Interest rates are sure to rise someday. it is a matter not of if but of when. My advice for the coming period of uncertainty in fixed income is to buy closed-end preferred funds. They offer good yields with lower sensitivity to interest rate fluctuations than bonds. I wish I could tell you exactly when rates will head up, but I cannot. No one can. If you knew, you would stay fully invested until just before they did, then sidestep a decline in prices by going to cash. Wishful thinking. In the absence of clairvoyance about interest rates, what is the best strategy? The bears are cowering in cash. The problem is that money market yields are about 1%. After inflation and taxes, you are losing money. This would be an acceptable defensive strategy for a few months, but not for a few years.
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