"If you hooked the U.S. Treasury market up to an electroencephalograph, you would see it flatlining."  My favorite quote today is from the Trader Daily website.

Yeah, I've been selling a few select stocks in the recent rally, but bonds have been painfully boring and, like a patient in the intensive care, you hope they stay that way because anything exciting means disaster.

While around half my portfolio is in fixed income right now, I try to keep the average maturity relatively short at just under two-years.  

As I've mentioned many times, I'm short bond futures (though currently at half my previous positions) .  I think bonds are still range bound and do not think the big bear market is about to begin right now.  However, if there is a huge breakout one way or another in interest rates, I think it will be to interest rates going up (bonds going down).  Thus, I continue to lean short.

Here's a nice article by Deborah Finestone of Bloomberg declaring the start of the bond bear market . 

Disclosure:  I am short bonds as described below.  My current allocation to bonds/fixed income includes funds that behave basically as fixed income instruments not just direct ownership of bonds.  I do not include private direct investments as part of my portfolio when calculating the allocation.

Don't Do This at Home Disclaimer:  My allocation to fixed income is higher than most other people's because I am more conservative with my investments as I do not currently have any income other than my savings.  I also own treasury bills as a cushion in case all the puts (think of it as insurance) I've writen against individual stocks are exercised when the market falls.

Disclaimer

Photo by Terry Freedman via Flickr and Creative Commons.