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The Bond Queen

Marilyn Cohen

LOS ANGELES | If the strongest bond bull market in history has finally been undone by the prospect of faster growth and rising inflation risks, Cohen ought to be well prepared. She has become one of the leading bond managers in the U.S. through Envision Capital Management, which she founded 20 years ago; it has $395 million (U.S.) in assets. But she is best known for her Forbes columns and her books, in which she preaches common sense, caution and capital preservation.

What's your investing style?

Since our clients are individuals, we keep it simple, risk-averse, and with a dependable income stream.

What bonds interest you now?

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U.S. airlines. In 2014, when it looked like several airlines were making a turn, we invested in American Airlines. In 2016, we invested in United Continental due to their improved, motivated management.

What advice would you give fixed-income investors?

Shorten your bond durations. Even better, a portfolio of individual bonds with staggered maturities will give you a much better, predictable income stream and less portfolio volatility.

What are the biggest risks in the bond market now?

The global central banks and their propensity to manipulate interest rates via massive bond purchases. Then they see it isn't stimulating economic growth, so they purchase even more bonds. It borders on insanity.

What was your best investment ever?

Exxon Shipping in 1989 issued zero-coupon bonds whose income was totally tax-deferred until their 2012 maturity. Even through the Exxon Valdez disaster, this bond was totally creditworthy. It was the sweetest bond ride I've ever had.

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Do you have a favourite holding now?

Nustar Logistics 4.8% due Sept. 1, 2020. This high-yield bond yields 4.76%, which is a great yield for investors willing to have a junk credit.

What keeps you up at night?

Lack of bond market liquidity.

What's your top metric?

The Treasury International Capital figure. It tells us the net transactions by foreigners in U.S. securities, plus foreign demand for U.S. securities and the U.S. dollars needed to purchase them. A fall in TIC holdings often warns of a weaker dollar.

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What's the best investing advice you ever got?

When they're yelling, you should be selling; when they're crying, you should be buying.

What do you do for fun?

I am a classically trained pastry chef, focusing on chocolate desserts. My husband and I also raise and train service dogs for veterans and the disabled through Canine Companions for Independence.

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