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10 Questions for Your Private Banker - 12/03
12/01/2003

Near-term issues
Bond prices have slid as yields have risen from their 40-year lows in June. Some portfolio managers say we’re at the beginning of a bear market in bonds. What does this mean for my portfolio?

U.S. municipal finances are in a shambles and muni bonds are trading in many cases way below par. Since there is only a small chance that any municipalities will default, is it time to load up on cheap muni bonds?

Mortgage-backed securities have been extremely volatile. With mortgage rates rising, this $4 trillion-plus market could be in for trouble. What’s my exposure?

Inflation-linked bonds such as U.S. Treasury Inflation Protection Securities (TIPS) are outperforming other government bonds, despite the Federal Reserve’s belief that inflation will remain low. Is it time to invest?

What is my exposure to the mutual fund companies, banks, and hedge funds being investigated by New York Attorney General Eliot Spitzer for improper trading of mutual fund shares?

Medium-term issues
Luxury housing prices are beginning to decline in key US markets, according to the Wall Street Journal. Are any of my real estate assets at risk? What can I do to protect them?

General Electric adopted a stock-based compensation scheme for senior executives in September, joining Microsoft. With the US market’s two largest companies abandoning employee stock options, others are likely to follow. What does it mean for the performance of their stocks?

The U.S. is pressuring China to float the yuan. If it does, and the currency appreciates sharply, how will it affect my investments in companies that manufacture goods there?

Long-term issues
The government estimates that U.S. companies will have to cough up $400 billion to meet their obligations to retirees. Are any of the companies in which I’ve invested imperiled by pension underfunding?

The World Trade Organization’s trade liberalization talks have collapsed. If they’re not revived, how should this affect my long-term overseas investment strategy?

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