Global bonds – There are many potential benefits to keeping a portion of your investment portfolio in global bonds. Here are the ones I believe are the most important:
a) Several countries came through the financial crisis better than the U.S. and are growing more rapidly.
b) U.S. bonds represent less than 1/2 of the global bond market.
c) Yields abroad can exceed those being paid in the U.S.
d) U.S. yield curve is on a positive slope which means rates may rise causing losses in the U.S. bond market.
e) To guard against interest rate risk in the U.S., invest in bonds of foreign issuers.
Over the past couple of weeks, I have spent much time discussing the possible benefits of investing in small cap companies. Another way of putting it is to say “stock prices of these companies are often based on their actual potential rather than values that may be “too rich”. Note: Small cap stocks are generally more volatile than large cap stocks.
As 2010 comes to a close, be certain to check all beneficiaries on all investment accounts. For help in how to make these decisions, just give me a quick call.
Have a great week,