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Bonds are the toast of the town right now. Everyone from experts on CNBC  to PIMCO’s Bill Gross have been championing the case for bonds over the last two years. I am normally a big fan of buying bonds because the dividend income is great and it helps to balance out wild stock market swings. But right now things look a little overdone in the bond market.

Here are 3 reasons that investors should be looking to get out of government bonds right now.

Bond yields are terrible right now.

The problem is that investors are going overboard with bond investing. Investors are so anxious to buy bonds and bond funds that they are driving yields down to virtually nothing. 10 year treasuries are yielding less than 3% right now. Savings bonds are paying even less. EE bonds are paying investors just 1.4% and I bonds are paying just 1.74%. There is little reason for investors to abandon the safety of savings accounts. High yield savings accounts are paying similar amounts of interest and do not require you to tie your money up for a year or longer.

Everyone is buying United States treasuries.

One thing that is a given in investing is that if everyone is investing in an area then you should go the opposite way. Over $600 billion dollars has made its way into the bond market over the past two years. It looks like a bubble is forming in the bond market and you don’t want to be heavily invested in the bond market when the bubble bursts. Bond prices look like they are headed downward when rates starts edging upward.

Investors are buying the wrong kinds of bonds.

Investors are so afraid of risk right now that they are running for the safety of United States treasuries. They are looking over the one class of bonds that is the most attractive right there. Corporate bonds may carry greater risks but they offer higher returns as well. Investment grade corporate bonds and junk bonds have significantly higher payouts than government bonds. Short to intermediate term junks bonds are offering double digit yields right now

Don’t get me wrong; bonds have a place in the portfolio of every investor. They should now however represent a larger percentage of your portfolio than stocks and stock funds.

What do you think about U.S. Treasuries? Do you think they are a good buy? Have you been pouring money into the bond market?