But should the economy plunge into another recession, all bets are off. "If they're wrong, the default rate will likely soar."
The other risk is rates could start rising again. If that happens, your bonds lose value.
"We think ... you could easily be lulled into security because you think government yields will continue to go lower," Stike said. In fact the 10-year Treasury rate has already started to creep upward.
"We think the best offense is a good defense. You'd better bring some credit into your portfolio and do your homework."
Bond funds are a better bet for most people than individual bonds, he said. "We think most individuals don't know how to analyze credit risk, so we feel it's best to have some professional input."
Read the fine print when looking for a bond fund, Stike said. Look for the term "unconstrained," which means the fund manager has leeway to buy a wide variety of bonds instead of sticking to a narrow focus.
"We like to have a tactical approach. We like a manager to be unconstrained. If he is constrained, he's stuck."
Old rules about shifting your investment mix toward bonds as you get older don't make sense now, Stike said, with interest rates so low.
"The big things now are these target-date or lifestyle funds. They automatically put you on a glide path to more bonds as you get older. We feel that's putting you in a risky situation. We don't think that takes into account today's situation.
"If you're 60 years old and going to overweight bonds when yields are at all-time lows and prices at all-time highs, we don't think that makes sense.
"That's why we like a tactical approach -- looking out three to six months, rather than automatically loading up with 60 percent bonds."
Dividend-paying stocks can be a good substitute for bonds, he said. "The dividend yield right now on the S&P 500 is greater than the 10-year Treasury note. So we think it makes sense to buy dividend-paying stocks.
"You can buy ETFs [Exchange Traded Funds], like 'dividend aristocrats' -- companies that increased dividends every year over the past 20 years. I think with ETFs it makes 0 percent sense to own individual stocks. ETFs are very low cost. You can buy ETFs for five to 25 basis points [.05 percent to .25 percent annual fee].
"It's not your grandfather's bond market," he said. "If you retired in '94 with a million dollars you could make $80,000 a year [in interest earnings]. Five months ago it was $14,000. Now it's $20,000, and what has inflation done since 1994?
"It's forced people to take more risk," Stike said. "So you better be careful."
Reach Jim Balow at ba...@wvgazette.com or 304-348-5102.