Our friend Glenn Surowiec, founder of GDS Investments in West Chester, Pennsylvania, is out with another episode of his podcast.

According to Glenn, investors need to rethink their playbook for various assets as the great 35-year bull market in bonds comes to an end. Specifically, investors should:

  1. Move out of longer-duration bonds and reposition into shorter-duration ones.
  2. Own banks that are “asset sensitive” (assets reprice quicker than liabilities). Bank of America (NYSE: BAC), for example, should earn in excess of $5 billion in incremental net interest margin dollars for every 100 bps move higher in rates.
  3. Add exposure to commodities/energy/materials through publicly-traded equities. These sectors are cheap based on historical S&P weightings and public securities provide investors with built-in liquidity.
  4. Make sure companies in your portfolio have fixed, not floating rate debt. Also, make sure the debt is sufficiently termed out.
  5. Stay away from Utilities and Consumer Staples, two sectors that benefited disproportionately from the bond bull market.

Listen to Glenn’s podcast on preparing for higher interest rates.