When it comes to bonds I have four main ideas.

• Invest in areas where you are more than adequately compensated for the risks.
• Try to be as unconstrained as possible.
• After a credit crash, wait for the momentum to return to credit, and pile on.
• During a time of debt deflation, be willing to hold long-duration high quality debts.

Those are my strategies and simple enough.? But what do I do when they are disagreeing with each other?? I play for time.? I play my best ideas, and wait for the market to make a big move that I can ride.

I have owned long duration Treasury bonds for the past year, but have not owned them only, but other ideas as well.? Being long credit has worked, whether in:

• Floating rate loans,
• Long duration corporates, or
• Bank preferred stocks

That does not mean I did not have my failures.? I lost a decent amount of money expecting that the Swiss National Bank [SNB] would eventually break its peg versus the euro.? I still have a small bet on that, and still expect that I will make money on the trade, as the position of the SNB is becoming more difficult by the day.

My goal as a fixed income investor is to make money.? Unlike most fixed income investors, my goal is to make a lot of money when it is favorable to do so, and tread water the rest of the time.? I?m treading water now.? Rates are low; yields are low ? there aren?t that many distortions to take advantage of.

I await an environment with more opportunities.? I wonder if this is how Seth Klarman feels toward the end of a bull market.? I?m just schnitzeling, and waiting for some real opportunities to show up.

As it is, I use two proxies to guide me: AGG and CSJ.? My performance over the last year was between the two.? In the short run, I look to exceed CSJ.? In the long run, I look to exceed AGG.

Full disclosure: long CSJ