I recently heard Steve Mandel, founder of Lone Pine Capital, say at a conference that investing in today's fixed income markets is a "Heads, I win very little/ Tails, I lose very big" proposition. And the estimable James Grant, longtime Wall Street chronicler and the author of the widely respected newsletter Grant's Interest Rate Observer, has called the bond market a "value desert." Investors who are viewing fixed income as a low-risk investment may want to rethink their assumptions in the current climate.

Unfortunately, the stock market doesn't seem particularly inviting at the moment either. The global economy is in trouble, with China slowing and the crisis in Europe weighing on the U.S. economic recovery. I'm by no means predicting a double-dip U.S. recession now, but the risk is certainly elevated, and I can understand why investors are wary of buying into stocks after everything that has transpired over the last decade.

The good news about stocks is that many strong and steady U.S. corporations are sporting far more attractive dividend yields now than anything you'll find in fixed income without delving into riskier credits. Shares of pharmaceutical giant Merck ( MRK) , for instance, are yielding 4.3%. Questar ( STR), a natural gas utility company in the Rocky Mountain region, yields 3.2%. Exxon Mobil ( XOM) yields 2.7%.

Moreover, stocks offer a natural hedge against inflation, since companies tend to benefit from charging higher prices even as they pay higher prices, and the long-term prospects for capital gains on stocks are far more attractive than bonds right now from a valuation perspective. Stocks have certainly proven to be a superior long-term investment throughout modern U.S. history, even during calamitous events like the Great Depression and world wars.

If you think we're headed for another train wreck and the stock market is going lower, you can sit in cash and wait for the bottom to buy stocks, but it's hard to thread that needle without a crystal ball or a time machine. And remember, even at a time when the dollar is gaining strength relative to other currencies, it's still losing purchasing power over time at the hands of inflation, which brings me back to my original point.

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