We are in an unusual time in history where the traditional views on the safety and conservatism of bonds may no longer be viable.
Traditionally, fixed-income securities, or bonds, fall on the conservative side of the risk spectrum. Ask any investment professional to show you the typical allocation for a conservative investor and he or she will likely display a pie chart with a large slice of the pie designated for fixed income investments.
Corporate bonds are considered safer than stocks because they have liquidation and cash flow preferences to stockholders; and the tradeoff is that they also have limited upside potential, unlike stocks.
U.S government bonds are considered safer than corporate bonds because they are backed by the federal government.
Q Besides a default, how do bonds lose their value?