What's at risk when you only invest in very safe Bonds?

Most consumers have heard the story about buying bonds to be more secure, to avoid market fluctuation, and a whole slew of benefits.  But are they getting only part of the information?  Possibly.

Here is how bonds respond to upward shifts in interest rates:

This chart illustrates what has happened to bonds as interest rates slowly climb up and there is an expectation of more aggressive rate increases. (You can run this chart on yahoo Finance).

I pulled this chart today as the market expects a new direction for the Fed's monetary policy due to changes in FOMC's leadership with an accelerated shift into higher interest rates. Higher rate expectations devalue lower yielding (particularly longer maturity) bonds.

Based on this chart Vanguard total bond (BND) portfolio's versus Dow (DJI) to date performance, a professionally managed bond portfolio lost about 5% of its value, while a portfolio mirrored after Dow gained 15%. That's a 20% difference in value!