but certainly they could do down further depending on interest rates and other factors. I try to choose bond funds that return a high dividend so I still make money even if the price remains stagnant.

I spent some time last week researching CD versus bonds for the non-equity portions of my portfolio. You could actually get a decent return on a 5 or 10-year CD that would probably beat bonds over the same period. However, you are locked into that investment for the entire duration or you give up your gains. So I will continue to take my chances with bonds and only invest in the highly rated bond funds. Even if they drop, I don't think the drop will be anywhere near as bad as stocks could be. Basically my bond investments are simply a hedge against a major correction.