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URL:  http://boards.fool.com/the-going-theory-of-holding-bonds-in-your-30810025.aspx

Subject:  Re: Fine-Tuning your Retirement Asset Allocation Date:  8/4/2013  12:51 PM
Author:  ResN Number:  72726 of 75539

The going theory of holding bonds in your portfolio is that it is supposed to reduce volatility and provide steady income. Which it does to a certain degree.

Bond reduce volatility and provide steady income, no certain degree about it. If rates are going down, then bonds also can provide some capital appreciation. Ir rates are going up, bonds also provide some capital depreciation, but also greater income. Yes, for the past 30 years, we've become use to bond funds and bonds providing capital appreciation, reduced volatility, and steady income. Now, for the next 10, 20, or 30 years, we'll have to accept that reduced volatility and steady income are the blessings. Over time, any captial losses will be restored, so long as you don't sell when you have capital losses.
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