I gave a friend a solid piece of advice back in June. Call your broker and get him to put you into safe waters if he can find it: low risk, no return is better than what is coming down the pipe. That is the only piece of investment advice I have ever given and perhaps ever will.
Well save for perhaps what follows. If I were a betting man I would do the following:
1.) Take a defensive stance with my investments. Try to meet inflation not beat it.
2.) Work off consumer debt, starting from least flexible and the highest interest rates and progress down the consumer financing chain.
3.) At the same time keep cash on hand. Yes it is time to save your money. Home equity is almost finished as a piggy bank and the banks are not going to take property values at face value for a while.
4.) Adjust your savings so that you have the capacity to finance three months of obligations. We may be headed into a cycle of higher and longer unemployment.
5.) If the economy continues to stay relatively strong and employment continues to hold having completed steps one through four will put you in a sound position to resume spending. OTOH if the real economy tanks it will give you a good night’s sleep to know that you have a Plan B which does not require the liquidation of your assets, a trip to bankruptcy court or slavish devotion to your boss.
NB: the advice given above is free advice, therefore, price it accordingly.