36 KIPLINGER’S PERSONAL FINANCE^ 04/2020POON WATCHARA-AMPHAIWANto the broader markets. (For more
on ExxonMobil, see “The Kiplinger
Dividend 15 Update,” on the facing
page.) If you’re tempted by the juicy
yields, I’d say first check out taxable
municipal bonds (see “Taxable Munis?
They’re Worth a Look,” Feb.) and
out-of-favor real estate investment
trusts, such as those investing in
hotels, senior housing and health
care facilities.
Investment managers and advisers
who meet with rank-and-file investors
are more grounded than the pundits.
I surveyed members of the fee-only
financial planners’ organization
NAPFA as to whether it is becoming
urgent for retirees to “take a knee,” or
purge all portfolio risk. Very few said
it’s time for a run on CDs, money mar-
ket funds or online savings accounts.
The folks at Columbia Threadneedle
Investments publish a monthly markets
barometer. Tellingly, they fall
in the neutral zone—neither
bullish nor bearish—on
key investment categories
such as U.S. large-com-
pany stocks, small caps,
growth stocks and value-
oriented fare. Ditto for
Treasury, invest-
ment-grade,
municipal
and junk
bonds,
as well
as REITs
and more.
The clear,
unambigu-
ous conclu-
sion: Hang
in there. ■INCOME INVESTING Jeffrey R. KosnettThe Income Rally Roars On
N
o sooner do I warn investors that
stock and bond prices are too
high and point to spreading ir-
rational overexuberance (see “Beware
the Roaring Twenties,” March) than
all my favorite income investment cat-
egories go even more wild to the up-
side. Serves me right for questioning
this market. I’m not abandoning all
caution. I still believe that AT&T
shares are expensive and that closed-
end funds with nutty premiums to net
asset value will fall toward earth. But
sometimes the best moves are the ones
you don’t make and the right course is
to take what the market is giving you,
no questions asked.
In January, Standard & Poor’s broad
municipal bond index returned 1.64%,
the index’s biggest one-month gain
since 2014. Strategists at T. Rowe
Price just officially declared utilities
a growth sector—no longer dull bond
alternatives—and predicted that util-
ity earnings will exceed those of the
S&P 500 index for the next few
years. Triple-B-rated corporate
bonds, which a year ago mari-
nated in fear and loathing, have
gained close to 2.6% so far this
year and 15% over the past 12
months. (Returns and other
data are as of January 31.)
Gripes about market risks
now seem feeble. The corona-
virus? In the sometimes-perverse way
of the bond market, this human trag-
edy and economic hurdle is a giant gift
to bond investors, causing even faster
rivers of money to seek haven in U.S.
dollars and government debt, driving
down interest rates. This development
has brought back the not-so-dreaded
“inverted yield curve,” which occurs
when short-term yields are higher
than long-term ones. It’s ostensibly a
harbinger of recession, and typicallyprompts warnings of bond-price losses
and defaults. The reality: Unless the
inversion is a result of the Federal
Reserve pumping short-term rates
skyward, it’s trivial.Ignore the political polls. A few scattered
pundits are spreading nonsense that
the better Bernie Sanders looks in polls
and primaries, the likelier the markets’
accumulated gains are to atomize. We
saw similar warnings of massive in-
f lation and tax increases concomitant
with the 2008 surge of Barack Obama
to his party’s nomination, as well as
four years later at his re-election. Quite
a few market sages also greeted Donald
Trump’s election as likely to be trouble-
some for investors because the mar-
kets hate surprises, and Trump was
a surprise. Whatever your political
leanings, I remind you that the Fed’s
actions, companies’ earnings and
dividends, and price stability matter
mega-times more than politics.As for the troubles
at Boeing and the
sinking price of
oil and natural
gas, well,
what hap-
pens at
Boeing and
Exxon stays
at Boeing and
Exxon. There’s
no risk of contagionJEFF KOSNETT IS EDITOR OF
KIPLINGER’S INVESTING FOR
INCOME. YOU CAN REACH
HIM AT JEFF_KOSNETT@
KIPLINGER.COM.SOMETIMES THE BEST
COURSE IS TO TAKE WHAT
THE MARKET IS GIVING YOU,
NO QUESTIONS ASKED.INVESTING Commentary