Carly Garner, senior strategist and broker at DeCarley Trading, joins TheStreet to explain why you should have bonds as part of your portfolio.
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00:00So what are the benefits to investing in bonds, especially when we look at the stock market has
00:05been so strong? Does the traditional 60-40 split still make sense? So I've been around a while. I
00:13lived through the financial crisis. I've seen some things, and I'm seeing a lot of red flags
00:18on the tape that remind me of 2007, 2008. And so what I've done with my personal portfolio is I've
00:25allocated a very big percentage of it towards treasuries as a safety play. Because I believe
00:33that at this point, for example, the 10-year note you can get, depending on what your timing is,
00:39anywhere from 4% to 5%, and you get paid to wait. You get that 4% to 5% regardless of what happens
00:46in the markets if you hold all the way to expiration. There is some interest rate risk
00:49between now and expiration. But if your time horizon is long enough, you really get paid
00:54to wait and see what happens. And if something does happen, let's say, I'm not saying we're
00:58going to get a financial crisis, but let's say we go into a recession, stock market corrects,
01:03not only are you getting 4% or 5% to wait in your treasuries, you're actually probably getting some
01:09appreciation in those as well. So I think there's definitely a place for bonds,
01:14specifically treasuries, not necessarily riskier corporate bonds, but treasuries.
01:20While we see how things unfold, I mean, we've got a wild election season coming up. We've
01:24got financial markets that are a little disjointed. And perhaps we have a soft landing and everything
01:30goes perfectly, but perhaps the opposite happens as well. So I think it's time to play defense,
01:37not offense. That's what I'm doing personally. So I've even gone beyond the 60-40 portfolio and
01:43allocated far more than that to treasuries. I could be wrong. I'm not saying you should do that.
01:48I'm just saying it's a time to be cautious.