Bond Bubble? Only for certain types of bonds...

There has been a lot of talk about a bond bubble recently and with the below chart (complements of Société Générale) it is easy to see why.  Bonds have an inverse relationship with interest rates, which means if interest rates go up, bond prices go down.  And in the below chart interest rates are about as low as they have been in the last 200 years.  This is why many bonds funds have performed well in the last few years.  I am not going to try to predict when interest rates are going up because they could easily stay low for years to come, but I am going to suggest you look at the Role of Bonds in your portfolio and consider moving into short-term, high-grade bonds. This will enable you to protect the cash flows that you need in retirement and will protect you should this chart turn around.