Stock Market vs. Bond Market

Every opportunity I get I will continue to talk about the different markets, specifically the stock market and the bond market.  When you hear folks talking about "the market" they usually are referring to the stock market.  A stock represents ownership in a public company.  A bond on the other hand is a debt obligation of whoever issues the bond: it could be the U.S. government, it could be corporations, it could also be government agencies.  In general, bonds have less price volatility than stocks and are considered more conservative (this is a general statement as there are many different types of bonds, some of them quite risky).  What you really need to know from this brief post is that the two markets typically move in opposite directions.  For example, last week "the market" (the stock market) was DOWN .71% and the bond market was UP .31% (both returns are based on Morningstar indexes).  The rule of thumb for diversifying portfolios is to have your money invested in BOTH the stock market and the bond market.  The percentage of each that you should own will be dependent on your specific circumstances including how much risk you are willing to tolerate and what assumed returns your financial plan dictates for you.