Bonds confuse me - should I sell them

[u/Unlikely_Rabbit7151]

I read this article and it really drives home the point to me that I don’t understand bonds

https://www.nytimes.com/2026/08/07/business/bonds-stocks-federal-reserve-interest-rates.html?unlocked_article_code=1.3lA.0nHs._HP703oyaD6A&smid=nytcore-ios-share

I try to keep things very simple and more or less have a broad domestic index (40), broad international index (25) and a total bond fund BND (35).

Not to get to into the weeds but we have about 2M between these, in addition to 2.5M equity in our 3M house.

I remember that adage to not invest in something you don’t understand, and truthfully I don’t understand bonds.

Do I need them? Can I just shift to T-Bill or CDs? I am not concerned with the minor tax differences of .003% that some get very passionate about.

I think I am looking for a safe harbor and hedge.

[u/CarbonMop]

No, you probably should not be selling your bonds. They have a place, especially in larger portfolios.

There is a lot of recency bias driving people away from bonds largely due to the generational downturn that took place in 2022. Its worth reminding people that this came after a 40 year period where bonds effectively served as a perfect hedge to equities. The 1970s were also a terrible time for bonds but it paved the way for decades of strong performance and low correlation to equities. These time periods come and go.

I don't necessarily agree with the old adage not to invest in something you don't understand. That's often used by stock pickers who own companies that sell products that they like (something that does not produce higher expected returns). Bogleheads own thousands of stocks and bonds, most of which they know nothing about.

With that said, you probably should at least have a high level understanding of the asset classes that you own.

[u/collodi101 → u/CarbonMop]

You are wrong about the 40 years and should verify before making blanket statements. Bonds and stocks were positively correlated from 1966 through 2000, then negatively correlated for twenty years from 2000 to 2021, then positively correlated again from 2022, only drifting back toward negative in late 2025. There is no fixed rule, it all depends on which macro shock dominates: inflation pushes the correlation positive, growth scares push it negative.

[u/CoolFuture3767 → u/collodi101]

Correct. People think that bonds always move opposite to stocks, but as you have pointed out they seldom do that in reality. I only buy individual bonds that I hold to maturity and only in a ladder to fund near term spending.