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Shell Shock?

Surprise: Putting your nest egg in bonds may no longer be safe.

By Scott Bernard Nelson

Opinions expressed by Entrepreneur contributors are their own.

Billions of dollars have flowed out of stocks and into bondsover the past 18 months, and it's easy to see why. While stocksdumped yearly double-digit losses on investors between 2000 and2002, bond portfolios trumped the major stock market indexes threestraight years, the first time that's happened since FDR hadnothing to fear but fear itself. Investors who sought safety infixed-income over the past year, though, should be afraid ofsomething more tangible--bond prices may be on the verge of a nastydownturn themselves.

The problem is that investors by the millions moved sizableportions of their nest eggs into bonds at what could turn out to bethe worst possible time. In a fool-me-twice scenario, an investorwho took a big hit from stocks finally throws in the towel andmoves her money into bonds just in time to take another hit, thistime from supposedly safe bonds.

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