NEW YORK ( TheStreet) -- The question investors ought to be posing about the bond bubble is not whether it exists, but how long it will continue to inflate.

"Bubble" buzz usually heats up around the time that the smartest players on Wall Street are exiting a market, right around the time lowly retail investors are warming up to the trend. The recent enthusiasm for debt -- particularly bonds backed by the U.S. federal government -- has now been dubbed "The Great American Bond Bubble" by widely respected intellectuals. It's safe to say the bubble buzz has begun.

Since a day of heavily volatility in May, $46 billion has left the stock market, with $77 billion flowing into bonds, according to the Investment Company Institute. The flow trend has been consistent over the last eight weeks.

Even more dramatic has been the shift since the stock market reached its height in October 2007: a decline of $248 billion vs. $615 billion; since the stock market low in March 2009, it's been -$382 billion vs. +$540 billion.

"There's been a huge inflow into bond funds as everybody knows," says Andrew Neale, founder of Fogel Neale Partners, a wealth management firm in New York.

Investors have also been plunging cash into gold, money-market funds and simple bank deposits that offer marginal yields. The gutsiest have been dipping their toes into investment-grade corporate or even high-yield bonds -- essentially anything but stocks.

It's not news that investors have been frightened by the twists and turns of a highly volatile stock market. Who can blame them?

Just a few months ago, the Dow Jones Industrial Average plummeted over 1,000 points in a single day only to recoup most of that value by the session's close. That "flash crash" came just after a tumultuous year or so in which the market hit a rock-bottom low in early March 2009, to ultimately climb 83% when it topped out in mid-April 2010.

Few stocks have been spared - even blue-chip names that offer attractive dividend yields in addition to growth potential. Procter & Gamble ( PG), with a $1.93 annual payout, and a yield of 3.22%, is down roughly 5% since mid-April. Kraft ( KFT), which offers a $1.16 annual dividend and 3.99% yield, has dropped even further. Pfizer ( PFE), with its 72 cent payout offering a 4.5% yield is much the same.

As Simon Baker, founder of the money-management firm Baker Asset Management, puts it : "This isn't your father's market."

The risk-rewards psychology of investors has changed markedly. Bonds may not offer a great deal of yield, with long-term Treasurys hitting a 17-month low near 2.5% and short-term T-bills reaching an all-time low of 0.46% on Friday. But from the view of investors who lost tremendous wealth over the past couple of years in the stock market, any yield at all can seem attractive, as long as there's some assurance of getting the initial investment back. As chatter regarding near-term deflation has reached a fever pitch, even flat or slightly negative returns can seem attractive.

"People's portfolios have been so badly damaged over the past three years," says Neale. "We see people come in whose portfolios have underperformed the markets and they're happy about that."

The recent trend of stock aversion has paid off for some: The S&P 500 Index is down nearly 30% over the past 30 months while bonds have returned 16%, according to a Bank of America-Merrill Lynch index and the price of gold has shot up dramatically.

Yet the safety of bonds may not stay in vogue for long. (Nor might catch-phrase of "wealth preservation" that's become popular in asset-management circles.)

Investors often want to follow the moves of market sages. Yet it's worth pointing out that the advice they publicly espouse isn't something one can follow in real time. The 13-F filings prepared by savvy hedge fund managers are looking in the rear-view mirror; just because John Paulson and George Soros were bullish on gold last quarter doesn't mean they still are. Similarly, when Bill Gross or other high-profile fund managers talk about imminent deflation or piling into Treasurys, they are also talking up their own game. They're less likely to tell investors to sell assets in the midst of their own unloading.

Instead of tracking their words and SEC filings, it's worth paying attention to the trends that push them to move funds from one asset class to another. As far as bonds are concerned, all it will take is a whiff of inflation or clear signals of revenue growth to make stocks look attractive once again.

A lot depends on whether the prophecy of deflation will become self-fulfilling - since it hasn't actually happened yet - and whether demand will pick up any time soon. Ultimately, when economic growth does occur, the reversal in bond fund flows is sure to be as sharp and painful as those of the recent past.

Investors who hopped in at the tail-end of the stock-market bull run this year got burned, as did those betting on oil strength in the summer of 2008 or on housing in 2007 or on auction-rate securities or money-market funds in 2008. Volatility isn't limited to asset class, even if the chaotic bends of the Dow have been more prominent than those in other areas.

In assessing how long the bond bubble will continue to inflate, it's worth remembering that bears had been rumbling about overvalued stocks during the "Santa Claus rally" at the end of 2009, months before stocks began to slump. Oil prices had been climbing at what some characterized as an untenable pace for at least six months before they began to plunge in 2008.

Home prices had been rising for a decade before they began to decline in 2007 - beating inflation by more than 5 percentage points a year, on average, according to the National Association of Home Builders data. The term "bubble" starting to be mentioned in regards to housing months before prices began to fall and years before they had fallen precipitously.

As for bonds, Neale puts it thus: "I don't know whether it's a bubble yet, but it is getting to a point where it's probably unsustainable. The second inflation starts to rear its head again, there's going to be a mass exodus out of bonds. Like all these trends, it's going to have a nasty and sharp reversal when it happens."

The bottom line for investors: People are just starting to pay attention to the "bond bubble," so it's unlikely to blow up tomorrow. More broadly speaking, those who want to be able to sleep at night, should prepare for lagging returns; those who want to make money should prepare for a bumpy ride.

-- Written by Lauren Tara LaCapra in New York.
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.