The stock market is overvalued, and bonds are ... who the heck knows?

So says Zvi Bodie, professor emeritus at Boston University and co-author of Risk Less and Prosper: Your Guide to Safer Investing, Essentials of Investments and more.

"It strikes me that the stock market is fully priced, if not overpriced, at the moment," Bodie said in an interview on Monday. "Although, I wouldn't advise anybody to sell it short. But I'm very nervous about there being a downturn."

Bodie did add the caveat that he "certainly can't predict when it will occur, but it's going to happen at some point."

Given that, investors ought to consider "portfolio insurance, always." His advice: Buy call options on the market as a whole or, if you own stocks, buy long-term, one-year maturity put options.

As for the bond market, Bodie said about rising interest rates: "That means that long-term bonds are pretty risk right now," he said, noting that he has reduced his exposure to long-term fixed income securities. (Of note, the 10-year U.S. Treasury bond closed at 2.55% Tuesday, the highest level in nearly 10 months.)

But Bodie said that he does own Treasury Inflation Protected Securities (or TIPS) for the long run. "I'm in retirement now and they provide inflation-protected income," he said. "I would advise anyone who's thinking of investing in bonds to consider inflation-protected bonds."

Bodie also said investors might want to consider buying for the cash reserves portion of their portfolio Series I Savings Bonds.

According to the U.S. Treasury, Series I savings bonds are a low-risk savings product. "While you own them, they earn interest and protect you from inflation," the U.S. Treasury notes on its website.

The Treasury also notes: "You may purchase electronic I bonds via TreasuryDirect or paper I bonds with your IRS tax refund. As a TreasuryDirect account holder, you can purchase, manage, and redeem I bonds directly from your web browser."

Bodie said anyone who is interested in safety and is concerned that inflation may flare up should consider Series I savings bonds.

"The beauty of those bonds is that you can't really lose money or purchasing power if you invest in them," he said.

Plus, Bodie noted that Series I bonds have a maturity of 30 years, but you can cash them in at any point. "You don't have to hold them for the 30 years," he said.

Got questions about the new tax law, Social Security, retirement and/or investments? Email Robert.Powell@TheStreet.com.

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