The investment strategy could protect your money in volatile choices

Amid growing recession fears, many investors are looking for a safe haven for their money. Carley Garner, Senior Strategist and Broker at Decarley Trading joined TheStreet to discuss how bonds could provide a potential shield against market volatility.

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CONWAY GITTENS: So what are the benefits of 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 have been for a while. We went through the financial crisis. I’ve seen some things and I’m seeing a lot of red flags on tape that remind me of 2007, 2008. And so what I’ve done with my personal portfolio is I’ve allocated a very large percentage of it to Treasuries as a safety play, because I think right now, for example, the 10-year T note you can get, depending on your timing, 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 until expiration, there is some interest rate risk between now and expiration. But if your time horizon is long enough, it really pays to wait and see what happens.

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And if something happens, let’s say I’m not saying we’re going to have a financial crisis, let’s say we’re going into a recession. Fair stock. Not only are you getting 4% or 5% for waiting in your Treasuries, you’re actually probably getting some appreciation in those, too. So I think there’s definitely a place for bonds and especially treasuries, not necessarily riskier corporate bonds, but treasuries. While we see how things play out.

I mean, we have a wild election season coming up. We have financial markets that are a bit disjointed and maybe we have a soft landing and everything goes perfectly, but maybe the other way around. So I think it’s time to play defense, not offense. I personally do that. So we went beyond even the 60/40 portfolio and allocated much more than that to treasuries. I could be wrong. I’m not saying you should do that. I’m just saying now is the time to be cautious.