QUESTION:  You have been cautioning me about the risks of bond and bond mutual funds:  if interest rates rise, the value of my bonds and bond mutual funds will drop.  I could lose money on these investments.  What else should I consider?

ANSWER:  Our interest rates are close to a historic low and bond prices at an historic high.  The FED has heavily influenced interest rates to go to this low level.  At some point, interest rates will rise which will challenge bond investors.  New challenges require new thinking.  We have changed our asset allocation models to reduce bond exposure and increase exposure to real assets (including real estate), alternative strategies (including global macro, long/short and risk parity), as well as bond funds that use tactical management to attempt to reduce downside risk.