Brian Kelly’s Trade TIPs for Market Skeptics


If you think the economy is about to tank and you’re looking for a safe haven trade, market pro Brian Kelly, founder of Shelter Harbor Capital, suggests TIPs for you.

Ok, we'll stop with the puns.

We’re talking about TIPs or Treasury Inflation Protected Securities .

TIPs are indexed to inflation in order to protect investors from its negative effects.

According to Investopdia, TIPS are considered an extremely low-risk investment since they are backed by the U.S. government and since their par value rises with inflation, as measured by the Consumer Price Index, while their interest rate remains fixed.

Interest on TIPS is paid semiannually. TIPS can be purchased directly from the government through the TreasuryDirect system in $100 increments with a minimum investment of $100 and are available with 5-, 10-, and 20-year maturities.

Sound good? Wait there's more.

Kelly likes this trade for another reason. He believes that rather than inflation – investors are looking at an environment of deflation.

“And in a deflationary environment TIP bonds can’t go below par,” he says.


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Posted by CNBC's Lee Brodie

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Trader disclosure: On July 11, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Tim Seymour is long BAC; Tim Seymour is long INTC; Tim Seymour is long SBUX; Josh Brown is long AAPL; Josh Brown is long JPM; Josh Brown is long GDX; Josh Brown is long GLD; Josh Brown is long XLU; Josh Brown is long TLT; Josh Brown is long XLF; Josh Brown is long WMT; Josh Brown is long TGT; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long NUE; Guy Adami is long MSFT; Guy Adami is long BTU; Brian Kelly is long EURO; Brian Kelly is long TIP; Karen Finerman is long AAPL; Karen Finerman is long BAC; Karen Finerman is long JPM; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is short SPY; Karen Finerman is short IWM; Karen Finerman is short MDY

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