An estimated $170 billion has been put in bond funds this year, while $35 billion has been pulled from stock funds, according to the Investment Company Institute, a trade group for the mutual fund industry.

Analysts at Bespoke Investment Group say we're in a "drive-by market." Their take: Stock investors aren't anticipating or analyzing anything. They just react to the news of the day and then move on to the next thing.

Lower rates should help companies because they make it cheaper to borrow money and allow them to refinance their existing debt. Corporate profits then go up, leaving more money to spend on expansion or workers.

That's why lower rates should help boost stocks, says Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "But we are not seeing that at all right now."

Instead, investors are putting money into corporate bonds, even those that offer little guaranteed return. IBM was able to raise $1.5 billion by selling 3-year notes that pay a mere 1 percent in interest. That was only 0.30 percentage points more than the yield on comparable U.S. Treasurys.

Johnson & Johnson sold 10-year bonds this month with a 2.95 percent yield, even though it pays a dividend equal to about 3.7 percent of its stock price.

That means an investor who buys $10,000 in J&J bonds gets back $295 annually for 10 years, plus the principal. If that investor bought 166 shares of J&J stock at about $60 a share now and held it for a decade, the annual payout would be $360 a year, plus any price appreciation in the stock and increases in dividends. J&J has increased its dividend for 48 consecutive years.

David Fuller's view The last two paragraphs above merit a second reading. Highly successful Johnson &Johnson is borrowing cheaply but does it make sense for investors to buy this month's bond offering rather than the higher-yielding equity?

No, it does not, in my opinion, even though I am not particularly drawn to J&J's rangebound chart pattern (monthly & weekly). Bond investors have enjoyed a superb momentum move since April, helped by quantitative easing and deflationary fears. We have yet to see technical evidence that this trend is over, although it is becoming increasingly overextended. Nevertheless this now crowded trade means that investors are paying an increasingly high price for their supposedly safe haven. Consequently the 'risk-free return' in low-yielding bonds is becoming a return-free risk.

I am not impressed by arguments that if one expects deflation, the real yield is higher than the nominal yield. Only Japan has experienced persistent CPI deflation in the last seventy years and if the same occurred in the US I would still rather have higher-yielding J&J shares than their low-yielding 10-year bonds.

What about during a depression, some will say. Even if that is an outside risk for the USA (I think a period of stagflation is more likely) Johnson & Johnson is a global player, leveraged to the world's stronger economies. I recall the pre-1950s perception that equities should yield more than bonds to compensate for their greater risk. Yes, in the extremely unlikely event of a global depression but not when the expanding and big-population economies are prospering, as we see today.