Advantages of Bonds
I bought some Fannie Mae bonds this morning with a 5.5% coupon at a bit below par (meaning that they will actually return more than 5.5% per year, because they pay par value when they mature or are called). But bad news from unemployment figures suggests the economy is still falling, which reduces the inflation risk--and interest rates therefore fell. That means the bonds are now worth $116.80 more than what I paid for them at 9:30.
The manner in which bonds and stocks usually move opposite each other in value means that they can be a useful counterweight. A rising stock market usually means falling bond prices, and vice versa. Serious investors (the sort who are managing portfolios of tens of millions of dollars) sell bonds when the economy has just started to turn around, and buy stocks. When all the "experts" start talking about how the Dow is going to keep rising without limit, you sell stocks, and buy bonds. Of course, this means that you have sufficient income to pay all your bills, keep your Gulfstream V maintained, the pilot paid, and the child support payments to the previous three wives current, without having to rely on the bond coupons or stock dividends.