Many experts believe we are on the cusp of a "great rotation" out of bonds and into other investments (primarily stocks). The bond market, due to falling interest rates, has been a good place to be ever since Paul Volcker subdued inflation by raising the Fed Funds rate to an astounding 20% back in the early 1980s.
The current Fed Funds rate, which is somewhere between 0% and 1/4%, is at its lowest level ever. At some point in time, the Fed will begin to raise the Fed Funds rate as the economy becomes stronger. As interest rates begin to rise, a bear market in bonds will take hold since, as interest rates increase, market prices or values decrease. Experts such as PIMCO fund manager Bill Gross believe the Fed should begin to remove quantitative easing and start raising interest rates sooner rather than later.
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