Investors keep trying to follow the playbook that worked very well for the last decade or so. It was a mistake in 2022 and will be a mistake again in 2023. Expect volatility and above-average risk, because of continuing imbalances in the economy and markets, underscores Bob Carlson, editor of Retirement Watch.
With that in mind, where do I see potential opportunity?
Traditional retirement income investments are looking better than they have for years. I developed the Retirement Paycheck portfolio because yields on the traditional retirement income investments didn’t generate enough income for most retirees.
In the portfolio, we expand the investment universe to a range of other investments and tactically move in and out of those investments as their margins of safety change.
Because risks were rising, in most of 2021 and 2022 a high percentage of this portfolio was directed to principal-protected instruments, such as MYGAs, CDs and money market funds.
As in the other portfolios, we’re holding some MYGAs and CDs until they mature and putting new money in the short-term contracts or in money market funds. That will give us liquidity to take advantage of new opportunities in 2023 and 2024.
One position worth noting is Cambria Emerging Shareholder Yield (EYLD). It continues to bounce back from a rough first half in 2022.
The fund’s parent company analyzes dividend-paying companies using several factors and ranks them by their ability to maintain and increase their dividends, a concept known as shareholder yield. EYLD invests roughly equal amounts in the 100 highest-ranked emerging market companies in the index.
The fund turns over about half its portfolio each year. The latest public data say almost 50% of the fund was in companies based in either China or Taiwan in the third quarter of 2022.
The largest sectors in the fund were materials, energy, and technology. The fund has done well as China reduced its pandemic restrictions and increased its emphasis on economic growth. Consider adding new cash to EYLD.
