Emerging markets, bonds and certain sectors offer opportunities. Let’s look at how the market is affected and what income-oriented investors can do to prepare for change.
Why Income Investors Can’t Ignore Emerging Markets (Morningstar, February 24)
From a short-term perspective, emerging markets are often considered high risk with rapid change. However, if approached with a long-term strategy, emerging markets have the potential for growth and high performance. Investors should understand the risks that affect these markets, but ignoring e merging markets “has the potential to cost people money.”
The Best Ways to Invest in Bonds Now (Money, February 21)
As inflation and interest rates rise and the economy grows, investors should adjust bond portfolios to handle the changing landscape. “When rates rise, the price of older, lower-yielding bonds fall. But short-term debt loses less than longer-dated securities.” Floating-rate debt is another option as rates continue to rise, however, these are usually issued by companies with “below-investment grade balance sheets.”
Investing in A Time of Political Uncertainty (Forbes, February 27)
As political developments unfold both domestically and globally, predicting market changes becomes more difficult. Despite expected tax cuts and regulation reduction, “there remain significant disagreements between the president and Congressional leaders on key aspects of any corporate tax reform.” There is also expected to be “bad news” for investors “in the form of trade protectionism and immigration restrictions.” Investors should make deliberate choices to strike a balance between risk and safety to protect against the unexpected.
3 Stocks You Can Keep Forever (The Motley Fool, February 24)
One strategy, especially for retirement portfolios, is to find stocks that could last “forever.” The decades of compound gains and a company’s proven track record are often big selling points for long-term investments. The author explores three stocks (Berkshire Hathaway and two REITs – Realty Income and HCP) that have the potential to last decades and continue to produce returns.
Investors Call Trump’s Plans into Question: 5 Utility Picks (Zacks Investment Research, February 27)
Utility stocks have gained traction as investors analyze the markets since the presidential election. With uncertainty on what policy changes will materialize and the rise in the stock market many are “wondering about whether the market is overheated.” Utility stocks offer a more stable investment since “utility companies have the means to pay steady return to shareholders with minimal price volatility and moderate risk.”
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