What can investors do when cash and gold also look shaky

With the recent turn of events, even gold and cash seems to look shaky. Financial advisers have been busy over the last few days, and were seen answering phone calls from some of the panic-stricken investors on Thursday as the stocks dropped around 500 points. Even gold seems to have lost its luster and the money markets are also totally shaken up.

Michael Kay, financial adviser, at Financial Focus, Livingston, New Jersey, managed to talk a client out of liquidating his portfolio to invest in gold. As the downward trajectory began in the morning, the client had initially wanted to liquidate his portfolio.

Kay has a piece of advice. He states that if you assume that this is the end of the world, then it is better to buy Progresso soup that come in pop-top cans as that is at least palatable whereas, gold isn’t.

So, what exactly must investors do under such circumstances – when the markets go haywire?

Alan Haft, financial adviser, Newport Beach, California, seems to be getting quite defensive. Since early July, he has moved around $15 million of the portfolio’s that belong to his clients into other cash-like investments. Most of the cash has been put to work in Vanguard’s short-term Treasury Fund.

Haft states that people are skittish, but the best bet is still the US Treasury, as that is the safest place when compared to the other places.

Haft also seems to think that Switzerland is a safe haven, and is parking all the money in Swiss fixed annuities that are highly liquid, but they can only be bought through intermediaries. Haft also added that the Swiss Franc is really rocking and most of his investors seem to love the off-shore nature of this business. Another favorite with him is the Currency Shares Swiss Franc ETF.

Since the last few weeks, Haft has also put in $5 million into Wells Fargo Advantage Short-term Mini Fund as the duration is very low and that means the interest rate risk is just the minimal.

Haft claims that this whole thing about the hike in interest rates is that the economy does not seem to get any better on one hand, but on the other hand due to the deficits, the rates must climb. So, it is a quandary he says. Since the economy is bad the rates must ideally remain at the lower end, but there seems to be a lot of uncertainty right now.