An expert joined TheStreet to discuss how alternative investments could offer a potential shield against a market crash as a volatile election season heats up.
Transcript:
CONWAY GITTENS: So what are the benefits to investing in bonds, especially when we look at the stock market has been so strong. Does the traditional 60/40 split still make sense?
CARLEY GARNER: So I’ve been around a while. I’ve lived through the financial crisis. I’ve seen some things and I’m seeing a lot of red flags on the tape that remind me of 2007, 2008. And so what I’ve done with my personal portfolio is I’ve allocated a very big percentage of it towards treasuries as a safety play, because I believe that at this point, for example, the 10 year T note you can get, depending on what your timing is, anywhere from 4% to 5% and you get paid to wait, you get that 4% to 5% regardless of what happens in the markets, if you hold all the way to expiration, there is some interest rate risk between now and expiration. But if your time horizon is long enough, you really get paid to wait and see what happens.
And if something does happen, let’s say I’m not saying we’re going to get a financial crisis, but let’s say we go into a recession. Stock market correct. Not only are you getting 4% or 5% to wait in your treasuries, you’re actually probably getting some appreciation in those as well. So I think there’s definitely a place for bonds and specifically treasuries, not necessarily riskier corporate bonds, but treasuries. While we see how things unfold.
I mean, we’ve got a wild election season coming up. We’ve got financial markets that are a little disjointed and perhaps we have a soft landing and everything goes perfectly, but perhaps the opposite happens as well. So I think it’s time to play defense, not offense. That’s what I’m doing personally. So I’ve even gone beyond the 60/40 portfolio and and allocated far more than that to treasuries. I could be wrong. I’m not saying you should do that. I’m just saying it’s a time to be cautious.
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