Corporate bonds and loans have become the "new" stocks. The day-to-day volatility of corporate bond mutual funds, especially junk bond funds, has become comparable to "normal" stock market volatility. For example, the Vanguard Long Term Corporate Bond fund (VWESX) is down
16% year-to-date. The stock market is effectively a 3 or 4 times leveraged version of its old self. Many investment banks are saying that corporate bonds and especially loans are cheap relative to stocks, and there have been articles in the Wall Street Journal and Barron's to this effect as well. For investors who have money in tax- deferred accounts, I suggest that some exposure to stocks be partially replaced by investment grade corporate bond mutual funds. If corporate bond spreads narrow, there could easily be a 20% return next year from corporate bonds. If they do not and corporate bonds continue to suffer, it is unlikely that stocks will do well, either.
The concept of bonds as a separate "asset class" distinct from stocks is an abstraction that has temporarily broken down, unless one is talking about Treasury bonds.