One of the biggest surprises so far in 2016 has been sharply declining long-term interest rates. For several years now, Wall Street analysts have started each year with consensus predictions that interest rates will start to increase toward more traditional levels. Once again in 2016, the opposite occurred as rates plunged to new all-time lows and negative interest rates became the norm in Japan and Europe. Interest rates play a central role in markets because they influence the price of nearly every other asset. Additionally, interest rates impact decisions in the real economy, particularly related to real estate, capital investment, and the funding of companies. Now that interest rates have been exceptionally low for so long, more side effects are becoming evident. Low rates are setting a number of traps for investors that will eventually destroy wealth. For our clients, we believe the most important task in the current investment environment is avoiding these pitfalls while continuing to generate consistent income and sustainable long-term appreciation. Overall, a defensive mindset is the proper approach in today’s market.