• Be patient.
• Be tactical and flexible.
• Provide liquidity when others need it.
• Prepare for market turning points. This is one of the key advantages of active management.
• Avoid or underweight assets that solely or primarily rely on central banks to support valuations.
• Hedge against a tail scenario in which inflation overshoots central bank targets. Although this is unlikely in the near term, the risk is significant over our secular horizon.
Andrew Balls is PIMCO's global fixed income chief investment officer.
Richard Clarida is a managing director in PIMCO's New York office and the company's global strategic advisor.
Daniel J. Ivascyn is PIMCO's group chief investment officer and a managing director in the company's Newport Beach, Calif., office.