With yields having fallen so far in recent years, the risks are rising for bond investors. It's a theme that's received a great deal of attention throughout 2012, but it's worth revisiting given that fixed-income investors aren't used to negative returns at this point. CNBC took a look at this issue earlier in the week in its article "Flight to Safety in Bonds May Actually Mean More Risk." The most important takeaway from the article is that just because prices are rising doesn't mean that it's time to get complacent. In fact, the exact opposite is true - particularly with the fiscal cliff looming on the horizon. In short, it's necessary to keep in mind that once investors drive up prices in an asset class in a quest for safety, that asset class can become overvalued relative to its actual worth - which means that the "safety" is in fact an illusion.
The full CNBC article can be found here.