So is now the time to get out of bonds?

[TNDemo]

About 1-1/2 years ago we divided the 401K into four equal parts - prime cap stocks, medium growth stocks, money market and bonds. The two stock funds are horrible but the bonds are pretty fabulous and now comprise the largest percentage of the account. I have been hearing that there is a bond bubble and it is going to take a dive also. Have been debating whether I should get out now while it's high and put it in the money market or what. Thoughts?

[MercutioATC]

1. I've been in Treasuries since January 2007 and I'm leaving it there.

I'm not keeping up with inflation any more, but at least I'm getting a small return.

With the way things are unraveling now, security is king and I'm not going to be comfortable with any risk until we find a bottom.

The first rule to making money is not to lose money...

[clixtox]

2. Who knows? There are no "rules", only the (possibly) immutable laws of physics...

What goes up, comes down!

One (strong) possibility is a/many serious devaluation(s) of the once dominant U$Dollar.

Less likely, but certainly possible, is the complete U$Dollar capitulation and the floating of a new currency with a tangible "basis", like gold. Very sophisticated folks might consider certain categories of "art". The U$Dollar has lost it's luster, so to speak, and the future is bound to be a lot different than anything any of us have experienced, at least in the USA. The only factor maintaining the U$Dollars buoyancy is a lack of a viable alternative, so far. Everyones ship seems to be sinking!

The demise of the Federal Reserve System/Banks is not beyond the realm of possibilities. Every fiat currency throughout history has eventually become nearly, or completely, worthless.

Gotta admire your tenacity and optimism though!

Good luck with your diversified portfolio, but you might consider further diversification into gold and pre-1964 silver coins and even possibly 60lb. tins of honey and other fungible, long lasting, healthy foodstuffs.

Who knows, and there are no rules!

[notesdev]

3. At this time

anything that preserves capital is a winner. But keep your eyes open, this deflationary period will be temporary, and inflation will come roaring back with a vengeance. If you're holding low-yield bonds at that time you will be an unhappy camper. You can lose value to inflation just as easily as you can lose value to an outright price drop.