INCLINE VILLAGE, Nev. - Last year was good for stocks and bonds, so it was easy to be right about the market. Still, as I look back at the securities I recommended in this article I couldn't be more pleased. With a few exceptions, they worked better than planned, some much better.
Most of my articles focused on income investments. That's because people find it hard to generate enough income from their investments in this low interest rate environment. It was hard a year ago; it's still hard now. The January 24 article on bank loan funds recommended Eaton Vance Senior Floating Rate Fund (EFR). It was $15.01 then, now it's $16.25 and it pays a generous dividend.
The March 1 article "An Update on Emerging Market Debt," recommended Western Asset Emerging Markets Debt Fund (ESD). Since then it is up 8.5 percent and it, too, pays a generous dividend. The June 28 article "A Slowing Economy ... and You!" recommended the U.S. Bank 6 Percent Series G. It was $26.81 then, now it's $27.73 and we've received dividends along the way.
While we liked those income vehicles, we avoided U.S. Treasury funds. Treasury funds are about unchanged since our March 6 article "U.S. Treasuries - A High Risk Investment." I continue to believe "unchanged" is about the best you can do in these funds, and there will come a time, maybe sooner than most expect, when investors will see sizable losses in Treasuys.
Perhaps the year's best call was the October 24 article, The Rise of the Internationals. In that article we featured the improving international markets and gave several suggestions. Since then these securities have been far stronger than the U.S. market. Mexico (EWW) is up 7.9 percent, Philippines (EPHE) is up 13.6 percent, Turkey (TUR) is plus 13.8 percent, and Pacific Ex-Japan (EPP) is ahead 4.9 percent.
There were many opportunities to profit last year, even in less-risky securities. Those who stayed on the sidelines in cash, CDs and money-market funds missed out. There are always investment opportunities, and some of the greatest appear when people are most pessimistic, as they are now.
But inaction is not an investment strategy. It's a recipe for disappointment. Either hire a Registered Investment Adviser like myself, or take an active interest in learning about investments so you can manage your own portfolio. If the former, I'd be delighted to meet with you. If the latter, be sure to keep reading this column.
- David Vomund is an Incline Village-based fee-only money manager. Information is found at www.ETFportfolios.net or by calling 775-832-8555. Clients hold the positions mentioned in this article. Past performance does not guarantee future results. Consult your financial adviser before purchasing any security.