Keep 80% of your money in stocks: Asset allocator

Stocks have had a historically rough start to the year, with the S&P 500 falling 6 percent for its worst week of losses since 2011. But despite the rocky road, one director of asset allocation says stocks should still play a large role in an investor's portfolio.

"For a 40-year-old investor right now, he or she should have at least a minimum of 80 percent in equities right now," said Albert Brenner of People's United Bank Wealth Management on Friday's "Power Lunch."

"I know that seems crazy after the four days we've had at the start of this year, but that's what the minimum would be."

The S&P 500 has lost nearly $1.1 trillion in market cap in the first week of January. For investors looking to protect their investments, Stacey Gilbert, head of derivatives strategy at Susquehanna, recommends buying put options on the S&P 500 ETF, SPY. Put options are a contract to sell a specific security at a set price and a set date.

However, Gilbert warned that the prices on protective options have risen amid the week's stock sell-off.

Read MoreWith stocks tanking, should investors dash to cash?

"On a relative basis just given the recent volatility in the marketplace, those puts are trading more expensively than they have been," Gilbert said Friday, also on "Power Lunch." To account for the higher prices on options, Gilbert recommends using another options strategy called a risk reversal, in which one buys a put option and sells a call option, which limits profits but reduces the cost of buying.

"We have seen investors buy puts for protection, a very common strategy, and they sell some of the upside calls against it to help finance those downside puts that they're buying," she said.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Sara Eisen

Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.

In March 2018, Eisen was named co-anchor of CNBC's "Power Lunch" (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.

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