A flood of money into fixed income drove once-stable bonds into bubble territory before starting to retreat this month. Here's how to adjust your strategy and protect your portfolio.

For generations, bonds have offered investors a safe haven that provides both steady income and far more stable prices than mercurial, zigzagging stocks. But lately, bonds have been doing the zigzagging, threatening the very qualities that make fixed income so attractive.

The financial crisis sparked a buying frenzy in fixed income that has only started to abate. Since September of 2008, investors have poured a total of $937 billion into bond funds -- increasing the total investment in those funds by 55% and dwarfing the $195 billion that flowed into stock funds over the same period.

This flood of money inflated bond prices to such heights that it drove yields -- interest payments divided by bonds' market prices -- to their lowest level in 50 years. Because a bond's interest payment is fixed, the higher its price goes, the lower its yield becomes.

But now there are signs that the great bond bull market may be coming to an end. News last week that President Obama reached a tax deal with congressional Republicans pushed bond prices down and sent yields surging. By Tuesday, yields on the 10-year Treasury bond had jumped to 3.27%, up from a low of 2.33% in October.

How much will this recent market swoon hurt fixed income investors? Whether bonds will suffer the same fate as real estate and tech stocks is still highly uncertain. Former Treasury Secretary Robert Rubin has predicted a disastrous rout, and Warren Buffett recently warned about "the overextended bull market in fixed income." In November, Bill Gross, the founder of Pimco, one of the world's largest managers of fixed-income mutual funds, called an end to the 30-year golden age that gave bond investors near-double-digit returns. More