NEW YORK ( FMD Capital Management) -- One of the biggest conundrums income investors face heading into 2014 is how to anticipate a move in interest rates. Nearly every week we get more economic data that seems to support the dreaded "taper" scenario of the Fed easing off the bond buying gas pedal. In addition, we are swiftly approaching a new era of Federal Reserve leadership under Janet Yellen, who will be tasked with reading the tea leaves with respect to timing the Fed's exit strategy.With so many factors in play, it's time to consider whether we will see a break higher or lower in rates next year and how that will impact both bonds and stocks. I want to focus on how to position your portfolio to insulate yourself from these risks while still taking advantage of income opportunities. A quick look at the 10-Year Treasury Note Yield shows that it is drifting back towards the top end of its range since hitting a high in September. This has put pressure on assets with the highest sensitivity to interest rates such as treasury bonds, REITs, and high-grade corporate bonds.