stock performance. Why? Because bond prices are already essentially as high as they can go. It's like you guys are saying, "Hey look! Stocks did terrible this year. Bonds matched stocks! Bonds are great!" Derp.
https://personal.vanguard.com/us/funds/tools/benchmarkreturnsHere's a link to the benchmark returns at Vanguard for just about every benchmark under the sun. Take a look at the first two sections regarding bonds. Over the past 5 to 10 year period quite a few bond funds did not too shabby. 5, 6 percent returns and a bit lower in the Muni's as one would expect. Not as great as stocks historically, but still not bad at all for a relatively safe investment and they compare quite favorably to the returns to the stock indexes further down for the same time period (that included the 2008 crash). Now, move over a column or two to the 3 and 1 year returns. In a word: Terrible. They're not even returning 3% annual over a 3 year time period. This is a good investment? If you want to cherry pick out your long bonds, they've done well over exactly one time period of 1 year. With an over 8% annual return. That they then proceeded to give back this YTD. Sure, you might see some isolated incidents of bonds spiking up for a year before they retreat to a new mean of sub 3% or so.
And speaking of those YTD numbers! In a year stocks are doing horrible, bond funds are looking like they might actually lose money in a losing year for stocks!!! Anybody have any idea when that last happened. Apparently it's only happened in 1931, 1941, and 1969 per this site.
http://awealthofcommonsense.com/often-stocks-bonds-decline-time/So, tell me. How again exactly have bonds been "great investments." Personally, I'd consider an annualized bond return of between 5 to 6% to be quite acceptable. But in the current interest rate environment, the best they can manage is the high 2% range. What kind of environment, going forward, is going to allow you to get to...and maintain...a 5 to 6% rate of return? Unless you think sub 3% returns are good? I mean if that's the case just say so.