Some people (e.g. Bill Gross) think there's a bond bubble too. As bond prices and interest rates are inversely correlated, and it's hard for rates to go anywhere but up at the moment, imho they're probably right. I don't think anyone has a good handle on what asset classes are particularly safe (or, equivalently, will yield reasonable returns over the near-intermediate term) at the moment. My best guess is that P/E ratios are still fairly sane-ish, so my investments are in stocks atm. YMMV, I am not an investment adviser, etc.

I would note that reactionary investment allocation is generally relatively extremely expensive (due to transaction costs) for retail investors, and Fed statements aren't exactly under the radar.

Long, markets-wide, diversified positions tend to work out best for retail investors. Switching from heavy positions in one asset class to heavy positions in another tends to benefit investment firms, without reliably lowering investor risk. It's hard to guess where the market is going, and the transaction costs of frequent position changes, even at institutional investor rates, can quickly outstrip gains of a correct guess.

IMO your balance should reflect your progress toward investing goals, not trying to outguess the market.

You know better than anyone about your own goals and progress, so you can make reliable decisions based on that information.

No one knows what the market is going to do next, and even if we assume a range of predictive accuracy, you're probably low in that range unless you spend a tremendous amount of time getting and analyzing economic data. So, you can't make reliable decisions based on that information.

No, bonds are the last place you want to be right now. That potentially sharp rise in longterm rates is highly dangerous for the bond market. If rates go up, bond prices go down. I'd stay in safe stocks or cash

trying to time the market is a losing game.

the winning game: 1) invest in broad-based, low-fee indices as regularly as you can. 2) try to forget about them.

Traditional economic logic says that bond prices have an inverse relationship with interest rates. That means if you buy bonds now, and interest rates shoot up, the underlying price/value of that bond will plummet. This is especially bad if you have callable bonds, because the bond holder can call them at any time, forcing you to essentially receive the value of the bond at the time of the call - even if the price/value has plummeted due to increasing interest rates.

Be cautious investing in bonds, and if you do, you might consider holding them to maturity if interest rates go up and prices/value goes down (and hope they don't get called).

I personally think it's a scary time - interest rates going up will have an effect on prices of bonds, stocks, and more. So while you earn more interest if you own fixed income assets, the value of those assets decreases and you can get stuck.

That said... IMHO, the raising of interest rates... I think really needs to start happening before the artificially low rates creates a different kind of animal altogether.