You might be in risky bonds & not realize it

IF you have money in mutual funds, you should be worried, but not only for the reason you think.

Sure, the stock market is causing concern. So investors are right to keep a close watch on the performance of stock mutual funds. But while you are doing that, mutual funds that invest entirely or partially in bonds are quietly having a very rough time. And it’s bound to get worse. You have to guess at what stocks will do. Will a company’s profits justify its stock price? Will quants’ computers cause a major sell-off ? Will President Trump say something that spooks Wall Street? Is the guy who runs your mutual fund paying attention?

The bond market is simpler to read. When interest rates rise, bond prices automatically decline. And bond mutual funds lose money. It’s as easy as that.

If you don’t understand why, here’s a quick explanation. Let’s say you own a 10-year government bond, and it is yielding 3 percent. That 3 percent yield is unattractive now that the new rate for bonds is nearly 3.2 percent.

So your 3 percent bond’s value will have fallen. And mutual funds that own these older bonds will decline in value. (You can get all your money back if you hold the bond to maturity, but funds aren’t going to do that.)

I asked Morningstar, which tracks mutual funds, to give me a list of the performance of those funds that invest in bonds. Nearly all of them are losing money in 2018. Only those that invest in short-term, fixed-rate instruments are up slightly for the year.

Take, for instance, one fund group called the US Fund Long Government, which invests in long-term government bonds like the 10-year. It was down over 8 percent in 2018, as of last week, when Morningstar ran the figures for me.

Other groups that invest in the bonds of emerging markets were down 8.6 percent and nearly 5 percent.

That’ll give you an idea of what you should look for in your retire- ment accounts — funds with the word “bond” in the name of their funds. Many people think these are safe investments — but they aren’t right now.

But there is a trickier part to this. You should also look for funds that have bond investments hidden in their portfolios and the name doesn’t shout out this fact.

Typically they have the word “balanced” or “allocation” in their name. The more their money is allocated into bonds, the more they (and you) will get hurt by rising interest rates and falling prices.

The Federal Reserve is expected to raise interest rates again in December. And Fed Chairman Je

rome Powell has indicated there will be more hikes because interest rates are still stimulating an economy that looks like it is growing nicely.

Those future rate hikes might make the stock market go down. But they will hurt bonds as well. So make sure you know what you are invested in.

If you are having no luck picking the numbers for Powerball or Mega Millions, maybe you’ll have a better chance at picking a company that gets bought in 2019. The payoff won’t be as big, but the chances are better.

Dykema, a national law firm, says in its 14th annual mergers and acquisition survey that 65 percent of the M&A professionals it contacted expect deal making to be up next year. That’s nearly twice as many that expected deals in 2018.

And the deals are expected in the automotive, energy and consumer products areas. Technology and health care held the top spots over the past four years.

Deals will be even stronger among privately held companies. Eighty-two percent of those responding to the survey said they expect an uptick in mergers and acquisitions in private firms next year.

Christmas starts earlier and earlier each year. And there are a lot of folks right now planning their company parties.

So let me be the first of many to offer advice on holiday party behavior: First, don’t do or say anything that would make your 10year-old snitch to Mommy or Daddy. (Pretend your kid is actually in attendance.) And second, before you do or say anything, imagine that there’s a #metoo banner hanging over the entrance to the party and that the unemployment line has a spot waiting for you.

Better yet, don’t do or say anything at all during the festivities. Just stand there mute with a soft drink in your hand and your mouth stuffed with pigs in a blanket.

Don’t think you need such radical solutions? Michael Schmidt, managing partner of the Cozen O’Connor law firm, thinks you should try these ideas: Give out drink tickets so you limit boozing; have a time limit for drinking and don’t let folks do shots or other high-octane drinks. Also, make sure there’s a lot of food. That’ll help keep people from getting drunk. Give out ride vouchers. Have a dress code. Give workers a memo telling them how to behave. And remember, always leave room for the Holy Spirit if you are dancing. That’s advice from my grammar school nuns that is still good today.