Smarty_Pants

High Cash Levels and Your Portfolio

While you are standing in the midst of a shoe dropping extravaganza it is most definitely not prudent to assume extra risk.

Just ask the former shareholders of Fannie Mae, Freddie Mac, LEH, AIG, WaMu, and probably soon enough Citi, each of whom bought at "incredibly" low prices only to discover that this time it really is 'different' and that stocks can and do go to zero.

As long as the politicians and bureaucrats are continuing to thrash about blindly trying to 'fix' things there will be greater risks involving possibly much greater losses.

While it may be true that there are opportunities today that haven't been seen in some time, it is also true that we haven't seen so many marquee stocks go bust in a few months since the 30s.

It took many years to resolve the difficulties back then and it's likely to take a good while to resolve them now as well. Any nibbling done now should entail a primary focus on minimizing the risk involved while providing a fair chance for either income or a rebounding price.

axelrod has the right idea. Safe returns are preferred over potentially spectacular gains that might turn into busts.

Investing will return to the standards used by your great grandparents. Income and stability.