The bond market has a serious PR problem: Nobody seems to believe there's much appeal there.

And that's helping the stock market win more fans--because if there's little or no attraction in bonds, the crown in that beauty contest often goes to stocks by default.

Buy bonds today? Why would you, when one of the smartest players in that market--Bill Gross of Pacific Investment Management Co. in Newport Beach, Calif.--is holding 43 percent of the assets in his huge Pimco Total Return bond mutual fund in short-term money market instruments rather than in bonds?

That's certainly not a ringing vote of confidence in longer-term fixed-income securities.

Nor was a report last week from Morningstar Inc. The headline: "Just How Safe Is the Bond Market?" The conclusion was that investors who are used to thinking of bonds as a safe place to be ought to steel themselves for a potentially bumpy ride this year--for example, if the housing market's woes cause more nervousness about mortgage-backed securities.

Anyone who has shopped for bonds recently can relate to the discomfort Gross and Morningstar have with them. Bonds just don't pay much. While the Federal Reserve has sharply raised short-term interest rates since 2003, longer-term rates haven't come up a lot since then.

The annualized interest yield on a 10-year Treasury note is about 4.7 percent. The average corporate junk bond pays barely 7 percent.

Plenty has been written about why long-term rates are depressed. In the end, it must come down to too much money chasing too few bonds, worldwide.

Whatever the cause, if this is the hand you're dealt, what do you do with it?

Many Wall Street pros say you pass for now. You can earn almost 4.9 percent, annualized, in a nearly risk-free money-market mutual fund.

If you're a long-term investor with money to put to work, some financial advisers suggest you look at stocks instead of bonds.

But aren't stocks far riskier than bonds?

Generally, that's true. U.S. blue-chip stocks fell nearly 50 percent from 2000-2002. Odds are you're never going to suffer that kind of loss in high-quality bonds.

So bonds do play a capital-preservation role in a portfolio, and no one would tell older investors to quit on them altogether.

But there's another kind of risk--the risk of losing purchasing power to inflation if your portfolio doesn't grow fast enough over time.

David Kelly, an economist at Putnam Investments in Boston, believes that many investors have become overly risk-averse about stocks since the 2000-02 bear market. "People are haunted by that ghost," he said.

One result, he said, is that too many people now "overpay for bonds and underpay for stocks."

Translation: Investors are willing to accept lousy yields on bonds while fearing that stocks are too expensive to buy.

Yet the average U.S. blue chip stock sells for about 16.5 times estimated 2006 operating earnings per share, according to Standard & Poor's. That is not much above the historical average price-to-earnings ratio since 1935, and is well below the P/E ratio of 22 that was the average over the last decade.

It's a common refrain of money managers today that they find the U.S. stock market to be priced just about right--neither too expensive nor too cheap.

By contrast, it's hard to find a professional investor who doesn't believe that bonds are expensive.

Even if you think that both stocks and bonds have become pricey, picking investments is a question of relative value. Ed Keon, investment strategist at Prudential Equity Group, said the surge in corporate takeovers by private-equity investors demonstrates that bonds should be sold and stocks should be bought.

That's what those investors are doing, he noted: They're borrowing via bonds to buy stocks.

Of course, they could be making a big mistake. If the economy is headed for recession in 2008, a year from now stock prices may be sharply lower.

That's one scenario that could benefit high-quality bonds: If investors begin to fear economic trouble, many would rush for perceived safety. That could drive bond prices up and their yields even lower.

But if the economy is going to be OK, or better, in the next few years (a replay of the 1980s and 1990s), bond investors have to wonder how much lower long-term interest rates can go--or whether they're more likely to rise than fall or stay level.

At the same time, a prolonged expansion is exactly what stock market bulls are hoping for.

If bond yields do rise, they'll become more appealing. Until then, if all you can earn on a bond is 5 percent or less in annual interest for the next 10 years, it isn't asking a lot of the stock market to beat that return in the same period.

Tom Petruno is a columnist for the Los Angeles Times, a Tribune Co. newspaper.